Government agencies are rushing the completion of the revised joint administrative order (JAO) to constitute the Price Negotiation Board (PNB) that will centrally negotiate price of supplies of pharmaceuticals and medical devices for the Department of Health (DOH) and the Philippine Health Insurance Corporation (PhilHealth) in the most transparent and best price offer, “no cartel or divide the pie” strategy, and make available to the public affordable but quality medicines and supplies.
The draft JAO on the “Constitution of the Price Negotiation Board and Implementing Guidelines on Price Negotiation for Innovative, Proprietary, Patented and Single-Sourced Health Commodities” is slated for approval after Oct. 15 this year.
Based on the draft JAO, the PNB shall be composed of a representatives from the DOH with the rank of at least Assistant Secretary; Department of Trade and Industry with the rank of at least Assistant Secretary; Philhealth with the rank of at least Senior Vice President; elected Local Chief Executives to be endorsed by the League of Provinces, League of Cities, and League of Municipalities; health care institutions endorsed by their national association; health professionals endorsed by their national association; and Civil Society Organizations/Patient Groups to be endorsed by their national associations.
The appointive members of the Board shall be appointed by the Secretary of Health and co-terminus with the appointing authority, unless otherwise revoked. The PNB shall be chaired by the DOH representative.
But Laban Konsyumer Inc., the country’s consumer protection advocacy group, has batted for the inclusion of the Philippine Competition Commission (PCC) right at the start of the PNB.
LKI President Victorio Mario Dimagiba has warned of meddling politicians in the PNB as he cited the strong lobby during the Maximum Drug Retail Price process.
He said the PCC could ensure fair and level playing field at the PNB and help ensure that the “best price is not the result of cartel or divide the pie” strategy.
The draft revised JAO, aims to promote transparency in price setting for innovative, proprietary, patented and single-sourced health commodities. It also aims to improve efficiency in government spending on health commodities, and guarantee access to affordable and quality health commodities.
The Order shall be applicable to all health care providers under the DOH, its offices/units, retained and corporate hospitals, treatment and rehabilitation centers, and Centers for Health Development insofar as procurements of drugs and medical devices are concerned and to Philhealth for the payment of claims and the development of benefit packages. Further, the Order shall be applicable to other government agencies/offices, the pharmaceutical and device industry, academe, civil society organizations, and other stakeholders who will be involved in the negotiation process.
Based on the draft JAO, centrally negotiated price refers to an agreed price as a result of a successful negotiation between the PNB and the company, which shall be the basis of the procurement price applicable to all health care providers under the DOH and the basis of Philippine Health Insurance Commission’s claims payment and benefit packages development.
The Board shall ensure adherence with the principles of transparency, accountability and good governance when conducting price negotiations with companies. It shall recognize that competition through public bidding is more effective in determining an efficient market price. Likewise, competition ensures that lower prices can be expected alongside improved products and services.
In cases of innovative, proprietary, patented and single-sourced health commodities whereby there is natural monopoly, the PNB shall seek to balance this power through price negotiation.
End-users of the negotiated suppliers are the DOH owned health care providers including, DOH Central Office, retained and corporate hospitals, treatment and rehabilitation centers, and Centers for Health Development, and Philhealth.
The negotiated price stated in the Memorandum of Agreement (MOA) shall be the basis of procurement by the DOH, its offices/units, CHDs, retained hospitals, and attached agencies, and costing of benefit packages by Philhealth.
A MOA will be executed by and between the end-user and the company after successful negotiation, which contains the negotiated price and the terms of the agreement, among others.
For Health Commodities still undergoing Health Technology Assessment, the draft JAO stated that prior to price negotiation, innovative, proprietary, patented and/or single sourced health commodities that are not yet funded by either DOH and PHIC must first undergo a health technology assessment (HTA) review by the HTA Council (HTAC) which shall consider its cost-effectiveness and budget impact.
Health commodities that have been assessed by HTAC to have good clinical value but are deemed not financially viable by government financing agents and/or beyond the budget constraint of the government shall be nominated for price negotiation.
The HTAC shall submit to the PNB the list of health commodities recommended for price negotiation and other pertinent documents such as but not limited to initial benefit decision which include product dossier, economic evaluation and budget impact analysis.
The PNB Secretariat shall make an announcement which health commodities are for price negotiation and shall issue a Letter of Intent to the company to submit a price offer or proposal based on the indicative volume stated therein. The company shall have seven calendar days to respond to the Letter of Intent.
Failure to respond within the set timeframe shall result in the declaration of failure of negotiation. The company may request for time extension, which must be accompanied with justifications and shall be subject to the approval of the Board.
The PNB Secretariat shall prepare and consolidate all relevant documents and data such as company proposal or price offer for price negotiation which includes information on prices sold to other countries, and utilization reviews/forecasting/quantification/budget impact analysis from the end-users.
The creation of the PNB is in accordance with Section 28 of Republic Act No. 11223, otherwise known as the Universal Health Care (UHC) Act, which was enacted to enable the employment of cost-containment measures that will promote efficiency in government health spending and increase health coverage to all Filipinos with much priority given to the poor and marginalized sector. RA 11223 mandates the creation of an independent Price Negotiation Board (PNB), which will centrally negotiate prices on behalf of the DOH and PhilHealth.
In could be noted that government spending on pharmaceuticals and medical devices are expected to continue to rise along with the rapid changes in the health needs of the Filipinos and continued launch of new and innovative health products. In the midst of this growing unmet and infinite needs of the population vis-à-vis the finite financial resources of the government and health system as a whole, providing for such drugs and medical devices now poses a challenge to the government as it also aims to increase population coverage.
Due to the fragmentation in the public procurement system, government health facilities/hospitals oftentimes resort to small volume procurements. This practice weakens their bargaining power, and thereby resulting to bid failures, negotiated procurement and ultimately, to heterogenous pricing for the same intervention.
By establishing the PNB with a primary objective of centralizing negotiation with respect to consolidated volume, the purchasing power of all health care providers under the DOH will be consolidated and, thereby strengthen its bargaining power. It can also be used to leverage for a more homogenous and affordable price points for new, innovative and single-sourced pharmaceuticals and medical devices.