Holistic approach needed (1)

There’s a plan to impose price control on some drugs under the Cheaper Medicines Act. The first and the last time this was done was in 2009. (Mind you, I’m not sure how we can call them drugs anymore seeing as how opioids and the like have captured the word. What does a drugstore sell now?)

The maximum drug retail price (MDRP) provision of the Cheaper Medicines Act can mandate exactly that: cheaper medicines. It would put a set price on some essential drugs to make them cheaper for everyone.

But believe it or not, this is not a good idea. I know it sounds good, but it’s based on a misunderstanding of the market. The poor who are supposedly the ones to benefit can’t afford medicines at any price — the medicines have to be free for them. For the middle class, most of the controlled medicines have much cheaper generics available. Some 60 percent of the market is now generics, indicating that consumers have made the shift voluntarily, without any law forcing them to do so. And most of the medicines being considered for control have several brands competing for the business.

A study on the effect of the MDRP imposed in 2009 was conducted by the Department of Health and was titled “The Impact of Cheaper Medicines Act (CMA) on Households in Metro Manila: A Qualitative Study.” Principally written by Dr. Eleonara de Guzman, it said: “The CMA does not seem to have resulted in significantly reducing the financial burden of medicine costs among households. Respondents from all socioeconomic classes claimed that their expenditures for medicines were still heavy. The law has had little effect on low-income respondents (Class DE) who rarely buy branded medicines, but avail [themselves] of free medicines from government health centers or purchase low-cost generics.”

So it did not seem to have had the desired effect. Another round of price controls can be expected to be similarly ineffective. And experience elsewhere would support this.

It also cost the pharmaceutical sector a lot of money, and you should care about this. If you know anyone dying of cancer, you’d give anything to save them. But you can’t, because the medicines don’t exist. Research-based pharmaceutical companies are investing huge amounts of money to find cures, and gradually getting somewhere. That money has to come from somewhere. It comes from us less ill people, worldwide.

Cut the funds, and you cut the research. And it’s no good arguing that Filipinos shouldn’t pay for it because they’re not all that well-paid. Well, what about Indonesians, or South Africans, or a hundred other developing countries? If you treat the Philippines as a special case, on what grounds? We must all contribute. We must let the market determine the price, not the government.

If you cause companies losses in selling their products, they won’t be able to provide them. Companies can’t operate for very long losing money. A better solution that could satisfy all participants—the government, the pharmaceutical sector, the patients—would be for the government to buy in bulk. Thus, companies would be able to supply medicines at very favorable discounted prices. The government could then give them for free or at lower prices under the universal healthcare program to everyone in public hospitals, rural health units and barangay health stations, and suppliers could be allowed to sell medicines at market prices to nongovernment health entities.

This is one reason it’s so crucial that Congress pass all five packages of the very well-conceived tax reforms. Overall it can raise an additional P400 billion, about 20 percent (or P80 billion) of which would go to health. Mr. Duterte’s idea of free health services, including medicines, can be attained. So we have to encourage Congress to agree, and give the government those revenues.

The World Health Organization considers six building blocks essential to a health system: leadership (political will)/governance; health financing; information and research; service delivery; health human resources; and medicines and health technology. It believes an effective health system cannot just focus on one or a few of these building blocks without considering and including the impact of the others. The DOH is doing this—an holistic approach to the problem. This is the right way to go. (Concluded next week)

E-mail: wallace_likeitis@wbf.ph. Previous columns: www.wallacebusinessforum.com