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OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUHML #0468/01 0640550
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O 050550Z MAR 09
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3389
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
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RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION IMMEDIATE

UNCLAS SECTION 01 OF 02 MANILA 000468 
 
STATE FOR EAP/MTS, EAP/EP, AND EEB/TPP/IPE 
STATE PASS USTR FOR BWEISEL, RBAE AND KEHLERS 
STATE ALSO PASS USAID, OPIC 
TREASURY FOR OASIA 
USDOC FOR 4430/ITA/MAC 
USDOC PASS USPTO 
BANGKOK FOR JENNIFER NESS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD EINV ECON RP
SUBJECT: PHILIPPINES CLOSER TO DRUG PRICE CONTROLS 
 
REF: 08 MANILA 2611 
 
MANILA 00000468  001.4 OF 002 
 
 
¶1. (SBU) Summary. The Philippine Department of Health has listed 34 
prescription medications that will be subjected to price controls 
under the Cheaper Medicines Act (reftel) enacted last year.  The 
main impetus for the rapid imposition of price controls came from 
advocacy groups and non-governmental organizations.  Local 
representatives of international drug companies participated in 
consultations on maximum retail prices, but warn that some of the 
controlled prices are lower than the costs of making the drugs, 
which could force them to withdraw many drugs from the Philippine 
market.  End summary. 
 
Health Department Chooses Drugs for Price Limits 
--------------------------------------------- --- 
 
¶2. (SBU) With the passage last year of the Cheaper Quality 
Affordable Medicines Act, and its implementing rules and regulations 
now in effect, the Philippine Department of Health has begun listing 
drugs and medicines subject to its price controls.  According to the 
Philippine Health Department, the meeting of any one of four grounds 
may subject a drug to price controls.  The first ground is that the 
drug is at least four times as expensive in the Philippines as in 
other Association of Southeast Asian Nations (ASEAN) countries. 
Second, the drug has fewer than four generic versions.  Third, the 
original "innovator" brand must outsell generic versions.  The 
fourth is that a given drug is of "public health concern." 
 
¶3. (SBU) Over the past two weeks, the Department of Health has 
produced a provisional list of 34 drugs that will be covered by 
price controls.  The Department indicated the final list will be 
reduced to 25, and will be released by the end of March.  As it 
currently stands, the list Post obtained includes anti-diabetes 
drugs, including insulin; cancer drugs; antibiotics; asthma and 
blood pressure medications.  We discussed the list with an assistant 
to the Secretary of Health, who assured us that the listing has been 
open and transparent and has included consultations with the 
pharmaceutical industry.  There will be at least one more hearing on 
the list in which drug industry representatives are expected to 
participate. 
 
Drug Companies Part of Talks but Are Worried 
-------------------------------------------- 
 
¶4. (SBU) We met with several directors of the Pharmaceutical and 
Health Association of the Philippines, the trade association of 
foreign drug companies, who noted that the main impetus for the 
rapid imposition of price controls came from advocacy groups and 
non-governmental organizations.  While the Association acknowledged 
that it has been invited to consult with the Health Department, it 
also noted that some member companies had not participated.  The 
Association is also concerned that the final list of drugs subject 
to price control may contain more than 25 medications. 
 
¶5. (SBU) In addition, the Association asserts that the Health 
Department has been pressuring companies to sell drugs in small 
packages that can retail for 100 pesos, or around USD 2, offering to 
exempt such drugs from price controls.  In many cases, this can 
amount to a handful of tablets needed for one cycle of a course of 
doses.  Representatives of Pfizer warned us that for certain 
antibiotics, small doses can promote antibiotic-resistant bacteria, 
and claimed that it is being pressed to sell antibiotics that 
currently cost over 1000 pesos for the 100-peso fixed price.  Pfizer 
said that if these price controls are put into effect, it will 
withdraw many drugs from the Philippine market. 
 
Comment 
------- 
 
¶6. (SBU) The Philippine press has recently featured stories noting 
that drug prices have not fallen since the Cheaper Medicines Act 
came into effect, creating pressure for more immediate action from 
the government.  However, the Philippine government must tread 
carefully and should not ignore Pfizer's warning that it could 
withdraw many drugs from the Philippine market if price controls are 
put into effect.  Pfizer's withdrawal of medicines from Thailand 
following laws on compulsory licensing clearly demonstrates the 
risks.  Post will continue to remind Health Department officials 
that expecting pharmaceutical companies to sell products for less 
than it costs to produce them could prove counterproductive. 
 
MANILA 00000468  002.3 OF 002 
 
 
 
Kenney