Maximum Drug Retail Price (MDRP) updates

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The Aftershocks of MDRP price control
Source: http://newsinfo.inquirer.net/inquirerhe ... compliance

Retrenchment

Retrenchments by drug firms are the initial consequences of the price cuts for over-the-counter medicines, according to officials and sales representatives of pharmaceutical firms.

Drug manufacturing giant Sanofi-Aventis announced this month that it was reducing its sales force by about 15 percent, even before drug firms had voluntarily slashed prices to comply with the cheaper medicines law, said a former official of the Sanofi-Aventis Employees Union.

He said the firm cut its sales force by 40 people in December 2008, and was expected to terminate 30 more this month.

Other multinational drug firms feeling the impact of the price cuts have merged operations or dissolved Philippine-based firms, said another official working for pharmaceutical firm Merck-Sharpe & Dohme Ltd. (MSD).

Conventions

The Sanofi source said the bigger impact on clients was the drastic cut in funds that used to be spent on medical conventions or on meals of doctor-clients.

“The truth is our job is to sponsor or promote the brands, not to sell them. That’s why we sponsor conventions and pamper some doctors. But I learned our budget now has gone down to zero,” the source said.

“There is a direct correlation between the cuts and the MRP (or the maximum retail price imposed on selected medicines),” the source added.

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Small pharma firms not happy with Maximum Drug Retail Price
By Marianne V. Go (The Philippine Star) Updated August 17, 2009
http://www.philstar.com/Article.aspx?ar ... egoryId=66


MANILA, Philippines - The implementation of the Maximum Drug Retail Price (MDRP) provision of the Cheaper Medicines Act may have the unexpected consequences of once again favoring multinational pharmaceutical companies and squeezing the smaller domestic pharma firms.

This was the wary assessment of Tomas Agana III, president and chief executive officer of Pharex Health Corp., a wholly-owned subsidiary of Pascual Laboratories Inc.

In a press conference, Agana admitted that local drug manufacturers are also against the MDRP which went into effect over the weekend.

Implementation of the MDRP, Agana explained, would effectively cut the price advantage that local pharma firms like Pharex have been able to offer consumers.

Pharex, for one has been positioning itself as a source of affordable, quality medicines.

With the implementation of the MDRP, local drug firms like Pharex, Agana said, would now be subject to “price pressure”.

Unfortunately, Agana said, local drug firms do not have much leeway to similarly lower their prices.

Pharex, Agana assured, is still confident of achieving its 25 percent sales growth target of P1.5 billion this year.

Pascual Laboratories and Pharex use quality raw materials sourced from the open, global market, doing away with the practice of transfer pricing done by multinational pharmaceuticals companies.

Pharex is then able to lower its prices by almost 50 percent.

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Private Hospitals Association may seek injunction vs medicine price cut
By Sheila Crisostomo / The Philippine Star / August 25, 2009
http://www.philstar.com/Article.aspx?ar ... egoryId=63

MANILA, Philippines - The Private Hospitals Association of the Philippines (PHAP) is studying the possibility of seeking an injunction against the price cut imposed by the government against 43 types of medicine.

PHAP president Dr. Rustico Jimenez said many hospitals have already felt the impact of the price adjustment less than two months after its implementation had begun.

“Many hospitals have already lost a lot of money. I won’t be surprised if some of them would go bankrupt because of the medicine price cut, especially since drug companies have not given them any assurance of rebates,” he said in a telephone interview.

PHAP is thinking of filing a petition with the court for temporary restraining order and injunction against Executive Order 821 or the maximum drug retail price (MDRP) and the government-mediated access (GMA) price or voluntary price reduction.

Jimenez noted that until now, many hospital pharmacies have not secured written assurances from drug companies that they would adjust their prices and give rebates.

“It’s all talk. But until now, many hospitals have already implemented the price cut although they are not certain if the drug companies will be the ones to shoulder the price difference,” he added.

He maintained the government should reconsider its action and give drug stores some six months to dispose of the supplies that they acquired from pharmaceutical firms prior to the signing of EO 821 last July 27.

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8 drugstores probed for violating price cut order
By Sheila Crisostomo
The Philippine Star / News / Headlines / August 28, 2009
http://www.philstar.com/Article.aspx?ar ... egoryId=63



MANILA, Philippines - The Food and Drug Administration (FDA) is now investigating eight drugstores for violating the mandatory price cut implemented last Aug. 15, Health Secretary Francisco Duque III said yesterday.

