By BERNIE CAHILES-MAGKILAT
Innovator drug companies in the country have vowed to comply once the second phase of the maximum drug retail prices (MDRP) is implemented, but cautioned the government that such price control mechanism is a bad idea that would only make pharma companies deprioritize the Philippines and end up depriving Filipinos of access to innovator drugs for critical illnesses at affordable prices while scaring investors away.
“We will follow the law, we will comply whatever the conditions are,” said Dr. Beaver Tamesis, now on his fifth term as president of the Pharmaceutical Association of the Philippines (PHAP), an association of research-based pharmaceutical sector in the country.
While PHAP vowed their full compliance, Tamesis also raised the question from the business perspective during an interview with Manila Bulletin stressing, “pharma is a business.”
The proposed second phase MDRP has remained pending at the Office of President Duterte, whose presidential campaign platform was anchored on the upliftment of the poor including the provision of better access to quality and affordable healthcare. The expanded MRRP covers prescription drugs for critical illnesses such as hypertension, diabetes, cardiovascular diseases, chronic lung diseases, neonatal diseases, and major cancers. It also includes high-cost treatments for chronic renal disease, psoriasis, and rheumatoid arthritis.
In pushing for the second phase of the MDRP, the DOH claimed that some branded innovator medicines are 22 times more expensive than in other countries while the generic drugs are still four times higher than international reference prices.
“I don’t know where in the world they got those numbers. It is confusing to a lot of us,” he said.
PRICE CONTROL
According to Tamesis, the proposed MDRP will cut prices of the listed medicines anywhere from 80 to 97 percent.
This has led the innovator drug companies in the country to question, “Will I sell at a loss? Why I am still here, will I have to let people go… and makes us question what kind of investments we’re doing.”
“Price control is a bad idea,” he stressed noting it removes business predictability considering that a pharma company puts in $2.6 billion in investments to develop one molecule for a long period of time.
Other countries like China and India have stepped back from price controls. In India, price controls have forced pharma companies to consolidate leaving rural areas without access to medicines. Now, they move into tendering and negotiated prices, he said.
When China imposed price controls, he said, pharma companies did not make the innovator drugs available. China changed everything as they adapted negotiated prices.
“Now, China has the latest and greatest new products for immunology, oncology treatments, and other innovator drugs,” he said noting that pharma companies are back in China because government now provides predictability and stability to business.
NEGOTIATED
Instead of price control, PHAP would like the government through the Department of Health (DOH) to expand its proven medical access program through negotiated price procurement to be able to bring down prices of medicines and ensure predictability of business.
Tamesis explained that under the negotiated prices, medicines can go as low as 75 percent cheaper compared to the actual price list of pharma companies.
Under this scheme, the DOH will buy in bulk where pharmaceutical firms can bid or enter into negotiation. With that huge discounts, he said, government can pass on the medicines to patients at lower prices, if not for free.
According to Tamesis, pharma companies only reveal their list prices, which are high, because of competition but once they enter into volume order from DOH prices drastically go down.
Based on computation, a negotiated volume order for a breast cancer medicine can substantially bring down to ₱13,000 from ₱38,000.
The DOH is the biggest single buyer of medicines accounting for 30 to 40 percent of the estimated ₱212-billion annual industry sales, he said.
PHAP, he said, can also help create solutions like forecasting of needs and getting those medicines into the localities to ensure medicines are distributed to intended patients before they expire.
EXPANDED PROGRAM
According to Tamesis, the DOH has already successful programs that they can replicate into other diseases. They just have to expand these to other areas where pharmaceutical firms can participate.
“There is no need to impose market distorting price control. We can reduce prices, but give us volume so we can forecast,” he added.
He recalled that the first MDRP really slowed down the industry for at least two years in 2009-2011 where the industry posted a negative 5-10 percent growth.
At that time, his company MSD dropped its particular drug by half but its generic competitor was selling at ₱1 higher than its innovator drug.
The industry as a whole started recovering only in 2012 and is now growing but driven by the entry of generic drugs, which now accounts for 76 percent of total ₱212-billion pharmaceutical industry.
“Why destroy the business by imposing price control,” he said noting 166 molecules have been registered in EU and US in the past five years that potentially affect Filipinos but only 5 have been launched here.
“The business condition is already tough and if DOH has no program to support and suddenly impose the MDRP what will happen to that 5?”
Tamesis stressed that it is in their interest to have a healthy nation because that translates to healthy business. “It is a win for government, patient, nation and business,” he said.
“Price control really destroys the landscape. It makes predictability very hard, business conditions unstable and makes us think what kind of investments we’re doing.”
Duterte, a populist president, won on a pro-poor platform. But Tamesis stressed, the President does not need the MDRP.
“If you have a president with 80 percent approval rating, there is no need for another populist measure, why destroy business,” he said.
Singapore has the most pharma manufacturing operations because they have the Singapore Development Board that think 50 years beyond and thus encourage companies to locate because that is the kind of horizon many companies look for.
“There is the stability and predictability and they are pushing forward with the vision,” he said adding that Singapore is doing this despite the lack of manpower. Singapore is getting pharmacy graduates from the Philippines.
But because of the instability of the industry in the Philippines, Tamesis said pharma firms already left the country.