Address the root causes of expensive pricing in medicines

THE Coalition for People’s Right to Health (CPRH) welcomes the recent move of the Department of Health (DOH) to draft an Administrative Order (AO) on the implementation of the maximum retail price for drugs and medicines. However, it will take more than just compelling pharmaceutical companies to reduce prices to truly make medicines accessible to all Filipinos.

Recognizing the root causes of why medicines are expensive is essential. First, there is monopoly or control of foreign transnational companies (TNCs) in the drug industry in the Philippines.

The Philippines is the 11th most attractive pharmaceutical market in the Asia-Pacific region and the third-largest pharmaceutical market in Asean, after Indonesia and Thailand. According to IMS Consulting for the Pharmaceutical Healthcare Association of the Philippines (PHAP), the country’s pharmaceutical industry is projected to grow by 4.5 percent annually over the next five years reaching P164 billion in 2018 from P146 billion in 2014. 

These figures have proven to be promising for TNC pharmaceutical companies. Of the world’s Top 20 pharmaceutical companies, over 14 have manufacturing facilities in the Philippines. It was also reported that foreign drug companies account for over 75 percent of the pharmaceutical market.

Second, high price is dictated through the World Trade Organization-Trade Related Aspects of Intellectual Property Rights (WTO-Trips) Agreement. Under Trips, transnational drug companies have the right to impose patents on their products. This means, they gain the right to exclusively manufacture, use, and sell patented medicine.  Each patent has a minimum effectivity of 20 years.

There is no independent local drug industry in the Philippines. According to the Philippine Institute for Development Studies, there are 15 multinational pharmaceuticals that control 66 percent of total industry sales, while 30 percent go to Filipino companies. Multinational pharmaceutical companies are heavily dependent on imports of active ingredients and technology that they become mere traders of finished and raw drugs. Some multinational pharmaceuticals are purely importers. The Philippines has over 500 drug traders, 700 drug importers, and 5,000 drug distributors, the report said.

Lastly, the National Drug Policy and the Cheaper Medicines Law of 2008 is limited and not fully implemented.

To meaningfully make medicines accessible to the people, CPRH pushes for the removal of the 12 percent VAT on medicines as an immediate measure. For the long-term, CPRH believes that a self-reliant national drug industry that is responsive to the health needs of the people need to be developed. –Dr. Julie P. Caguiat, co-convener, Coalition for People’s Right to Health