Four of these drugstores have been served their cease-and-desist order personally by Duque to force them to sell concerned products at the discounted prices.

They are Cheer-up Drugstore, Stardust Drug and Medical Supplies Corp. and Sunburst Drug Corp., all located along Rizal Ave. in Sta. Cruz, Manila, just a stone’s throw away from the Department of Health (DOH) central office, and Southstar Drug along Matalino Street in Diliman, Quezon City.

“We have to observe due process. They have 72 hours to explain why they should not be sanctioned for violating the law,” Duque told DOH reporters.

The health chief had refused to identify the four other drugstores as they have not been served their cease-and-desist order.

Last Aug. 15, the government began implementing the maximum drug retail price (MDRP) or the 50-percent mandatory price cut on medicine and the government-mediated access price (GMAP) or the voluntary price reduction of 10 to 50 percent among drugstores with automated inventory systems.

Those with manual system have until Sept. 15 to comply.

But according to Duque, drug outlets within 500 meters from hospitals should have started implementing the price discount last Aug. 15 whether their inventory system is automatic or not.

FDA records showed Stardust was found to have violated the GMAP on two drugs, while Cheer-up failed to implement the MDRP on eight products, Southstar on one, and Sunburst on two products.

Duque said that violators of GMAP face a fine of P1,000, suspension of product registration and revocation of license to operate under the Consumer’s Act.

Non-compliance with MDRP is punishable by an administrative fine of P50,000 to P5 million, suspension of product registration and revocation of license to operate under Republic Act 9502 or the Universally Accessible Cheaper Medicine Act.

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A brooding volcano
CTALK By Cito Beltran (The Philippine Star) September 14, 2009
Source: http://www.philstar.com/Article.aspx?ar ... egoryId=64



Mayon Volcano is the perfect analogy for the brooding discontent among many sectors involved in the manufacture, distribution and sale of medicines in the Philippines.

I make the analogy between Mayon Volcano and all the people directly or indirectly involved in the production and sale of medicines because I recently returned from Naga City where I had a chance conversation with leaders of the Drug Stores Association of the Philippines (DSAP). Just like Mayon Volcano, these ladies were a very unhappy and grumbling lot.

For sometime now, I have quietly recorded information gathered from many sectors involved in the “medicine” business and I guess it’s about time people got an update as to how and what the “Cheaper Medicines Act” and the Maximum Retail Price or MRP on medicines has achieved.

First and foremost, we now realize that “medicines” in the Philippines is not the sole territory or concern of the Pharmaceutical Industry. Legislators and government concentrated on controlling pharmaceutical companies but disregarded the impact of the law on companies that distribute medicines, wholesalers, retailers, hospitals.

Everybody wanted cheaper medicines but had no idea what impact MRP would have on car dealers, hotels, restaurants, airlines, car limo services, events organizers, production companies, artists and ad agencies.

The second thing the legislators and DOH officials may have ignored were the many complications concerning rebates on price differences, Senior Citizen discounts, impact on the generics industry, impact on tax collections and collateral incomes of related sectors. Most of them did not even believe that their action would actually result in retrenchments, which has started to happen.

My discovery started when I sincerely tried to get all the reasons why medicines in the Philippines were expensive. The answers I got from everybody were: cost of electricity, highly unionized labor which meant higher labor costs, taxes, distribution, and government policies that restricted more efficient or economical forms of promoting product information.

That’s when a very feisty lady told me to my face that I did not really know enough. It was right under my nose, but we all tend to see things that are at a distance. Bordering on seething frustration the lady blurted out: We have to give each employee a car! We have to provide samples for every doctor!

In her case, the company she works for has about 75 to a 100 people who call on doctors everyday. Those 75 to 100 cars don’t run on water or air and they are not self-healing vehicles, so costs pile up. All that has to be factored in to their costs.

As an incentive most company employees have the buy back option on their brand new car after four or five years. Because of the 50 percent forced reduction on prices and the announcement that a second wave or list for reduction will be due in about two months, many pharmaceutical companies have lengthened the waiting period to buy back from four years to six years.

This means that car dealers who could predict annual fleet sales can now predict an equivalent loss in sales like the Pharmaceuticals will at year-end.

