IHS Global Insight Perspective | |
Significance | Big pharmaceutical companies proposed the voluntary price cuts of about 80 of their drugs in the Philippines to meet the deadline given by the president to respond to the DoH's suggested price ceiling on 22 essential drugs. |
Implications | The multinationals are hoping to halt or postpone the imposition of strict price control of their widely prescribed drugs through the said proposal. |
Outlook | Whether the proposed voluntary price cut is approved or not, the multinational drug makers will see their sales and revenues reduced in the Philippines through the country's Cheaper Medicines Law. |
Some 50 multinational drug majors, under the Pharmaceutical and Healthcare Association of the Philippines (PHAP), proposed to voluntarily bring down the prices of over 80 of their drugs by around 50% in the Philippines on Saturday (18 July), the deadline given by President Gloria Macapagal-Arroyo for them to respond to the price cut of 22 essential drugs. Cardiovascular, diabetes and cancer treatments are among the therapeutic areas covered by the drugs proposed to undergo price cuts. PHAP's executive director noted that the proposed price cut will reduce sales by 40-50%, however, it could be welcome if the sales volume can be driven up by this move.
The drug firms' proposal of voluntary price cuts will be submitted to President Arroyo by the Department of Health (DoH) for further approval.
Big Pharmas Aim to Ease MRP Imposition by the Proposal
With the proposal of voluntary drug-price reductions, Big Pharma are in a bid to halt the government's action of imposing maximum retail price (MRP) limits for 22 essential drugs as proposed by the DoH in June (see Philippines: 11 June 2009: Philippine Department of Health Announces Ceiling Price on 22 Essential Drugs). The DoH proposal of MRP imposition, as one of the last resorts of measures related to the country's Cheaper Medicines Law, has sparked strong opposition from multinational drug makers.
On 8 July, President Arroyo held a meeting with representatives of major pharma firms operating in the country, following which she gave the companies a ten-day period to come up with a proposal on how to voluntarily lower drug prices.
Outlook and Implications
Although the final approval is yet to be granted by the President, it is likely that the multinational drug companies' voluntary move will help to ease up the urgency of an imminent imposition of price ceilings for their drugs. For the pharmaceutical firms, the halt or at least delay of such a ruling will earn them time with less negative impact on the sales of their widely prescribed medicines such as Norvasc (amlodipine besylate; Pfizer, U.S.), Plavix (clopidogrel bisulphate; Sanofi-Aventis; France), Lipitor (atorvastatin; Pfizer) and Diamicron (gliclazide; Servier, France). Nevertheless, the proposed price cut, if approved by the president, will still see the companies suffer reduced revenue and profit in the Philippines' market, which might not be fully made up by the increase in prescription volume.
On the other hand, the Philippines' government is facing many differing interests through the decision over this one ruling—the mission of making more medicines affordable for patients, the voices of large pharmaceutical companies and their potential investments, as well as the forthcoming general election next year.