Medicine price cap may cause gov't to lose P28 billion in taxes: pharma group

ABS-CBN News

Posted at May 24 2020 03:03 PM

MANILA - A group of drug makers on Sunday urged government to recall its price cap policy on several medicines as it claimed it could result in P28 billion revenue loss.

In February, President Rodrigo Duterte signed Executive Order No. 104, imposing a limit on the prices of 86 drug molecules or 133 drug formulas.

The industry expects its sales to drop by P57 billion from P200 billion once the order is fully implemented in June, according to the Pharmaceutical and Healthcare Association of the Philippines (PHAP).

PHAP said government will also lose P17 billion in corporate taxes, P7 billion in value added taxes (VAT), and P4 billion in foregone customs duties.

"The EO does not benefit the public in the end because of the formula used to compute the price adjustments. We appeal that the measure be withdrawn until further studies especially at this time when the government needs funds to fight COVID-19,” the group said in a statement.

It reiterated that price control "has not been effective based on global experience."

"It is a populist proposition but discourages production, creating scarcity that will likely hurt those in need of the medicines the most, and shrinks an industry. We continue to appeal for a thorough review on the impact of this policy," PHAP said.

"Government should continue the practice of buying in bulk and price negotiation to assure both supply and price stability."

The Department of Health earlier said it had "extensive consultation" with drug makers, patient organizations and consumers before making the proposal to the President to set a maximum price on certain medicines.

"This will propel us toward Universal Health Care which will broaden our agenda to make comfortable lives for all Filipinos,” Health Secretary Francisco Duque III said in February.

“With the limited ability of many Filipinos to support even their basic needs, how can they even pay for expensive medications which could amount to Php 5 million to treat cancer, for example? We cannot accept these sky-high prices as the norm. The industry and health institutions must be socially responsible and ensure that medicines are within reach of the ordinary Filipino," he added.

"All of us should be sincere in providing fair and affordable access to medicines. The health of our people is primordial over business interests.”