Industry group warns: medicine price caps unsustainable, may lead to product withdrawals

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Pharmaceutical and Healthcare Association of the Philippines executive director Teodoro Padilla

Metro Manila (CNN Philippines, February 28) — An industry group warned that President Rodrigo Duterte's new order setting price caps on medicines could lead to a pullout of essential drugs, as global manufacturers avoid selling the goods at a loss.

Teodoro Padilla, executive director of the Pharmaceutical and Healthcare Association of the Philippines, said the recently-signed Executive Order 104 could do more harm than good for Filipinos needing a constant supply of medicines for their ailments.

"Right now, most of the medicines are patented. If there is going to be a price cap... we're not sure if we can sustain continued availability because there are costs in terms of developing these medicines which have yet been fully recovered worldwide," Padilla told CNN Philippines' Business Roundup. "A company might decide to either scale down operations or withdraw a product altogether."

The order sets price ceilings on either or both the retail prices or wholesale prices of 86 drug molecules or 133 drug formulas, in keeping with the Cheaper Medicines Act. Among the medicines covered are those for the treatment of hypertension, diabetes, cancer, asthma, and antidepressants, to name a few. The association earlier proposed to trim the retail price of some medicines by 50 to 75 percent in lieu of a government-mandated price cap.

Padilla said global pharmaceutical companies need to recover the cost of developing, producing, and distributing essential medicines, which could turn them away from the Philippines given the new rule.

"For those who actually need recovery, it may not seem tenable to continue... The sustainability of the executive order is something that we ask the government to review at some point in time because we want to make sure patients have access to these innovating, life-saving medicines," Padilla added. "If it comes to a point when it's very difficult to sell these medicines at a price below cost, then we may not see it altogether."

He said the Philippines is currently a laggard in terms of access to new medicines, pointing out that there have only been 20 new drugs introduced locally out of over 300 developed abroad in recent years.

Instead of price caps, Padilla proposed that private drug firms partner with the government for "pooled procurement," or buying medicines in bulk to be able to bargain with suppliers and ensure steady supply. He added that this would also do away with expired medicines in the warehouses of the Department of Health.