September 2006
Health and the Filipino

New Rx needed for generics movement

Hailed as a landmark piece of legislation almost two decades ago, Republic Act No. 6675 — more popularly known as the generics law — has unfortunately suffered from years of lax implementation.

AMONG ALBERTO Romualdez Jr.’s saddest experiences as a physician, one that he says he continues to encounter, involves his regular trips to the drugstore. “You cannot miss this scene,” shares Romualdez, who was the health secretary during the brief presidency of Joseph Estrada. “Somebody with a prescription, say for antibiotics for one week, comes up to the sales clerk and pleads, ‘This is the only money I have. Is it possible to buy just one or two tablets or whatever this amount can afford?'”

“The poor,” he continues, “will spend all their money, give as much as they can bear, which is usually too much for them especially if it concerns catastrophic illnesses.”

Romualdez laments how medicines, including essential, life-saving ones, are priced way too steep beyond the reach of ordinary Filipinos. It’s an anomaly that he blames primarily on unregulated free-market forces that wreak havoc on the country’s healthcare system.

Indeed, compared to the demand side, the supply side — the pharmaceutical industry — is so dominant that it can dictate whatever price it wants. As a result, next to Japan, the Philippines has the highest drug prices in Asia. It’s almost as if the country had no law aimed precisely at bringing down the cost of medicines to levels the masses could afford.

Table 1: Comparative Retail Prices of 100 Units (Tablets/Capsules) of 12 Commonly Used Drugs in Five Developing Asian Countries and Canada, July-September 1995 (in US$)
Source: Issues Concerning High Drug Prices in the Philippines by Prof. Joseph Lim (1997)

Amoxycillin 250 8 9 10 8 5 22
Amoxil 250 14 10 40 9 8 29
Tagamet 200 25 56 14 95
Cotrimoxazole 48 6 5 7 3 3 20
Septrin 480 6 25 3 5 53
Odofenac 50 30 2 48 2 7 25
Voltaren 50 46 2 52 18 37
Erythromycin 250 6 12 10 10 5 20
Erythrocin 250 9 11 37 11 7 35
Adalat 5 28 2 18 2 40
Inderal 40 15 8 74 28 25
Zantac 150 81 3 150 3 39 95
Table 2: Price Comparison of Selected Generic Drugs between the Philippines nd Selected ASEAN Countries (in PhP)
Source: A Comparative Study of Drug Prices in the Philippines and in ASEAN Countries by DOH and DTI (1999)

Penicillin G 9.8 4.83
Rifampicin 4.5 11.49 5.58
Nifedipine 4.15 1.78
Tetracycline 3.45 0.64 1.3
Glibenclamide 3.45 0.93 0.99
Pyrazinamide 2.15 3.17
Amoxicillin 2.14 4.27 2.68
Chloramphenicol 1.95 2.21 2.68
Cotrimoxazole 1.55 0.97 1.05
Prednisone 1.55 0.44 0.54
Mefenamic Acid 1.35 0.91
Metronidazole 1.07 0.94 0.99

In 1988, though, the Philippines, ahead of everyone else in Asia, enacted a law on generics in consonance with the national drug policy of the then fledging democracy under President Corazon Aquino. Helping usher in an era of social-reform measures, Republic Act No. 6675 sought to promote, require, and ensure the labeling, prescribing, and dispensing of medicines using their generic names.

Eighteen years later, the consensus among stakeholders in the healthcare sector — government agencies, generic-manufacturing companies, distributors, and nongovernmental organizations — is that the implementation of the landmark Generics Act has been for the most part a blow hot, blow cold affair. No less than the health department admits that its enforcement has not been that good.

“In fact, it’s somewhat dismal,” says health undersecretary Alexander Padilla. But then he also says the law itself is defective, because he sees it as bearing the mark of the strong pharmaceutical lobby that insisted on the right of doctors to continue prescribing branded medicines.

“While the law compelled doctors to issue generic prescriptions,” says Padilla, “it also allowed them to continue prescribing the branded equivalent of their choice, the net effect of which has been to nullify generics altogether.”

Dr. Eduardo Banzon, vice president of the government Philippine Health Corporation (Philhealth) and a health economist, does not go as far as describing the generics law as flawed. But he agrees with Padilla that it has suffered from weak enforcement. While consumers are now familiar with the generic names of several popular over-the-counter branded medicine such as Tylenol (paracetamol) and Ponstan (mefenamic acid), he says that people still do not ask for the generic equivalents.

