[Ip-health] Wall Street Journal: Philippines President Arroyo Orders Drug Price Controls

[Thiru Balasubramaniam]

http://online.wsj.com/article/SB124879732286587201.html

Philippines President Arroyo Orders Drug Price Controls

By JAMES HOOKWAY

The Philippines has become the latest developing country to resort to
legal remedies to cut the cost of life-saving medications, after
President Gloria Macapagal Arroyo imposed price controls on several
branded drugs when their manufacturers failed to comply with a new law
designed to lower retail prices.

Philippine officials Tuesday said Ms. Arroyo signed an executive order
on Monday to regulate the prices of five drugs, mostly used to treat
high blood pressure, cancer and cholesterol. The list includes Pfizer
Inc.'s popular anti-hypertension drug, Norvasc. Drug manufacturers
operating in the country earlier offered to halve the prices of 16
drugs to treat a similar range of diseases, including Pfizer's Norvasc
medication, and offered to reduce the prices of nearly a dozen others
by Aug. 15. In the end, the government decided it wanted more control.
More

Global drug companies in recent years have looked to emerging markets
to compensate for sluggish growth in markets such as the U.S., Europe
and Japan. But a number of countries have pushed back. Thailand, for
instance, introduced so-called compulsory licenses in 2007 enabling
the government to over-ride drug patents and import or manufacture
some HIV/AIDS medications.

The latest moves in the Philippines alarm the drug industry because it
adds an additional layer of regulatory price-setting in a country
where more flexible free-market pricing had previously prevailed, and
could potentially reduce the incentive for drug companies to develop
new medications.

Pfizer, which offered to cut prices on 10 drugs, said in a statement
that it is "disappointed to learn that the government did not accept
our offer and chose instead to impose the Maximum Retail Price on
Pfizer's products."

The Philippines' pharmaceutical industry indicated it would abide by
the executive order. But in a statement, Reiner Gloor, executive
director of industry lobby group the Pharmaceutical and Healthcare
Association of the Philippines, said that "price control may deliver
some short-term benefits but the long-term negative consequences, not
only on the pharmaceutical industry but in other industries, must be
considered," Reuters reported.

"If price adjustments do not result in market expansion, then affected
companies will have to study options to remain viable," Mr. Gloor
said, adding that price controls meant that the cost of some drugs
would still be beyond the reach of many Filipinos, a third of whom
live on less than a $1 a day.

The Philippines' pharmaceutical industry earlier estimated it would
lose between $146 million and $208 million in sales because of the
government's legal action.

Write to James Hookway at james.hookway@wsj.com

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


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