It will be recalled that this column recognized government’s initial victories in its raging war against expensive medicine for major illnesses suffered by underprivileged Filipinos. We echoed the enthusiasm shown by Philippine International Trading Corp. (PITC) chair Roberto Pagdanganan following the introduction by Filipino-owned United Laboratories (Unilab) of the anti-hypertensive treatment Amvasc which effectively reduced by 60 percent what patients have to spend for such treatment.
Some of the 7.76 million Filipinos suffering from hypertension registered similar enthusiasm. Those on a daily dose of at least one 5-milligram tablet of hypertensive treatment point out that with the introduction of Amvasc, their monthly medicine budget should go down from P1,342.50 to an affordable P525.
For many years, the only available anti-hypertensive treatment in the country is Norvasc which is manufactured and distributed by Pfizer, one of the world’s biggest drug companies.
Already, the talk in the market is that Pfizer faces the same fate as that of a major international hamburger chain which entered the Philippine market sometime in the late 1970s. Our coffee shop colleagues tell us that this chain always captures top market slot in whatever country it penetrates. Except the Philippines.
Pfizer is mostly number one in the countries where it markets Norvasc. Could Amvasc cause it to lose its leadership in the Philippine market? Hamburgers and anti-hypertensives are worlds apart, but the comparisons are becoming more interesting.
Is a price war about to ensue between Amvasc and Norvasc, considering the 60 percent difference between the price of the two treatments? Is there any chance that Pfizer would try and match the P17.50 per 5-milligram tablet at which Amvasc is priced today?
About a year ago, Pfizer did come under fire on the Norvasc issue. Government officials called the giant’s attention that the same medicine was being sold at a very much lower price in India and Pakistan. Pagdanganan led the call for Pfizer to lower the price of Norvasc so that the country’s 7.76 million hypertension patients could have the medicine within their reach.
Pfizer mounted a legal suit against Governor Pagdanganan and the PITC in the process but did not lower Norvasc’s selling price despite the row.
To lower its price now could be disastrous for Pfizer.
Reason: there could be an angry howl from its multi-million peso market in the country. Those who have been using Norvasc for decades despite its price would ask Pfizer how come it is reducing its price now? Does Pfizer mean to say it was in a position to reduce the price of Norvasc all these years but did so only because there was finally a competition?
Some of our friends on Norvasc say Pfizer has issued some kind of VIP card that entitles the bearer to some discounts for the anti-hypertensive. Even this move is raising eyebrows. People are asking if this is actually the silent price war: approximate the Amvasc price by using a "discount" ploy.
The general view is this: whatever move it makes today may be too late for Pfizer. The market had always aspired for a more affordable choice. It got one.
The prognosis is Pfizer might just let Norvasc stay as the "Rolls Royce" of the hypertensive world. A "signature drug" of sorts.
In the meantime, the market will enjoy the respite from high blood pressure. And high medicine prices.
Indeed, there are lessons to be learned here.
Ian, the more technical guy among the group opined that the controversy is just another indication on how well-meaning laws are turned into virtual burdens when its provisions are skirted, wittingly or unwittingly, for convenience.
Our technical expert went on to explain that the present set-up of the WESM will not "yet" create a lowering of electricity prices as was claimed by the administration – simply because there is still a dominant player - the state-owned National Power Corporation.
It doesn’t require rocket science to realize that there will be no true competition in a virtual monopoly because the dominant player can easily dictate the rules of the trade.
The government agency Napocor still owns some 80 percent of the country’s generating capacity. And since the remaining 20 percent are IPPs with fixed price contracts directly with distribution utilities like Meralco, then practically all of the plants that set the price in the WESM today are subject to the dictates of the state firm.
The coffee shop group finds it difficult to accept and swallow Napocor’s repeated denials that it dominates WESM. And they expect the public to believe their 13 trading firms involved supplying the majority of WESM’s energy pool operate independently and are actually in competition with each other.
No matter how Napocor divides its plants into trading firms in WESM, the fact that it still owns the trading firms simply implies they have a say in how each and everyone of them trades in the spot market.
The EPIRA requires that before WESM was launched, at least 70 percent of the government owned and operated power plants should be privatized. This would have ensured true competition.
Let’s cite one case in point. As a result of the low trading prices in the WESM in July this year, Napocor reportedly incurred more than P1 billion. But its president, Cyril Del Callar, was not a bit bothered as he was quoted as saying "a peso lost this week will or could be recovered next week."
True to his word, in the next month, prices in WESM dramatically increased to P3.07 per/kwh and then skyrocketed to P4.86 per/kwh in September. This was way over their ERC-regulated average "time-of-use" price of P3.90 per kilowatthour.
This led many observers to suspect manipulation because there could be no explanation on why electricity rates could have dramatically increased by almost 100 percent only after three months. Was it the scheme insinuated by Del Callar on how his state firm could recover loses?
This is yet another reason that proves WESM is meaningless until the majority, 70 percent to be exact, of the government agency Napocor is privatized.
Besides, we cannot imagine investors would even want to consider taking part in a business with a dominant state firm subsidized by the government at the expense of taxpayers’ money. There is no fair competition in that.
But does this mean that WESM should be scrapped? Ian gave the sanest, most practical answer – definitely not! It has worked and proved itself in many countries in so far as lowering electricity rates and, more importantly for the Philippines, attract the urgently needed investors in the power sector.
The delay in Napocor’s privatization has a number of colleagues really starting to believe that stories about individuals who are hell bent on continuing to treat the state firm their milking cow for as long as they possibly can.
Allegations of Napocor officials enriching themselves in office while the state firm is mired in huge debts have never ceased. And if the reports were true, then it would appear that the ones tasked to execute the privatization may the very people jeopardizing its chances of being privatized.
We must cite the fact that the government has made headway in implementing reform in the power sector.
Among our last three presidents, President Arroyo has made the most progress in power reforms. The passage of the EPIRA is one and then former Energy Secretary Vince Perez accomplished the tough and dirty job of raising NPC rates closer to their true costs and then the launching of WESM is another.
But the underlying step of making the EPIRA truly work has not yet been implemented – and that is the privatization of Napocor.
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