PWD Discount 1: Who are Persons with Disability?

In a complaint email last Tuesday by James Auste, head of the Cancer Warriors Foundation (CWF), why Mercury Drugstore did not give sell him his medicines for more than one month, he was answered by Atty. Edsel Manuel of Mercury. The latter gave me permission to blog his comments, thanks Atty. Manuel.

--------------

Is one suffering from Chronic Illness a Disabled person? This has been discussed with the National Council for Disability Affairs (NCDA) 2 years ago and was answered in the negative.

First, Republic Act 9442, amending RA 7277, the Magna Carta for disabled persons, provides that the 20% discount for the purchase of medicine shall be for the exclusive use and emjoyment of persons with disability, thus:

CHAPTER 8. Other Privileges and Incentives

“SEC. 32. Persons with disability shall be entitled to the following:

(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for the exclusive use or enjoyment of persons with disability;”

Second, the Implementing Rules and Regulations of RA 9442 states that the granting of said 20% discount is subject to the guidelines of the Department of Health (DOH), thus:

“IRR OF REPUBLIC ACT NO. 9442,

6.1.d Purchase of Medicine – at least twenty percent (20%) discount on the purchase of medicine for the exclusive use and enjoyment of persons with disability. All drug stores, hospital, pharmacies, clinics and other similar establishments selling medicines are required to provide at least twenty percent (20%) discount subject to the guidelines issued by DOH and PHILHEALTH.”

Third, the DOH-Administrative Order No. 2009-0011 has made clear in its “Rationale” and in the “Definition of Terms,” particularly on the “Disability Types,”  the phrase “Chronic Illnesses with Disabilities” or “disability due to chronic illness,” thus:

Senior Citizens Discount, Part 2

(Note: The original title of this paper was "Mandatory Drug Price Discounts")

Last week, I attended the first meeting of the DOH Advisory Council for Healthcare. This body used to be called the Advisory Council for Drug Price Regulation. Curious why a free marketer like me is attending meetings of the government that imposed drug price control? Well, I attended it mainly to listen to what the industry players have to say based on their actual experience, and to help explain to the DOH officials that price control is not the way to achieve the goal of cheaper drugs or whatever commodity. More competition from more players will achieve that.

Anyway, the various industry players were there in the meeting as usual -- the multinational pharma, local pharma, drugstores (from Mercury to Watsons to small ones), hospital associations, medical and pharmacist associations, NGOs (me among them). There were also participants from other government agencies like the DTI, Food and Drug Administration (FDA), and PITC pharma.

The old and renewed pain of the drug retailers were raised once more related to the obligatory, mandatory discounts for senior citizens (SC) and persons with disabilities (PWDs). And recently the expanded senior citizen law.

Before, it was 20% mandatory discount (SC and PWDs).
Then there was the drug price control policy, mandatory 50% discount.
And after that, the expanded SC discount of 12%

So drugstores, especially the small ones, that earn a gross profit margin of 5 to 10 percent will now be forced to shoulder the above mandatory price reductions at no cost to the government. All costs will be borne by the drug retailers and drug manufacturers. The mandatory revenue losses are not subject to tax credits.

When politicians like legislators think of "welfare", one variation is that the full cost of such welfare is entirely on the sellers and entrepreneurs, not on them or the Executive branch. Let the drugstores (small ones, esp.) lose and close shop, or let them stop selling some affected drugs, or let them sell cheap but counterfeit drugs perhaps to help recover the losses, they won't care. So long as they can "give welfare" at no cost to them or to the national treasury.

The other and more dominant variation of welfare, is that taxpayers foot the bill, like the conditional cash transfer (CCT) and various other programs.

Welfare. Politicians are well, taxpayers pay the fare. Welfare.

See also, On Senior Citizens Discount, August 10, 2009.

On Senior Citizens Discount

(Note: The original title of this paper was "Double Price Control")

Senior citizens (60 yrs old and above) and persons with disabilities (PWD, like blind, mute) are entitled to 20 percent discount on medicines. That’s price control #1. Then there is the government-mediated and government-mandated 50 percent price cut on medicines. That’s price control # 2 that will start 5 days from now, August 15.

There have been a number of confusions already on price control #1 alone. Among these are the following:

One, if the senior citizens are buying drugs that are obviously for their grandchildren or for other people, can the drugstore refuse to give the mandatory 20 percent discount? But there are clear penalties if the seniors will report to the Department of Health (DOH) and the police.

Two, if a person comes to a drugstore and makes signs that he/she is mute and deaf and demand the 20 percent mandatory discount, how will the drugstore staff know that he/she is indeed mute-deaf and not just pretending?

Three, most small drugstores just make 5 to 10 percent profit margin because of stiff competition among them, but they are all forced by the government to give 20 percent discount to PWD and senior citizens, how will they recoup the losses?

When price control #2 is added to the above, here’s the result: for certain drugs, a senior citizen or a man/woman on wheelchair can get 20 percent discount on drugs that already have 50 percent forced price reduction!

So pharmaceutical companies and drugstores, big and small, are wondering how to deal with this kind of double price control and still survive. And there are uncontrolled taxes and fees on medicines alone, uncontrolled taxes and fees on entrepreneurship and doing business, the government is not budging to reduce or abolish even one of those various taxes and fees.

Business is business. If businessmen lose money somewhere, they have to recoup it elsewhere; otherwise, they better close shop and move to other industries. So the non-senior, non-disabled persons, rich and poor, men and women, will have to bear higher drug prices.

This morning, I attended the DOH Advisory Council Meeting on Price Regulation. The above issues were among those discussed. Well, the term “double price control” was not used or mentioned there, it’s only a term I coined as I listened to the drugstore owners and managers, including hospital pharmacies, and pharmacists.

The big hospitals were represented there – Makati Med, St. Lukes, Asian Hospital, among others. They say that as much as possible, they do not allow the confined patients to buy drugs outside of the hospital to control the use of (a) cheap but counterfeit drugs, and (b) cheap but sub-standard generics with no bio-equivalence tests. When these drugs are used by the patients, either they do not recover fast, and/or develop new diseases, and some of them sue the hospital and their attending physicians.

So the hospital managers ask, “We usually charge higher for drugs in our pharmacies than the drugstores outside because there are administrative costs to us. A nurse will get the blood pressure for instance and the physician or pharmacist will recommend what dosage to give. Will the new drug price control law allow us to charge additional administrative charges for the medicines we dispense to our patients?” To which DOH officials replied “Yes, a separate charge, but the price of drugs under maximum retail price (MRP) should not exceed the prices as announced.”

As a researcher and policy analyst of the effects of various government intervention in the market, I am intrigued by the unfolding of events, even before the actual price control (the second control) will commence.

I have said it before and I will say it again: politicized pricing through government price control, like mandatory discounts and mandatory price reduction, is among the best formula to mess up the economy. Any intervention will require another set of intervention supposedly to correct the wastes and inefficiencies of the earlier intervention.

Elton John sang it appropriately: “It’s the circle of life, and it moves us all…”