“How we’ve implemented the law hasn’t empowered consumers enough,” he says. “We need to push for it more.”

FOR SURE, despite Padilla’s misgivings, the crafters of the generics law had tried to cover all bases so that generic medicines would have a fair chance in the market. Drugstores, for instance, were supposed to have a generics menu visible and accessible to customers. They were also to remind consumers about available generic equivalents of branded medicines. Each doctor’s prescription, meanwhile, had to have the generic name of every medicine a patient was told to take. Even medicine ads carried a brand’s generic name.

Table 3: Cost Structure of Pharmaceutical MNCs
Source: Interview with a pharmaceutical company official

For every peso of the price of medicines that Filipinos buy, drug companies spend for the following:

(in centavos)
40 Product transfer price price of the medicine as bought by the subsidiary from its “mother company” based abroad (almost all the foreign drug companies are merely into distribution and no longer engage in drug manufacturing in the country)
20 Promotions expenses incurred by drug companies for sponsoring doctors’ seminars, conferences and foreign trips, as well as advertisements and other endorsements to sell their products
15 Sales force expenses mainly for the salaries, vehicles and other benefits provided to medical representatives
12 to 18 Distribution costs discounts offered to pharmacies and drugstores
5 to 8 Medical expenses clinical trials, market research and surveys

In the United States, which passed a generic-drugs law just four years ahead of the Philippines, generic drugs now have a 50-percent market share. By contrast, so-called “true generics” still account for a measly three percent of nominal drug sales in this country. Prices of branded medicines should decrease by 50-60 percent when a generic equivalent is introduced in the market — but only if consumers start buying the latter in sizeable quantities, thereby putting a challenge before the branded-drug makers.

That generic medicines are barely making a mark can in fact be traced largely to Padilla’s very own department. As it has turned out, the implementation of the generics law depends on the zeal of who heads the Department of Health (DOH), which monitors compliance with Generic Act’s provisions, particularly among doctors and drug outlets. (See status of compliance with specific provisions of the generics law)

When Dr. Alfredo R.A. Bengzon headed DOH, a nearly 100-percent compliance rate was registered particularly among government hospitals controlled by the department. At the time, the DOH put forth the vision of “health as a right” rather than a privilege of the few.

This encouraging trend was more or less maintained when Dr. Juan Flavier Jr. (now in his last term as a senator) succeeded Bengzon as health secretary. “He even had a (mascot), Eric Generic,” recalls Romualdez of Flavier’s effective media campaign to promote generics.

Unfortunately, the health secretaries that came after Flavier — Dr. Hilario Ramiro Jr., Dr. Carmencita Noriega-Reodica, and Dr. Felipe Estrella — did not seem to have given much attention to generics. Says Romualdez: “It was still part of the program, and I’m sure they were all in favor of the generics law, but they were not too hot about it. Kaya medyo napabayaan (That’s why it was neglected a bit).”

By the time he assumed the Cabinet post in 1998, Romualdez says the compliance rate had fallen below 50 percent. “So we had to start all over again, always doing monitoring, asking for hospital records and so forth,” he says. “By the time I left (in 2001), it was again at about 80 percent, more or less.”

Today the situation appears to have returned to the post-Flavier years. Pastor Joseph Lee, manager of Botika Binhi, a nationwide nongovernment village pharmacy initiative that has been around since the early 1990s, attests to the vigorous promotion of generics and the support his organization received during Flavier’s time. But he rues that the enthusiasm of those days has declined over the years. “It’s harder now,” he says. “We really feel the lack of support.”

Padilla, for his part, puts the compliance rate at 30 to 40 percent, “50 percent at the maximum,” which he attributes to poor monitoring and weak penalties.

Penalties for violating the generics law include reprimands, fines, the maximum of which is P10,000, suspension of licenses of doctors for a year at the most, and six months to a year behind bars. But Joshua Ramos, deputy director of the Bureau of Food and Drugs (BFAD), says the perception is nobody really gets penalized, given that the government seems to be having a hard time keeping track of what doctors, hospitals, drugstores, and pharmaceutical companies are doing.

IT’S EASY enough to see, though, what Filipinos are buying at pharmacies: branded medicines, not generics, despite the wide gap in cost. In large part, this is because they are simply following their doctor’s orders — as much as their wallets would allow, that is. Comments Ramos: “We place a lot of trust on our doctors. When they write down a brand name, we no longer consider another option.”