Because the BFAD prohibits drug companies from advertising (except branded generics) companies must invest on product launches, round table presentations, scientific seminars and the likes. This has been good for hotels, restaurants and airlines that have serviced many of the requirements of drug companies year-round.

But because of the MRP, the disposable income of drug companies has evaporated and so have the sales of many hotels nationwide as well as the restaurants and airlines that earn millions of pesos from the business activity of Pharmaceutical companies.

This week several event organizers who handled “segments” at the DSAP convention lamented that most of the Pharmaceutical companies have scrapped their events for the year and are now concentrating on intimate or man-to-man presentations.

As a result, actors, actresses, singers, bands and event hosts have lost a major source of income. Writers, video producers and production companies have also started to lose at least 30 to 40 percent of their regular income due to the Pharmaceutical industry cut backs.

Along the mainstream of business, one pharmaceutical company has retrenched 70 employees. Soon to follow is another company who will disengage with a distributor who has 150 employees specially assigned to the foreign company. I am told that a third company is just waiting to follow with their announcement.

While the Pharmaceutical companies have stayed low while licking their wounds, it seems that Hospital organizations and the Drug Store Association have decided to go to court due to the financial injury caused by the Cheaper medicines Act, the MRP and the insistence of the DOH that drug stores should still give a 20 percent Senior Citizen discount in spite of the 50 percent forced reduction or MRP.

A DSAP member asked “ how can we do that? We only have an average mark up of 5 to 10 percent on medicines. Then the government imposed a 50 percent reduction on the product price, now they want us to add another 20 percent discount for seniors. In return we get a tax deduction of 30 percent in exchange for a 70 percent loss!”

Unfortunately, reports indicate that the MRP only benefitted the rich because they were the only ones who bought the expensive medicines. The majority simply don’t have the cash or won’t spend the cash. The problem that many generic companies face is that the forced price reduction on branded medicines now threatens their profitability because customers with money now find branded medicines competitive and attractive.

In the end, the Cheaper Medicines Act and the MRP will certainly create competition between Branded Medicines and Branded Generics. Unfortunately that competition will also kill the small generics companies. MRP has certainly brought us cheaper medicines…. along with unemployment and business losses.

In the words of a famous government official: “We’ll let the next administration worry about that”.

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MDRP: 30 days after
By SPGamil / De Luxe Drugstore, Daraga, Albay


Health Secretary Francisco T. Duque III conducting a spot visit on Accuhealth Pharmacy to check if such establishment is complying with the September 15 deadline of small drug stores to implement the government’s Maximum Drug Retail Price program. Duque stressed that all drug stores, big or small, should now comply or face sanction. http://www.doh.gov.ph/node/2420

Smaller drugstores are expected (and mandated) to comply with the MDRP by Sept 15, 2009. The DOH is also expecting that all drugstores (small, medium and big) have already ironed out the issue of "rebates" of the Price differentials as an effect of the EO, by this time.

The EO is very clear that "Price differentials as an effect of this Order shall be shouldered by the corresponding manufacturer/trader/importer." However, as of this writing, I have NOT RECEIVED any amount that would represent as "rebate" or reimbursement for the price differentials (How about you? Have you received your “check rebate”?). Since my one and only pharmacy is located within 500 meters from the provincial hospital, I have been absorbing the 50% price reduction/differential from my own pocket since August 15, 2009.

It is very disappointing to note that DOH is vigorously pressuring the retail drugstore sector to comply with MDRP but it seemed that they are half-hearted in running after non-compliant drug companies/distributors on the issue of the "price differential rebate" (which is likewise a clear violation of the law).

I would also like to emphasize the point that the daily tri-media announcement of DOH that small drugstores are given more time to adjust their prices is actually a DISADVANTAGE to the small drugstores. It is just like telling the people to patronize the giant chain drugstores because it is CHEAPER there!!! It is (in reality) a FREE ADVERTISEMENT!!! With generous support from both the drug companies and the government, I am not wondering why the biggest chain drugstore in the country is the Philippines’ 14th richest!!! (Forbes.com - http://www.forbes.com/lists/2009/86/phi ... _Rank.html )

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DOH MDRP Review Forum, arranged by the Philippine College of Physicians - Quezon City, September 15, 2009

Source: http://www.y101fm.com/index.php?option= ... up-losses-

Issue 1: Dr. Rustico Jimenez, president of the Private Hospitals Association of the Philippines (PrHAP), said member hospitals had jacked up prices of their services to prevent them from going bankrupt because of complying with the government’s (MDRP) policy.

