Attention to detail and unintended circumstances

THE Philippine government can learn from how Viagra was discovered and apply it to crafting laws. Maybe even the Philippines should appreciate that approach. Though that seems very unlikely.

First, we don’t prize and mostly don’t exercise critical thinking, including testing hypothesis, observing major and minor effects, and most surprising of all, not looking for, factoring in, or realizing the potential unintended consequences of what we are doing, and then being cognizant as well of the role of chance and luck, which will elude most of those who are not consciously looking out for and monitoring it.

Viagra was developed in the late 1980s to deal with angina or chest pain. By 1989, through multiple trials that were extensively monitored, there was some benefit for angina, but they noticed many of the male members of the trial groups developed erections. Pfizer then shifted to testing for that and what effects were both good and bad if that was the primary focus of the potential drug. So, besides the erections, what were the effects if healthy people without heart issues took it and so on. When much of that was determined and verified, the wonder drug of the 1990s was released about half a decade later.

Same thing with Ozempic and Wegovy. Novo Nordisk, now the most valuable company in Europe with a market capitalization exceeding $500 billion, which is more than that of its home country Denmark’s GDP (gross domestic product) of $400 billion and with just 6 million people (by comparison, our GDP, with our 115 million people, is about the same, so the average Dane is about 20 times richer than the average Filipino and they have no demographic dividend).

Novo Nordisk was a midsized global pharmaceutical company that was primarily focused on diabetes and illnesses closely related to it, to concentrate on just that given its much more limited research budget as compared to the global full spectrum behemoths like Pfizer, Eli Lilly, and the like. After developing semaglutide, their tests showed it was very useful for pre-diabetic patients for lowering blood sugar. Ozmepic was approved and licensed for that use. Over time, they also observed the other effects the drug had and noticed there was weight loss as well for users of Ozempic.

They then tested for that, and the effects it had and increased by 10 times the three dose sizes of Ozempic and the increase in weight loss more than doubled. This became Wegovy and it was approved as not a blood sugar drug but a weight loss drug for the obese as distinguished from merely overweight. Now they are finding other major potential benefits versus cancer, heart conditions and even depression for semaglutide or Ozempic. When they shifted emphasis, Novo Nodisk also checked to see what the other effects on the obese who were not pre-diabetic or diabetic were.

While these pharmaceutical companies concentrated on the primary use of the proposed drug, they carefully observed all the effects whether related to the use or not. When they found an ancillary use was actually more valuable, they started a new process as well to see how it worked and what the ancillary effects were given it was now being proposed for another use and therefore a different profile of patients. Now let’s look at how legislation is passed in the Philippines and the contrast which sadly is not to our favor.

Maharlika

Let’s take two examples, Maharlika and the last pay increase for the Armed Forces plus the pension changes for them.

Maharlika seems to have hoped to address two points. Have a national development fund as President Ferdinand Marcos Jr. wanted our Temasek.

Some sponsors also noted there were excess funds in many government corporations that were off budget and just in low-yielding deposits that can be made better use of and could additionally fund some ayuda and national development, and would not affect the budget. I suppose the first part led to everything, everywhere, all at once, nature and power of the then proposed fund.

Alas, the backlash to using the government pension funds led to their being removed. Then while there was a catch-all for future funds from the government, they did not seem forthcoming or readily available for initial funding. At the same time, caution was raised on using the capital of the Bangko Sentral ng Pilipinas given the paramount need to build the capital of the central bank to defend the peso and address potential financial crisis, but they stayed in as funders, just not initial funders. The Pagcor (Philippine Amusement and Gaming Corp.) was also to be a source but not initially as well. So, the lawmakers concentrated on the Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP) as initial investors.

No adjustments were made to these changes. The ayuda was dropped. Then analysis on DBP and LandBank was so inadequate that the authors concentrated on the percentage of their equity but not the capital adequacy ratio, which I have explained in detail previously. Then that capital was treated like permanent capital even though they were third-party funders albeit public sector ones with no rules on return or exit. Also, though the National Development Corp. (NDC) was already in place and would be the ideal entity for a Temasek-like fund; there seemed to be an obsession to have a new fund and not to build up NDC.

Pension changes

For the military salary increase and resulting pressure on their noncontributory pension system, it also seems no analysis on the pension effect was made when the law passed increasing the salaries. While I agree with the pay increase, that was a missed opportunity to fairly reform the pension system as was subsequently done. To do that simultaneously with a 100-percent pay increase would seem to be like the ideal time to me. Then one could also have differentiated the pay increase for pension purposes as well, like perhaps treating some of it as an allowance or something else not counted toward the pension.

If we are not capable of thinking broadly and holistically when passing these kinds of laws, would it perhaps be time to have something equivalent to the nonpartisan Congressional Budget Office which studies these types of effects when revenue and benefit-related bills are proposed? Or as Santayana warned, are we condemned to repeating this due to our sometimes monochromatic approach to solving problems or seeking solutions? I am seeing the same thing as we discuss possible changes to the economic provisions of the Constitution.

The fact is we have badly underperformed relative to our neighbors over decades. But to jump to the conclusion that changing the economic provisions of our Constitution will change that is to me an ideological conclusion rather than analysis. We should stay all the circumstances and causes that made that happen — like expensive power, poor infrastructure, red tape, and in the 1980s which was the decade when American, European and Japanese multinationals started building manufacturing facilities in Asia in a big way, we had suspension of debt payments, EDSA, coup attempts and in the early 1990s, power outages.

All that should be studied and analyzed rather than just come to the conclusion that changing the economic provisions of the Constitution is the miracle medicine that will cure what has ailed us for decades. Especially when the limitations on foreign investments in the countries that have eclipsed us in Asia are in many cases similar or even more restrictive than ours.