Call for sound economic policies to improve medicines access

The Foundation for Economic Freedom (FEF) called on the government to consider a more market-oriented, competition-based, and economically sound approach to improving access to medicines in the country, and lowering medicine out-of-pocket health expenditures of Filipinos.

FEF said that the Universally Accessible Cheaper and Quality Medicines Act of 2008 recognizes effective competition policy as the primary instrument in ensuring access to affordable quality drugs and medicines for all.

“Since its enactment, competition in the pharmaceutical industry has been fierce, providing options to patients available at a wide variety of prices. A 2017 study by Dr. Ramon Clarete and Dr. Gilbert Llanto found that competition has effectively reduced medicine prices, with the influx of generic medicines driving originators to lower their prices,” the FEF noted.

It added that the Universal Health Care (UHC) Act and the National Integrated Cancer Control Act (NICCA) laid out economically sound policies aimed at improving access to medicines.

“Pooled procurement, framework contracting, multi-year obligations, and central price negotiations create economies of scale and lowers transaction costs, putting the government in a better position to negotiate medicine prices. Competition among suppliers/bidders brings prices further down. Outpatient drug benefit packages will reduce out-of-pocket spending on medicines,” FEF added.

According to the FEF, this is the approach used by members of the Organization for Economic Co-operation and Development (OECD) — including Australia, Canada, and the United Kingdom — to enhance competition and fully implement UHC as strategies to improve access to medicines. The advocacy group pointed out as well that non-OECD countries such as Thailand and China are successfully implementing such mechanisms. Thailand maximizes the benefits from pooled procurement while price negotiations on innovative medicines have expanded access in China. For the latter, it led to significant reduction in prices of up to 71% for cancer medicines.

“Price capping — its expansion and the creation of a price board — is not the answer to making medicines affordable and accessible to the poor. Several studies have shown that such measure had little effect on socioeconomic classes D and E. Price capping is anti-competitive as it distorts the market, leading to price convergence among competitors,” the FEF stressed.

FEF proposed the following measures that the government may consider pursuing:

• Institutionalize pooled procurement and price negotiations as the primary measures to reduce prices of medicines. The experience with price reductions for oncology medicines trastuzumab and basiliximab of up to 50% and 74%, respectively, attests that the system works.

• Implement UHC in phases by mapping primary care providers with priority groups first. The SAP list, Senior Citizens, and Persons with Disabilities are excellent starting points for UHC rollout.

• Develop outpatient drug benefit packages, and expand its reach through accreditation of private drugstores.

• Increase investments for health.

• Provide special access schemes in partnership with the private sector.

• Enable greater participation of the Philippine Competition Commission to review whether price capping policies adversely affect market competition.

“We believe that we can do more for Filipino patients without the negative impact of price regulation. With market-oriented, competition-based, and economically sound policies, we can improve medicines access in the country,” the FEF stated.

As a matter of sound economic policy, the imposition of price control is retrogressive and may discourage highly needed investments critical to economic recovery. Price regulation disincentivizes innovation, and serves as a barrier to the entry of new, lifesaving medicines in the country. There are more sustainable and viable ways of reducing medicine prices in the country, which FEF highlighted in its position statement.

As FEF rightly noted, the measures provided in the UHC Act and NICCA such as pooled procurement, price negotiations, expanded medicine reimbursements, coupled with greater investments in health, are exactly what other countries with UHC in place implement to bring medicine prices down.

Partnership with private sector initiatives is also embedded in these laws, providing a holistic approach to improving healthcare in the country.  The pharmaceutical industry operating in the Philippines looks forward to closely collaborating with the government and other stakeholders in finding sustainable ways to improve Filipinos’ access to medicines especially in this time of the pandemic and silent epidemics.

Teodoro B. Padilla is the executive director of the Pharmaceutical and Healthcare Association of the Philippines (PHAP). PHAP represents the biopharmaceutical medicines and vaccines industry in the country. Its Members are in the forefront of research and development efforts for COVID-19 and other diseases that affect Filipinos.