Many doctors do list down generic names in the prescriptions, but most of them do not encourage patients to consider the generic equivalent of the branded medicine they recommend. According to a 2002 World Bank report, this is true especially among private doctors.

“Generic prescribing in the public sector appears to be the rule rather than the exception,” said the report, which looked at the government’s generic-drugs promotion. “It is in the private sector where prescribing habits of doctors have hardly changed: only about a third say they would advise generics to their patients.”

Blame a particular marketing practice by big drug companies, say some medical personnel. They say that the endorsement of branded medicines in exchange for a whole gamut of favors — dinners, spa treatments, appliances, plane tickets, foreign trips, etc. — from pharmaceuticals remains prevalent especially among the likes of internists and pediatricians who get to see patients fairly regularly and prescribe medication.

“What these doctors are promoting is for people to become more stylish,” says an upset Romualdez. “It’s like branding in clothes. That’s the whole issue of branding in health. In medicine, hindi dapat may branding as it should not be as important as the actual cure.”

Yet most of the doctors interviewed for this article say it is really a matter of quality, which they say generics simply lack. One doctor who used to work in public health, for example, says that while he prescribes generics to lower-income families to help them afford the medication, it’s a different case when he treats patients with severe illnesses. “It has to be branded, otherwise the patient might die,” he says.

A young doctor who trained at the Philippine General Hospital before pursuing private practice also admits to a certain “double standard” in his prescriptions — he does not prescribe generics to his own family. Yet another clinician says that she relies more on the more popular brand since they are already “tried and tested.”

But BFAD’s Ramos says that going by his agency’s laboratory analyses of branded and generics medicines, there is actually not much difference. “The percentage conformity of generic drugs is even higher than that of branded medicines,” he says, referring to results of BFAD’s tests conducted on drugs submitted to it from January to August this year.

BFAD is the government regulatory agency that ensures the safety, efficacy, and quality of pharmaceutical products, as well as food, cosmetics, and other invasive devices (such as condoms, IUDs, pacemakers, implants, etc.) sold in the country.

Of the 1,235 generic drugs submitted to BFAD between January and August 2006, 1,138 (92 percent) conformed to the agency’s standards while 11 (0.89 percent) failed; 81 (seven percent) are still being processed. Among the branded medicines, 3,000 (91 percent) met BFAD standards while eight (0.24 percent) did not; 275 (8 percent) are still being analyzed.

Ramos says any perceived difference in quality between branded and generic drugs is “really more of a marketing strategy to condition the public’s mind that generic drugs, because they are cheaper, are inferior in quality.”

Last year, a multinational drug company even came out with an ad that had the line “kaduda-duda ang presyo (dubiously priced).” The ad was actually part of an official campaign against fake drugs, but Ramos says it was misleading at the very least since it seemed to imply that a low price tag makes a drug’s quality suspect.

Philhealth’s Banzon, however, says the credibility problem of generics also stems from government drug procurement fiascos. He says many reports that reach him often involve substandard generics bought by public hospitals, as well as by national and local government units. “The problem might be in the procurement process because government has to buy the cheapest price,” he says, hinting at the possibility that the quality of medicines could be sacrificed because of cost considerations.

CHEAP OR not, one problem with generics is that “quality is a little bit more difficult to control,” admits avid generics supporter Romualdez. “But,” he adds quickly, “it can be done with BFAD equipped with the proper people and technology.”

Table 4: Top 20 Ethical/Prescription Drugs
Source: May 2006 IMS Drugstore and Hospital Sales
* off-patent

(January-May 2006, in +000 PhP)
1 Ventolin* 1,401,196 GlaxoSmithKline
2 Norvasc 1,190,016 Pfizer
3 Augmentin 801,850 GlaxoSmithKline
4 Plavix 731,852 Sanofi-Aventis
5 Plendiler* 672,874 Astra Zeneca
6 Zinnat 558,730 GlaxoSmithKline
7 Lipitor 554,618 Pfizer
8 Cherifer* 508,480 Intermed Marketing**
9 Neobloc* 504,607 GX International**
10 Diamicron* 460,620 Servier Phils.
11 Seretide 438,928 GlaxoSmithKline
12 Tazocin* 431,953 Wyeth
13 Unasyn* 426,979 Pfizer
14 Ponstan* 410,962 Pfizer
15 Nexium 404,711 Astra Zeneca
16 Ciprobay* 403,607 Bayer Pharmaceuticals
17 Zegen* 366,882 United Laboratories**
18 Imdur 360,214 Astra Zeneca
19 Vastarel 355,959 Servier Phils
20 Zithromax 353,549 Pfizer

BFAD, however, is severely undermanned. Compared to the 44,333 licensed establishments it regulates, the agency has only 220 food and drug regulation officers (FDROs) nationwide. Of 48,416 registered products, the central office has only 32 evaluators, or a ratio of one evaluator for every 1,513 products.

