Monday, 3 August 2009

Philippines - Drug Price Cuts, Pfizer a Prized Scalp in this New Order?

Despite desperate manoeuvring - which included allegations of Pfizer attempting to bribe the Department of Health (DoH) as a delay tactic - the government in July 2009 imposed price controls on pharmaceuticals for the first time since the 1970s.

As it stands, the multinationals, who have long controlled much of the Philippines market, have been dealt a severe blow, and look set to lose more ground, as the government has expressed its intention to cut even more prices in the future.

Philippines president Gloria Arroyo, on 27th July 2009, signed an executive order to slash the prices of five essential medicines by 50% effective 15th August 2009. The prices of other medicines, part of the 22 essential medicines by the government, were voluntarily cut before the deadline by manufacturers.

Pharmaceutical companies were given the opportunity to voluntarily reduce prices for the said drugs prior to that and most did reduce their prices. With the deadline looming, Pfizer instead tried to offer the Health Secretary Francisco Duque five million “discount cards” reportedly worth around P100 million (US$2 million) to delay the enforcement of the Cheaper Medicines Law.

The Department of Health perceived this as a bribe, although Pfizer have denied any wrongdoing, saying it was part of the company’s “continuing commitment to expand access to its high quality, safe medicines nationwide”. In a country with a population around 95 million, mainly poor people, the effectiveness of five million, one-off discount cards was questioned by Senate president Juan Ponce Enrile.

The Cheaper Medicines Law, or the Universally Accessible Cheaper and Quality Medicines Act of 2008, was approved in June 2008, but this is the first time that it has been enforced by the president. Allegations of corruption in the Philippines political landscape is not something new, but Pfizer probably miscalculated in trying to offer the discount cards to Health Secretary Francisco Duque, one of the stronger advocates of the Cheaper Medicines Law.

President Arroyo’s time in office has not been without controversy, notwithstanding allegations of corruption and election rigging, and her popularity has suffered especially with the poor majority of the population. The enforcement of reducing prices of drugs by 50% was part of her early promise to voters, and is only now being implemented. Populist politics some might say, but industry players are gearing up for the challenges and opportunities that lie in this largely untapped market.

Further reading - An in-depth analysis of the pharmaceutical market in the Philippines, including some background information on pricing, is available from Espicom: The Pharmaceutical Market: Philippines (published June 2009)

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