Price caps on drugs ‘populist,’ hurt revenues

PHAP says

The impending implementation of the government’s “populist” price cap regulation on medicines next month would ultimately hurt consumers, a group of pharmaceutical and healthcare companies claimed.

In a statement, Pharmaceutical and Healthcare Association of the Philippines (PHAP) said the Duterte administration’s price caps on more than a hundred drugs and medicines will not benefit the public, but hurt government revenues.

“It is a populist proposition but discourages production, creating scarcity that will likely hurt those in need of the medicines the most, and shrinks an industry,” the association said.

According to PHAP, the government stands to lose ₱28 billion in revenues as a result of price controls on medicine, which is under Executive Oder (EO) No. 104 signed by President Rodrigo R. Duterte in February.

Beginning June this year the EO 104 will slash the retail and wholesale prices of selected drugs and medicines used for hypertension, diabetes, pulmonary disease, cancer, among others.

But PHAP explained that while the executive order will slash the prices of medicines from the manufacturers’ level, it however will not reduce all prices at the patient level. “The industry projects its sales to drop by ₱57 billion from ₱200 billion once the full price control plan of the DOH [Department of Health] is fully implemented,” PHAP said.

“Projected government revenue losses are broken down into: ₱4 billion in foregone customs duties; ₱7 billion in lost value-added tax; and ₱17 billion in corporate taxes,” it added.