Philippines' Government Launches Second Wave of Drug Price Cuts within Six Months

The Philippines' government has launched a second round of its drug price cut push in six months as it asked pharmaceutical companies to voluntarily slash the prices of their life-saving drugs by half, according to a report by the Wall Street Journal. The country's Health Undersecretary Alexander Padilla issued a request letter to the Pharmaceutical Healthcare Association of the Philippines (PHAP), the industrial association of over 50 multinational drug majors operating in the country, earlier this month, asking multinationals to submit their price slash proposals on about 20 "top-selling and most expensive" drugs. Government officials revealed that some drug makers have already submitted proposed voluntary price reductions on their products, however, there have been no further details disclosed at this stage. The price slash push of the government has raised concerns among pharmaceutical companies. Executive president of the Philippines pharmaceutical industry group, Reiner Gloor, noted that the industry has seen 600 jobs axed as a result of a similar price cut ruling executed in August 2009. The industry is trying to solve the issue with dialogue with the authorities, added Reiner Gloor.

Second Round of Price Axes in Six Months

The Philippines government's first wave of price slashes was put into place in August 2009, which peaked with the president's executive order No. 821 ruling the price reduction of five drugs by 50% (see Philippines: 29 July 2009: Philippines' President Signs Executive Order to Impose MRP on Five Drugs). That wave of drug price control began with the imposition of maximum retail price (MRP) limits for 22 essential drugs proposed by the Department of Health (DoH) in June (see Philippines: 11 June 2009: Philippine Department of Health Announces Ceiling Price on 22 Essential Drugs). Multinational companies responded by offering voluntary reductions on the prices of over 80 selected drugs, which, however, didn't stop their best-selling drugs such as drug giant Pfizer's cholesterol-lowering blockbuster Lipitor and antihypertensive Norvasc, from the fate of a price cut.

Outlook and Implications

The latest move is one more follow-on action of the Philippine government to implement its Cheaper Medicine Law, RA 9502, which came into effect in November 2008. In a bid to bring down the high prices of drugs, especially expensive patented products from multinational drug makers, the ruling includes a series of heavy-handed measures for drug price control including:

• Permitting parallel importation so that cheaper drugs from other countries can be brought in to force down the prices of drugs sold in the Philippines;
• The imposition of a mandatory generics prescribing rule, which requests the public doctors and health workers should only put generic names of the drugs on the prescriptions while leaving out the brand names. Private doctors working in government facilities should also follow this rule;
• To allow the President to approve price ceilings proposed by the Health Secretary to certain drugs in the interest of the public health need.