Regulations for cheaper medicines law released

MANILA, Philippines - Rules implementing the cheaper medicines law were finally released yesterday, granting the Health secretary massive authority to regulate the pharmaceutical industry by relaxing patent rules and allowing price controls on practically all drugs and medicines. The joint administrative order by four agencies—the Health and Trade departments, Bureau of Food and Drugs (BFAD), and the Intellectual Property Office—gives teeth to Republic Act 9502 or the Universally Accessible Cheaper and Quality Medicines Act of 2008, signed by President Gloria Macapagal Arroyo in April amid vehement protests from drug manufacturers. The rules state that the Health chief can recommend to the President retail price caps “over any or all drugs and medicines" for “such period of time as the situation may warrant," and “covering all levels of the supply chains." Price controls will cover the manufacturer, trader, distributor, wholesaler, and retailer, with violators facing fines of up to P5 million. Also barred is price manipulation via hoarding, profiteering, or forming cartels, with fines of up to P10 million. At the very least, the price controls will cover drugs and medicines for “chronic illnesses and life threatening conditions"—diabetes, peptic ulcer, prostate enlargement, hypertension, tuberculosis, asthma, lupus, HIV and AIDS, and even skin diseases and neuropsychiatric disorders. Also covered are vaccines, contraceptives, anesthesia, and intravenous fluids. “The Secretary [of Health] has the power to recommend prices at all levels of the supply chain, from retailers down to the manufacturer, to impose a ceiling price with the approval of the President," Health Undersecretary Alexander A. Padilla told BusinessWorld. The rules take effect 15 days after publication in two national newspapers. The 66-page document was posted on the Health department website yesterday. Amid the unprecedented regulation, the Health official assured that profits of pharmaceutical firms would be taken into consideration. “Before a recommendation on retail prices can be made, the [Health department] takes into consideration market forces like profit. Manufacturers and retailers will still make money because we take into account the percentage of profit they should get," Mr. Padilla said. To be considered in setting price ceilings are the foreign exchange rate, changes in the amortization cost of machinery brought about by currency movements, changes in the cost of labor due to adjustments in the minimum wage, and changes in the cost of transporting or distributing the medicines. A list of essential drugs with ceiling prices will be released in two weeks and is just awaiting the President’s approval, Mr. Padilla said. But he cautioned that prices won’t go down immediately. The Pharmaceutical and Healthcare Association of the Philippines declined to comment yesterday, saying it would come out with a statement once the implementing rules are published. The rules will finally allow the government or any one with a government permit to import cheaper versions of medicines, supposedly to increase competition and bring down prices. Before, drug firms had exclusive rights over their products, and importing these from countries where the prices are lower was a violation of intellectual property rights. "We can now import anything, patented or not," Mr. Padilla said. In emergency cases, the government can break patents and ask a third party to import or manufacture a drug, but the patent owner must be compensated. The rules also cover drug stores: they cannot discriminate and refuse to sell imported drugs "without good and sufficient reasons" such as force majeure. To quell any distrust over the quality of generic drugs, the rules require all generic drugs to carry the statement: “This product has the same therapeutic efficacy as any other generic product of the same name. Signed: BFAD" or “This product has the same therapeutic efficacy as the innovator product of the same generic name." The rules call for a stronger BFAD to effectively monitor the quality of drugs, but Mr. Padilla said a larger budget should be approved by Congress. “We are hopeful that the bicameral committee [crafting the national budget] would approve our budget so the BFAD can be strengthened. [The BFAD] needs more manpower because now their duties are multiplied by three or four," Mr. Padilla said. - E. N. J. David, BusinessWorld