Health Secretary Francisco Duque III reply:

“If you really stand by your claim that you will go bankrupt because of the 50-percent price reduction, show us your financial statement (FS). I am a health financier. I will go over your FS one by one,” When Duque said he would challenge the hospitals to open their books, some members of the audience applauded. Jimenez did not make a response.

Duque, who was chair of Philippine Health Insurance Corp. (PhilHealth) before he became health secretary, pointed out that private hospitals had other “profit centers” aside from their pharmacies. “You get reimbursed by PhilHealth. PhilHealth increased your OR (operating room) fees but we didn’t hear any thank you. You have board and lodging, OR, professional fees and laboratory fees. You have many profit centers. Why don’t you give in when it comes to medicines? Why don’t you join our goal in government to make medicines more affordable, so that our people would see that you are with them and that you’re not just concerned with your interest,” Duque said.

Issue 2: Pharmaceutical companies continued to oppose price regulation, claiming there was already market competition. (Free Market is still their main advocacy.)

Health Secretary Francisco Duque III reply:

Duque said the initial “setback” for drug companies and outlets could be compensated by increased volume in sales since, theoretically more Filipinos should now be able to afford and complete medication like antibiotics.

(Personal comment: To compute if you could be "compensated by increased volume in sales", please click this link: viewtopic.php?f=2&t=149 )

Issue 3: Dr. Ruben Flores, president of the Philippine Hospital Association (PHAP), took the floor to say that his group was supporting the cheaper medicines law. But he said PHAP members were concerned about their financial viability in the long run. “They are in this for business and they have to earn, of course with corporate social responsibility,” said Flores, who is also medical director of the government-run Jose Fabella Memorial Hospital. Flores acknowledged that laboratory fees and pharmacy were the “leading revenue-making centers” in a hospital.

Issue 4: Drugstores representatives, meanwhile, complained of delays in getting rebates from drug companies/distributors. (while small drugstores will not get any rebates at all because they are sourcing their medicines from wholesalers and not directly from drug distributors)

MDRP after a month

A month since the MDRP was first implemented, the Food and Drugs Administration (FDA) has served notice to eight drugstores, most of which are located near hospitals, to explain why they continued to sell medicines at the old prices. But only one, the South Star Drug branch in Matalino Street in Diliman, Quezon City, was recommended by the FDA to be fined the minimum penalty of P50,000. The FDA said South Star did not immediately implement the new prices and was found to have sold the antihypertensive drug amlopidine at the higher price on Aug. 15.

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1 month after, big pharma, drug stores, hospitals assess MDRP
BusinessMirrror / Top News / Friday, 18 September 2009
Written by Sara D. Fabunan / Correspondent
Source: http://www.businessmirror.com.ph/home/t ... -mdrp.html

Significant excerpts from the article:

1. Watsons health business unit director Lyle Joseph Morell told the weekly forum that in the first three weeks of the MRDP implementation, sales volumes have risen by as much as 30 percent to 80 percent, apparently because people are now encouraged to buy their drugs, especially maintenance antihypertensives, known to be among those erratically used by people trying to scrimp.

“If this trend continues, say, if the units double, eventually [we can recoup what we lost from the forgone profit from slashed prices]. Lower prices, but more sales,” he said at the sidelines of the weekly health forum.

2. Philippine Chamber of Pharmaceutical Industries president Edward Isaac said that even just at the start of the implementation of the MDRP, the sales of “generic-generic” and “branded-generic” medicines are increasing, and the only challenge for them is to increase their thrust for them to be able to survive the changes in the industry.

3. Since the start of the implementation, the Pharmaceutical and Healthcare Association of the Philippines (PHAP) said pharmaceutical distributors have been processing the rebates among some 18,000 retailers.

PHAP president Oscar Aragon said in a media roundtable earlier that right from the issuance of the executive order on July 18, they had already conducted inventories among retailers and conductors as a basis for rebates.

4. The head of the Drug Store Association of the Philippines’ national affairs committee, Celia Carlos, lamented the huge loss in their sales and revenues, since small and medium pharmacies usually buy their supply from wholesalers, not from the distributors.

Although she could not give exact estimates of how much the loss is since the MDRP implementation, Carlos said a 50-percent price cut plus the 20-percent discount for senior citizens make it impossible for them to earn any profit, much less survive.

