Study: PHL policies impede innovative drugs’ development

By Elijah Felice Rosales, Businessmirror, Jul 4, 2019

THE Philippines has one of the most restrictive trade regimes in Southeast Asia for pharmaceutical items in spite of rising consumer spending on health, according to a study.

In a report titled “Nontariff barriers (NTBs) in Asean and their elimination from a business perspective,” the Philippines was flagged for its trade, price control, intellectual property (IP) and government procurement measures on medical products. These apparently impede the entry and development of new pharmaceuticals in the country.

“Slow regulatory processes remain a major hurdle in providing access to innovative medicines,” the study read.

“Current committed turnaround time for certificate of product registration is 254 calendar days. In practice, turnaround time ranges from two to four years,” it added.

The report claimed the government taxes pharmaceuticals at all levels in the distribution chain between 12 percent and 13 percent, and tax cuts only begin at the consumer level.

Further, it said “it is difficult for companies to negotiate or offer their innovative products,” as the government’s disaster response plan imposes a price ceiling on medicine.

Patentability of new forms and uses of pharmaceuticals are also limited under the Cheaper Medicines Act, making it hard for firms to ask for IP protection for their innovative products, the study argued.

The study cited the “lack of clarity” in the national formulary as a procedural obstacle in government procurement. Timelines for the registration process are reportedly unclear and review of medicine inclusion, based on experiences of many firms, can take up to three years.

The Philippines has the third largest pharmaceutical market among member states of the Association of Southeast Asian Nations (Asean), only behind Indonesia and Thailand.

Estimated at some $3.4 billion in 2015, the Philippine pharmaceutical market is projected to reach $4.1 billion by 2020. Generics account for about 65 percent of the market largely due to the passage of the Cheaper Medicines Act of 2008, as well as government efforts to promote the use of generic medicines.

In 2017 Manila’s health expenditures increased 8.03 percent to P712.3 billion, from P659.3 billion in 2016, contributing 4.5 percent to GDP, according to government data.

Every Filipino that year spent an average of P6,790.7 for his or her health. It was an increase of 6.29 percent from the average P6,388.8 in 2016.

The report on NTBs in Asean called out the government for the “long time [it takes] to get a device approved or licensed” such that “even a small machine might take up to one and a half years to get approved.”

It also flagged the government’s lack of capacity to manage product approvals. Firms reported there are large backlogs in the product approval process for medical devices.

The study was conducted by the European Union-Asean Business Council and the Asean Business Advisory Council with the rationale of identifying trade barriers in the region.##