Cheap medicines bills explained

A few days ago, a front-page story in the Philippine Daily Inquirer reported that foreign pharmaceutical companies in the Philippines have put together a P1-billion lobby fund to kill the cheap medicines bills. I am inclined to believe this report. The local pharmaceutical market, after all, is worth P100 billion a year, 70 percent to 80 percent of it controlled by the foreign drug companies. What’s P1 billion to kill a bill that would drastically reduce their profits?

Look at these facts:

The Philippines ranked second to Japan as having the highest medicine prices in Asia. Filipinos spent for medicines the equivalent of $1 billion a year, from 1997 to 2001, the highest in Asean, notwithstanding that half of the Philippines’ 80 million population have no access to essential medicines. The cost of medicines here is 40 percent to 70 percent higher than in other Asean countries. For Filipinos who have access to medicines, their budget for total health-related expenses (not just medicines) is a measly P2,000 per person per year.

The government has tried to provide the people with cheaper medicines by importing them, through the Philippine International Trading Corp. (PITC). The efforts of the PITC, however, are puny and doesn’t even make a dent on local drug prices. In a P100-billion market, the PITC’s yearly import budget is only P300 million. What’s more, it has few outlets for its drugs. The two biggest drugstore chains in the country, Mercury Drug and Watson’s, refuse to sell medicines imported by the PITC.

How can the multinational drug companies get away with such profiteering? Mainly because of the law on patents and the Intellectual Property Code. These two laws allow pharmaceutical companies exclusive rights to manufacture and sell products they have developed. The multinationals have taken advantage of these laws by pricing their medicines for as much as the market can bear. They can price their products at any level because there is no competition. Any medicine importer, including the government, can be sued by the multinationals that do not like imported drugs to compete with their products.

The Philippines is clearly in the grip of a cartel or oligopoly. The medicine market is controlled by foreign companies who have their own association with plenty of money for propaganda and lobbying. Their products are manufactured here by one or two companies, also foreign-owned. They are distributed by only one foreign company and retailed by two drugstore chains, one of them (Watson’s) foreign-owned.

The Constitution mandates the government to prevent restraints in trade, such as cartels and monopolies, but lawyers say it is difficult to prove the existence of a cartel, hence government exerts no effort to enforce the ban although we have cartels not only in the pharmaceutical industry but also in cement, petroleum products and the power sector. What is obvious to the layman – cartels -- the legal profession refuses to see.

The government has tried to fight back with legislation. The first was the Generics Law wherein doctors are mandated to write the generic names of the medicines they prescribe and the drugstores to carry generic equivalents of branded ones. But many doctors still forget to write the generic names, and the drug companies have mounted a subtle campaign to make people believe that generics are less effective than the branded, and expensive, medicines. On parallel importations, they have a campaign painting imported medicines as “counterfeit,” even if these imported products are genuine ones manufactured by their sister companies.

Congress is counterattacking with two bills, one in the Senate and the other in the House. The Senate passed its version before the 13th Congress adjourned, but the House failed to pass its version for lack of quorum. The bills have been refiled in the present Congress. Their main authors are Sen. Mar Roxas for the Senate bill, and Rep. Ferjenel Biron for the House version.

Kapihan sa Manila invited the two lawmakers to explain the differences between the two bills. Biron was there but Roxas only sent his legal counsel Blas Viterbo. Former Health Secretary Quasi Romualdez and former PITC chief Obet Pagdanganan were also there.

The differences are quite simple. The Biron bill seeks to impose price controls on medicines, while the Roxas bill seeks to amend the Intellectual Property Code.

In a separate interview, Roxas outlined the provisions of his bill:

“1. Disallow another patent for new uses of an existing substance (already patented) so that drug manufacturers can immediately copy off-patent products without fear of lawsuit.

“2. Allow parallel importation and international exhaustion of intellectual property rights for patents. Parallel importation refers to the importation, without the consent of the patent holder, of a patented product that is marketed in another country. International exhaustion refers to the regime where the supply and price of a product is moderated by competition. Both would allow the Philippines to shop around for a quality product with a better price.

“3. Allow the ‘early working doctrine’ to enable generic drug companies to experiment and test generic versions of patented drugs before their patents expire. It will also allow them to produce and sell generic versions of patented drugs upon their patents’ expiration.

“4. Restructure provisions of government use. At present, the government is required to apply for a license before it can use patented medicines or processes for manufacture. The bill does away with this compulsory licensing, making it easier and quicker to respond to public health threats without fear of law suits.”