“We’re already suffering as it is; we still haven’t gotten the rebate. Who can survive with 5 to 7-percent? We can’t survive like this. And you can’t insist the 20 percent for the senior citizen. Where is the fairness in that?” she asked.

5. The Private Hospitals Association of the Philippines, meanwhile, said its president, Dr. Rustico Jimenez, is apprehensive that if their pharmacies inside hospitals are being forced to lower their prices by half, their revenue would take a 20-percent to 30-percent hit.

However, Secretary Duque doubted that hospitals would go bankrupt because of the MDRP.

“If the Phap would keep claiming they’ll go bankrupt because of this, then let’s review the financial statements,” Duque said, adding that he is a former health finance officer of PhilHealth, so he should know best.

Jimenez accepted the challenge of Duque on the transparency of the financial statements.

6. Health Undersecretary Alex Padilla, for his part, said there are continuous negotiations between them and the Department of Finance regarding the possible ways to address the problem of the 12-percent VAT, the 50-percent price cut and another 20-percent discount for senior citizens—all of which, the drugstores claim, are being dumped on them.

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Private hospitals to raise fees to recoup losses from drug price cut
By Sheila Crisostomo (The Philippine Star) September 20, 2009
http://www.philstar.com/Article.aspx?ar ... egoryId=63

MANILA, Philippines - Private hospitals will increase their administrative fees to recoup the losses incurred from the medicine price cuts.

Private Hospitals Association of the Philippines (PHAP) president Dr. Rustico Jimenez said this was the consensus of their members during a meeting yesterday in Clark Freeport, Pampanga where they discussed how they could sustain their operations despite the losses.

Jimenez said hospitals would charge a fee every time nurses administer medicine or injection to a patient.

“It was agreed upon that we increase our administrative fees to cover the rebates that drug companies have not yet given us. It’s been a month since many hospital pharmacies have adjusted the prices of some medicine but they have not yet been paid their rebates,” Jimenez told The STAR.

“ But this is only temporary. These services are free and once we recoup our losses, we’ll stop charging our patients. We don’t want to do this but many hospitals would go bankrupt if we don’t do anything,” he added.

PHAP had also asked the Philippine Health Insurance Corp. (Philhealth) to speed up the payment of their reimbursements to cushion the impact of the MDRP and GMAP.

“It usually takes six months for us to be reimbursed for the services that we render to Philhealth members. This must be shortened,” Jimenez said.

(Personal Comment: I believe that DOH should now run after Drug Suppliers who are NOT GIVING the "Price Differential Rebate" because it is a clear violation of MDRP Executive Order. DOH should be fair to every sector of the pharmaceutical industry.)

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DOH: Hospitals to call off service fee hike
GMA News TV / 09/23/2009
Source: http://www.gmanews.tv/story/172930/doh- ... e-fee-hike

Last Sept. 19, 2009 , members of the Private Hospitals Association of the Philippines (PHAP) announced it would enforce higher service fees, supposedly to make up for the losses caused by the 50-percent price slash.

PHAP spokesman Bu Castro indicated that the fee adjustment may last for six months, while member hospitals try to recoup their losses.

Despite government warning against the hike, the PHAP pushed through with the fees adjustment.

The situation, DOH Undersecretary Alexander Padilla said, prompted the DOH to call for a meeting with representatives of private hospitals and of pharmaceutical firms.

After the meeting on Tuesday (Sept 22) with representatives of pharmaceutical firms, many hospitals are rethinking their plan to hike their service fees, a Department of Health official said Wednesday (Sept 23).

In a radio interview, Padilla said that the meeting “clarified" several matters, including rebates that pharmaceutical firms would give to hospitals.

“I think we can resolve this. The representatives of pharmaceutical companies said they would shoulder the discounts and rebates to be given by the hospitals. There may have been lax implementation of the agreement," Padilla said in an interview on dzXL radio.

The rebates stemmed from a 50-percent price slash on at least 21 essential medicines that went into full effect last September 15.

On the other hand, he said the “encouraging" results of Tuesday’s meeting may also turn aside a government plan to have the hospitals open their book of accounts to see if they are really losing because of the medicine price cut.

We are hoping this thing will be resolved soonest through negotiations, and that hospitals would not think of raising their service fees," Padilla added. - GMANews.TV