MANILA, Philippines ? Malacañang won?t accept proposals by drug companies to voluntarily slash by more than 50 percent the prices of drugs not included in the list of 21 commonly prescribed drugs.

Palace officials said drug companies risked getting their proposal ?shot down? and faced the prospects of President Gloria Macapagal-Arroyo signing an executive order setting the maximum retail price for the drugs if they insist on their proposal.

Some multinational drug companies have offered to cut drug prices by 50 to 60 percent, but these medicines were not in the Department of Health?s list of 21 essential drugs recommended for 50-percent reduction.

?If true, these (proposals) are not responsive to the President?s request. At the very least, that should be sorted out,? Gary Olivar, presidential economic spokesperson, said in a briefing.

Deadline

Drug companies were given until Saturday to submit a letter of understanding stating their proposal to voluntarily comply with the Cheaper Medicines Law by slashing drug prices by 50 percent on their own.

?The President is within her right either to entertain more discussion or to just shoot them down, and go ahead with the price ceiling. That?s her prerogative under the law, and she has given them enough notice,? he said.

At their request, Ms Arroyo agreed on July 8 to let these drug companies draft an LOU in 10 days stating their commitment to voluntarily slash prices of commonly prescribed drugs by half.

If the compliance is unsatisfactory, Ms Arroyo will sign the EO setting the MRP for these drugs, according to officials, who had ruled out any extension of the deadline.

Olivar said Malacañang was confident the companies would submit proposals that would hew closely to the DoH specifications.

Impossible

?The presumption is they will try their best to behave as corporate citizens, otherwise, they won?t be entertained by the President in terms of the 10-day compliance,? he said.

But Sen. Manuel Roxas II conceded that it would be impossible for multinational firms to offer price cuts on the 22 essential medicines since they get most of their earnings from these drugs.

?These medicines are the most prescribed ones as they include those treatment for hypertension, cholesterol problems and cancer,? Roxas said.

A legislator, however, is blaming Mercury Drug Corp.?s virtual stranglehold on the Philippine retail drug market as the main reason for the high cost of medicines in the country.

Iloilo Rep. Ferjenel Biron, a doctor by profession, insists that a price control on medicines was the only way to keep drug prices affordable to ordinary Filipinos.

Biron noted that with a 65 percent share of the market, drug companies?multinational corporations and local firms?have to provide Mercury Drug with a 30 percent discount before their medicines can be sold by the company?s 700 branches nationwide.

Biron said that including the standard 10 percent add-on and subtracting overhead expenses (about 2 percent), Mercury would have a 38 percent profit margin. In contrast, Biron said other drug retailers in India, Thailand and other countries have only 10 to 15 percent margin.

?This is the main reason why drug prices are high in this country,? said Biron.

Mercury Drug, founded by enterprising businessman Mariano Que in the pre-war era, is ranked number 11 among the top 1,000 corporations based on gross sales with a turnover of P58.53 billion in 2006 and profits of P1.58 billion.

Mar fires back

The country?s number two drug retailer, Watson?s, a joint venture between SM Prime Holdings and Hutchison Whampoa of Hong Kong , is a distant second with 10 percent market share.

Roxas turned the tables on Biron and Iloilo Vice Gov. Rolex Suplico for blaming him for the continued failure to make essential medicines more affordable despite the passage of the Cheaper Medicines Law.

The senator said the duo should blame Malacañang, not him.

?What they want is that the price regulatory board should set prices just like ERC (Energy Regulatory Commission), TRB (Toll Regulatory Board) and the MWSS (Metropolitan Waterworks and Sewerage System regulatory commission for water rates),? Roxas said. With reports from Gil C. Cabacungan Jr., Michael Lim Ubac and Christine O. Avendaño