By Gillian M. Cortez

ERLINDA ANTONIO (not her real name), 57, commutes for two hours and waits in line to buy medicines for her benign breast tumor at the Philippine General Hospital in Manila, where drugs are sold for a fraction of their cost.

“It’s far from home but it’s cheaper here,” the Makati City resident said in an interview while waiting for her turn at the public drug store.

Drug prices in the Philippines are the second-most expensive in Southeast Asia, according to global health insurer Mercer Marsh Benefits in a 2019 report. Medicine prices rose 13.7% last year, it said.

President Rodrigo R. Duterte signed an order last month putting price controls on at least 86 drug molecules or 133 drug formulas.

Executive Order 104 covers all public and private retail outlets including drugstores, hospitals and hospital pharmacies, health maintenance organizations, convenience stores and supermarkets.

The order also regulates wholesale drug prices and covers all manufacturers, wholesalers, traders and distributors.

“No public or private entity shall be allowed to sell, reimburse, or demand from the public or patients payment in an amount higher than the maximum retail price or maximum wholesale price, as the case may be,” according to the directive.

Mr. Duterte’s order followed consultations between the Health department and pharmaceutical companies, medical professionals and patient’s groups.

Local health authorities have said medicine prices in the Philippines are unfairly high, and research and development won’t justify it.

On a global scale, the lack of transparency of companies in drug pricing has become a concern not only of governments but also of the World Health Organization (WHO).

“It is unacceptable that a country like the Philippines, which is not even a high-income country, will have medicines as expensive as those in European countries,” Anna Melissa S. Guerrero, head of the Health department’s Pharmaceutical Division, said at a briefing this month.

Proponents say the price cap has been long overdue, noting that a law mandating cheaper medicines had been in place since 2008. The rules enforcing the law were released four years later, effectively creating the Drug Price Advisory Council.

Then President Gloria Macapagal-Arroyo signed in 2009 an order putting a price cap on five medicines and 21 drug formulas, including antibiotics and those against hypertension, high cholesterol and cancer.

Mr. Duterte’s order expands that by also covering medicines for pain, the immune system, asthma, chronic pulmonary diseases, blood clots, vomiting, psoriasis, seborrhea, dry skin and depression.

Also covered are drugs for iron overload, growth hormone inhibitors, antivirals, mucolytic, intravenous nutritional products, phosphate binders and surfactants.

Health Secretary Francisco T. Duque III said at a briefing a day after the executive order was released that the drug price cap could ease the burden on nine of 10 Filipinos who buy medicines out of their own pockets.

But the Pharmaceutical and Healthcare Association of the Philippines (PHAP) warned that the price control would not benefit patients because it will distort prices and lead to even higher retail prices.

“The price distortion stems from the DoH formula that sets very low prices at the manufacturers’ level and yet mandates retailers to impose as much as 45% mark-up which, at present, generally does not reach that level, particularly with most outlets,” PHAP said in a statement.

The proposed scheme would, therefore, lead to either a price freeze or even higher drug prices at the patient level.

“This is like squeezing rice farmers but mandating retail prices to go up. The result is the farmers will not plant, and there will be a shortage. It will be the same with us,” PHAP Executive Director Teodoro B. Padilla said.

In a separate interview, Mr. Padilla noted that under the Universal Health Care Act of 2019, the government must subsidize patients’ medicine expenses. That could cost the state trillions of pesos, he added.

In lieu of a price cap, the local drug industry is batting for bulk buying and negotiations to keep prices down.

PHAP said the government should instead pool drug procurement and sell medicines in state hospitals.

Mr. Padilla said the price control imposed by Ms. Arroyo in 2009 had led to job losses after at least one drug maker left the country. He added that industry growth had slowed significantly and did not recover until a decade later.

The drug association noted that since drug makers cannot sell at a loss, the country will have to import medicine, which could be costlier.

“Some manufacturers might also have to review their operations here,” Mr. Padilla said after the price ceilings were announced.

“Price controls in pharmaceuticals do not work in normal times and only lead to market inefficiencies, and the best proof is that many countries, like China, which tried price controls and other interventions, went back to free-market solutions for medicines,” he said.

Mr. Padilla said the industry is wrongly accused of pricing too high and earning too much profit, adding that local prices are at par with regional peers.

Fitch Solutions Macro Research last month said the price controls would be positive for the market in the long term but was likely to threaten the operations of multinational drug makers, whose business models are based on expensive medicines under patent protection.

The price controls could also restrict the growth of the pharmaceutical market in the short term, it added.

“Pressure on pharmaceutical prices will continue to threaten the operations of multinational drug makers in the Philippines,” Fitch Solutions said in a report.

“The introduction of a maximum retail price scheme will exacerbate a tough environment, with price controls being applied at all stages of the supply chain,” it added.

US researchers in 2008 said imposing European-style price controls on prescription drugs there would result in modest cost savings that would be more than offset by shortened life spans as the pace of drug innovation slows.

Mr. Duterte probably wanted to balance the interests of both consumers and the pharmaceutical industry in his decision to impose price controls, Ramon C. Casiple, executive director of the Institute for Political and Electoral Reform, said by telephone. “It was probably a win-win solution.”