PHILIPPINES CLOSER TO DRUG PRICE CONTROLS

UNCLAS SECTION 01 OF 02 MANILA 000468 STATE FOR EAP/MTS, EAP/EP, AND EEB/TPP/IPE STATE PASS USTR FOR BWEISEL, RBAE AND KEHLERS STATE ALSO PASS USAID, OPIC TREASURY FOR OASIA USDOC FOR 4430/ITA/MAC USDOC PASS USPTO BANGKOK FOR JENNIFER NESS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: KIPR ETRD EINV ECON RP SUBJECT: PHILIPPINES CLOSER TO DRUG PRICE CONTROLS REF: 08 MANILA 2611 MANILA 00000468 001.4 OF 002 ¶1. (SBU) Summary. The Philippine Department of Health has listed 34 prescription medications that will be subjected to price controls under the Cheaper Medicines Act (reftel) enacted last year. The main impetus for the rapid imposition of price controls came from advocacy groups and non-governmental organizations. Local representatives of international drug companies participated in consultations on maximum retail prices, but warn that some of the controlled prices are lower than the costs of making the drugs, which could force them to withdraw many drugs from the Philippine market. End summary. Health Department Chooses Drugs for Price Limits -------------- --- ¶2. (SBU) With the passage last year of the Cheaper Quality Affordable Medicines Act, and its implementing rules and regulations now in effect, the Philippine Department of Health has begun listing drugs and medicines subject to its price controls. According to the Philippine Health Department, the meeting of any one of four grounds may subject a drug to price controls. The first ground is that the drug is at least four times as expensive in the Philippines as in other Association of Southeast Asian Nations (ASEAN) countries. Second, the drug has fewer than four generic versions. Third, the original "innovator" brand must outsell generic versions. The fourth is that a given drug is of "public health concern." ¶3. (SBU) Over the past two weeks, the Department of Health has produced a provisional list of 34 drugs that will be covered by price controls. The Department indicated the final list will be reduced to 25, and will be released by the end of March. As it currently stands, the list Post obtained includes anti-diabetes drugs, including insulin; cancer drugs; antibiotics; asthma and blood pressure medications. We discussed the list with an assistant to the Secretary of Health, who assured us that the listing has been open and transparent and has included consultations with the pharmaceutical industry. There will be at least one more hearing on the list in which drug industry representatives are expected to participate. Drug Companies Part of Talks but Are Worried -------------- ¶4. (SBU) We met with several directors of the Pharmaceutical and Health Association of the Philippines, the trade association of foreign drug companies, who noted that the main impetus for the rapid imposition of price controls came from advocacy groups and non-governmental organizations. While the Association acknowledged that it has been invited to consult with the Health Department, it also noted that some member companies had not participated. The Association is also concerned that the final list of drugs subject to price control may contain more than 25 medications. ¶5. (SBU) In addition, the Association asserts that the Health Department has been pressuring companies to sell drugs in small packages that can retail for 100 pesos, or around USD 2, offering to exempt such drugs from price controls. In many cases, this can amount to a handful of tablets needed for one cycle of a course of doses. Representatives of Pfizer warned us that for certain antibiotics, small doses can promote antibiotic-resistant bacteria, and claimed that it is being pressed to sell antibiotics that currently cost over 1000 pesos for the 100-peso fixed price. Pfizer said that if these price controls are put into effect, it will withdraw many drugs from the Philippine market. Comment -------------- ¶6. (SBU) The Philippine press has recently featured stories noting that drug prices have not fallen since the Cheaper Medicines Act came into effect, creating pressure for more immediate action from the government. However, the Philippine government must tread carefully and should not ignore Pfizer's warning that it could withdraw many drugs from the Philippine market if price controls are put into effect. Pfizer's withdrawal of medicines from Thailand following laws on compulsory licensing clearly demonstrates the risks. Post will continue to remind Health Department officials that expecting pharmaceutical companies to sell products for less than it costs to produce them could prove counterproductive. MANILA 00000468 002.3 OF 002 Kenney