VZCZCXRO6467
OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #1060 1380254
ZNR UUUUU ZZH
O 180254Z MAY 09 ZDK
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4142
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEAWJB/USDOJ WASHDC IMMEDIATE
RUEHZU/APEC COLLECTIVE IMMEDIATE

UNCLAS MANILA 001060 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EAP/MTS, EAP/EP, EEB/IFD, AND EEB/TPP/MTA/IPC 
STATE PASS USTR FOR BWEISEL, RBAE AND KEHLERS 
STATE PASS USAID, OPIC, USDA 
BANGKOK FOR JENNIFER NESS 
TREASURY FOR OASIA 
USDOC FOR 4430/ITA/MAC 
USDOC PASS USPTO 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON RP
SUBJECT:  Health Department Patent Remedies to Cut Drug Prices 
 
¶1.  (SBU) Summary:  The Philippine Department of Health is close to 
ordering pharmaceutical companies to stop marketing their products 
with discount cards, seeking to require companies instead to sell to 
all customers at the lowest price already available.  The pending 
order may stem from frustration among legislators that the year-old 
Cheaper Medicines Act has not led to lower retail drug prices, and 
particularly from Senator Manuel Roxas' desire to kick-start his 
presidential campaign.  End summary. 
 
¶2.  (U) Many international pharmaceutical companies distribute 
discount cards as a marketing tool in the Philippines.  Philippine 
law prohibits advertisements for prescription medicines, so a number 
of companies have issued the cards to doctors, who distribute them 
to their patients.  Patients present the card together with the 
doctor's prescription at pharmacies, and receive discounts on the 
full retail price of the prescription.  In many cases, the discount 
amounts to over 50%.  Pharmaceutical companies claim that the cards 
encourage patients to consult doctors instead of self-medicating, 
and assist patients to take the full course of a medication instead 
of just one or two doses and stopping.  Discount cards have now 
become part of the debate over the implementation of the Cheaper 
Medicines Act. 
 
¶3.  (SBU) The Philippine Congress passed the Cheaper Medicines Act 
in May 2008.  On this first anniversary, media and legislators have 
noted that the retail prices of drugs have not fallen over the past 
year.  Political pressure is again building for lower drug prices. 
During a May 12 hearing, Senator Manuel Roxas, the sponsor of the 
Cheaper Medicines Act and a 2010 presidential candidate, told 
Department of Health officials he was giving them two weeks to lower 
medicine prices.  Soon afterward, the Health Department seized upon 
banning discount cards and requiring drugs to be sold at the 
discounted price as a quick fix. 
 
¶4.  (SBU) Pharmaceutical companies have expressed varying degrees of 
worry about the proposal.  Pfizer, whose marketing in the 
Philippines centers almost exclusively upon its discount card, 
requested a meeting with Embassy to seek our intervention.  Pfizer 
claims that over 80% of its local sales are to cardholders. 
GlaxoSmithKline also uses discount cards in the marketing of its 
patented medicines, although with off-patent drugs, its strategy 
focuses upon direct price reductions.  Merck told us that when the 
Department of Health banned new card-based discount programs in 
2005, it saw the writing on the wall and began to wind down its card 
program. 
 
¶5.  (SBU) While Pfizer, due to its marketing strategy, is the most 
affected, all three companies complained of their frustration with 
repeated arbitrary policy changes by the Department of Health. 
GlaxoSmithKline pointed out that the Health Department card policy 
would establish maximum retail prices on specific brands, but 
according to the Cheaper Medicines Act, only the President can 
impose price controls and they must be placed upon classes of drugs 
based upon the compounds in them. 
 
¶6.  (SBU) Comment:  Senator Roxas can be counted upon to continue 
pressing for quick pharmaceutical price reductions, as the passage 
of the Cheaper Medicines Act is one of the key accomplishments he 
points to in preparing for the presidential run.  We will ensure in 
upcoming meetings with government officials that they realize that 
we are interested in the issue and that such extra-legal actions as 
imposition of price controls via arbitrary Department of Health 
actions would be unacceptable. 
 
Memmott