MANILA, Philippines—The Department of Health (DoH) has ordered some pharmacies and private hospitals to explain why they should not be sanctioned for defying a government-price control on certain essential medicines.

The order came after the department found that “90 percent” of pharmacies and hospitals have complied with the maximum drug retail price (MDRP) on medicines commonly used, according to Health Undersecretary Alexander Padilla.

The MDRP, which took effect Aug. 15, cut in half the prices of essential medicines.

Small- and medium-size drugstores, which have not computerized their system and the pharmacies of primary and secondary hospitals, were given until Sept. 15 to implement the new prices.

Health Secretary Francisco Duque III said the DoH was investigating a “few cases” of violations to Executive Order No. 821, which set the MDRP.

“(W)e’ll be filing cases once we’ve consolidated the reports,” Duque said.

The health secretary asked the public and the media to report to the DoH drug outlets that continue to sell regulated medicines at prices higher than the cap.

Three days to explain

While he did not identify the violators, Padilla said the DoH had given the owners of retail drug outlets three days to explain why they should not be sanctioned.

Padilla said overall compliance with the MDRP was “better than expected.”

Republic Act No. 9502, known as the Universally Accessible Cheaper and Quality Medicines Act of 2008, gave the DoH the power to impose hefty administrative fines and penalties on any person, manufacturer, importer, trader, distributor, wholesaler, retailer or any other entity who violates the maximum retail price.

The fine ranges from P50,000 to P5 million.

Twenty-one drugs

Malacañang, upon the recommendation of the DoH, issued EO 821 that placed five common but expensive medicines under price regulation effective Aug. 15.

These are the antihypertensive drug amlodipine, the anti-cholesterol drug atorvastatin, the antibiotic/antibacterial drug azithromycin, and the antineoplastics/anticancer drugs cytarabine and doxorubicin.

The DoH originally wanted to cover 21 drugs, but multinational drug firms preempted the government by agreeing to voluntarily lower the prices of 16 of the drugs by at least 50 percent.

The voluntary 50-percent price cut for the 16 drugs also took effect on Saturday.

These are telmisartan and irbesartan, which are antihypertensive drugs; the anti-thrombotic drug clopidogrel; the anti-diabetic drug gliclazide; and the antibiotic drugs piperacillin + tazobactam, ciprofloxacin, metronidazole and coamoxiclave.

Bleomycin, carboplatin, cisplatin, cyclophosphamide, etoposide, mercaptopurine, methotrexate sodium and mesna which are anticancer drugs.

Licenses

But since the 16 drugs are under voluntary price cuts, the Bureau of Food and Drugs (BFAD) Director Nazarita Tacandong said the agency could only invoke the Consumer Act and impose a P1,000 fine for violations.

But she warned that the agency could suspend the product registration, which in effect would prohibit a drug company from selling the particular medicine, and revoke the license to operate of the erring drugstore or pharmacy.

The BFAD complaints hotline is 807-0751 and 807-8275.

The DoH said it would set up a complaints’ desks in all Centers for Health Development offices nationwide, and ask consumers to keep the official receipt in case they were sold a regulated medicine at prices higher than the price cap.

Padilla said the DoH had not heard from the Private Hospitals Association of the Philippines since multinational drug firms belonging to the Pharmaceutical and Healthcare Association of the Philippines had assured retailers of rebates for stocks of medicines bought at higher prices.

The hospital group earlier threatened to go on “hospital holiday” to demand a postponement of the Aug. 15 implementation of the maximum drug retail price.

The pharmaceutical industry is estimated to lose about P7 billion to P10 billion ($146 million to $208 million) a year in sales, the spokesperson of the Pharmaceutical and Healthcare Association of the Philippines said last month.

Retrenchment

Retrenchments by drug firms are the initial consequences of the price cuts for over-the-counter medicines, according to officials and sales representatives of pharmaceutical firms.

Drug manufacturing giant Sanofi-Aventis announced this month that it was reducing its sales force by about 15 percent, even before drug firms had voluntarily slashed prices to comply with the cheaper medicines law, said a former official of the Sanofi-Aventis Employees Union.

He said the firm cut its sales force by 40 people in December 2008, and was expected to terminate 30 more this month.

Other multinational drug firms feeling the impact of the price cuts have merged operations or dissolved Philippine-based firms, said another official working for pharmaceutical firm Merck-Sharpe & Dohme Ltd. (MSD).

Conventions

The Sanofi source said the bigger impact on clients was the drastic cut in funds that used to be spent on medical conventions or on meals of doctor-clients.

“The truth is our job is to sponsor or promote the brands, not to sell them. That’s why we sponsor conventions and pamper some doctors. But I learned our budget now has gone down to zero,” the source said.

“There is a direct correlation between the cuts and the MRP (or the maximum retail price imposed on selected medicines),” the source added.