Local drug firms seek limited importation

Local pharmaceutical companies want government to limit its importation of raw materials for pharmaceutical products, saying they will not be able to compete if the Department of Health starts selling cheap imported medicines.

An official of the Chamber of Filipino Drug Manufacturers (CFDM) told reporters that local pharmaceutical companies would be the first to succumb if the government proceeds with its plan to import from India and other cheap sources of off-patent drugs.

The Department of Trade and Industry (DTI) has already sent a team to India to check on prices of medicines for a possible parallel importation of off-patent pharmaceutical products that could be made available to the public at low prices.

This is part of the government's strategy to force big foreign-owned pharmaceutical companies to reduce the prices of their products by providing competition at the retail level.

Multinational drug companies account for 70 percent of the market while local pharmaceutical companies account for only 30 percent, selling mostly to small drug stores and government agencies.

According to the source, however, local pharmaceutical firms would be directly affected by this move since government agencies such as the Department of Health and the Department of Social Welfare and Development account for a huge part of the market left over by foreign drug companies.

The source said the government should import raw materials instead and do the processing in the country. At the resulting price level, the source said local companies would be able to compete although they would still have to bring down prices.

The source said both local and foreign drug manufacturers import cheap raw materials from India and process these for sale in the local market. It was further revealed that foreign drug companies even export some of these products as genetics which are later exported back into the Philippines as branded products sold in the market with huge mark-ups.

Initial DTI reports indicate that pharmaceuticals were at least 10 times cheaper in India although officials are still finding out where the price differential was coming from and whether product quality is affected by the low prices.

Government is also studying the Thai model which involves the creation of a government-owned procurement organization devoted entirely to pharmaceutical and other medical products.

Government has been considering a range of policies to bring down the cost of medicines from the imposition of price controls to importation from cheaper sources.

This followed the meeting between Philippine officials and representatives from US pharmaceutical companies who protested a proposed administrative order that would effectively regulate the sale of branded pharmaceutical products by first limiting and then ultimately phasing out the use of brand names.

The AO requires pharmaceutical companies to produce and market a certain percentage of specific drugs as generics. Only the remaining portion will be allowed for sale as branded products.

Aside from brand restrictions, Trade and Industry Secretary Manuel Roxas II said there are other extreme options available to the government which may be considered if pharmaceutical companies refuse to reduce their exorbitant prices.