The good news is that BFAD expects its request for an additional 400-plus staff approved soon. “We should be following the optimum ratio between the number of employees and the products and establishments we regulate,” says Ramos, “so that we maintain the credibility of the seal or certificate that we award to them.”

“The government should ensure that generic drug competitors are credible and viable,” insists Banzon. Once that happens, doctors and their patients may stop looking at brands and price tags, as in the case of Neobloc, a generic equivalent of the high-blood pressure medicine Betaloc (Astra Zeneca brand for metoprolol tartrate).

Neobloc, which is manufactured by GX, has been able to capture a healthy share of the market, says Banzon. “If there is credible competition,” he says, “people will definitely go for the cheaper product.”

In the meantime, the government has been trying to offset the imbalance in generics distribution with its “Gamot na Mabisa at Abot-Kaya (Effective and Affordable Medicine)” program. Aimed at halving the 2001 price of selected drugs by 2010, the program has included parallel drug importations by the Philippine International Trading Corporation (PITC) benefiting 72 DOH hospitals and three local government units.

Botika ng Bayan and Botika ng Barangay outlets nationwide to ensure accessibility and availability of low-priced quality medicines have also been set up. As of last July, Botika ng Bayan branches — full-blown pharmacies located in cities and municipalities — have reached 1,135. Botika ng Barangay outlets, which are limited to generic over-the-counter drugs and a few selected prescription drugs, now number 7,004.

The PCIJ tried but failed to interview the Pharmaceutical and Healthcare Association of the Philippines (PHAP), which has multinational drug companies among its members, in time for this article. PHAP, however, has been quoted in other media reports as saying that forcing its members to lower prices “would discourage innovation in an industry where innovation is key to discovering new cures for new diseases.”

“Losses that will be incurred by the pharmaceutical industry,” it said, “which may translate to profit for the generic drugs industry, would, in the end, prejudice consumers in the form of less investments and research and development of better medicines.”

Interestingly, PHAP has also said that the way to reduce medicine prices in the country is through strict implementation of the generics law, not through parallel importations. It did not, however, elaborate any further on that.


THIS ARTICLE had already been published when PHAP replied to PCIJ’s written queries. Here are some of its answers, as provided by Leo Wassmer Jr., CEO and executive vice president of the association:

PCIJ: PHAP has said that to reduce medicine prices, the government has to strictly implement the generics law. What exactly do you mean by this?

PHAP: Cheap medicines are already available locally. In compliance with the Philippine National Drug Policy, the Department of Health developed the “Essential Drugs List” which contains medicines “that satisfy the priority health care needs of the population.”

The Essential Drugs List shows that in each therapeutic category there is a wide range of products a consumer could choose from according to affordability.

Also, almost daily in many broad sheets and practically hourly on many radio programs are advertisements of cheap locally manufactured essential medicines.

Despite the availability of cheap essential medicines, there are still some who claim that medicines are expensive because of the absence of a public information campaign as required by Sections 5 and 11 of the Generics Act of 1988. Section 6 (d) of the same law also requires drug stores to post a list of generic products with corresponding prices as reference for buyers. Not all drugstores comply with this requirement. This is one of the reasons why consumers do not ask for generic equivalents.

PCIJ: The drug industry’s marketing practice supposedly has continued to influence doctor’s prescription habits, even with an ethics review you’ve initiated. Is this a fair assessment?

PHAP: Physicians are well-trained, highly discriminating professionals who will prescribe only medicines that they consider the most appropriate for a diagnosed illness. They are also guided by the concept of “rational drug use” in their choice of medicines.

Promotional activities are done to provide physicians quality and detailed adequate technical information about a product. PHAP member companies are compelled to follow strict promotional guidelines.

PCIJ: Can the pharmaceutical companies themselves not address the issue of their exorbitantly priced drugs?

PHAP: Prices of medicines in the Philippines are not exorbitant. We must be aware that prices of all products in the market are influenced by several factors, and the weights or effects of these factors vary from one country to another. These factors include: economies of scale, production cost, level of demand, among others.