Can gov't break up drug monopolies? - Gotcha

They're not kids, but they do say the darndest things.

After riding on Lakas to the Vice Presidency in '98 and accepting its vice chairmanship in '99, Gloria Macapagal now says she's not a member of the party because its merger with her Kampi never pushed through. It's like saying the live-in never worked out, so she'll let LAMP court her.

Senate Majority Leader Frank Drilon says he's frustrated with his chamber's slow legislative pace under Senate President Blas Ople, so he'll speed up things when he replaces him next week. It's like saying he never did his job these past many months as Ople's gate-keeper of lawmaking.

Medicines in India are just as potent as in RP. After all, they come in the same dosages and packages, from the same world makers and sellers. So why are medicines in RP 18 times costlier than in India? Filipinos will soon find out, as an inter-agency task force attempts to directly import RP's ten most-prescribed drugs. Whoever cackles laid the egg. Whoever opposes the move will surface as the culprit all these years that Filipinos have been suffering and dying from unaffordable drugs.

Trade Secretary Mar Roxas anticipates more than just cackle from Zuellig Group and Mercury Drugstore chain. Direct-buys aim to break what he calls "inordinate economic control" of the pharmaceutical industry by the two conglomerates. Zuellig, through so-called tolling, makes 90 percent of all drugs sold in RP by 654 competing local and foreign firms. Mercury sells 70 percent of all medicines made by Zuellig, six small rival tollers, and a slew of overseas makers. Buying 18 times cheaper from India -- tax-free since it's a state deal -- then selling through cooperatives and charities would incite howls of unfair government competition. Some traders are already crying foul, although they'd be least hit by direct imports. Roxas knows who put them up to scare the government with buzz words like investor flight and mass layoffs -- to which it already is allergic due to cronyism in other industries.

Insiders say that Health Secretary Alberto Romualdez had tried to import as far back as June 1999 and again in November. Both times, powerful lobbies pulled strings in Congress and Malacañang to thwart him. Roxas was House Majority Leader at that time, heading an inquiry into why drugs cost too much. Militant doctors kept sending him studies about half of prices going into brand promotion. But the figures just didn't add up for Roxas, who trained in Harvard finance school. If half of prices went to such items as glossy brochures, physicians' samples, or golf freebies for doctors, then the solution would simply be stricter use of generics. Yet drugs still cost thrice more in RP than in Singapore or Malaysia, seven times more than in Thailand or Indonesia.

Roxas dug deeper and discovered Zuellig and Mercury's monopoly of drug-making and selling, respectively. He found out that of the 242 so-called drug manufacturers, only a dozen or so actually make their drugs. The rest just send their secret formulas to Zuellig, which then imports chemicals and gel coatings to mix and label pills into what consumers see in their medicine cabinets. It's a no-lose proposition, since Zuellig bills its captive clients on cost-plus basis. But since Zuellig is so secretive about its account books, it hardly shows profit from a multibillion-peso industry. Still, doctors and drug traders complain that Zuellig charges one of the highest tolling rates in Asia.

Mercury is just one of 1,933 drug retailers. Yet it controls 70 percent of the trade with its huge branch network. No sin there -- in a new world of business where size does matter. Just that Roxas sees something strange in Mercury raking in 15 times more profit each year than a manufacturer--distributor as big as, say, Eli Lily.

Teaming up with Romualdez to attempt direct-buys for a third time in May, Roxas is banking on newfound influence as a member of Joseph Estrada's Economic Coordinating Council to skirt the lobbies. Estrada is anxious for palpable projects for the poor to shore up his survey rating. If Roxas can bring down drug prices on one end of the seesaw, the Boss' ratings just might rise back up from +5 to +66 on the other end. No lobby can botch things up this time.

Health workers do not foresee Mercury to put up a fierce fight. It is so big, while nonstock-nonprofit groups are too small and few to make a dent in drug retailing, so it can rest easy. Such groups must secure "botica licenses" before they can sell drugs imported by Roxas and Romualdez; Congress will have to go through long debates to relax retailing rules for "newcomers". In the end, Roxas and Romualdez may have to sell through Mercury's branch network -- under strict price monitoring -- if they want the masa to enjoy the cut-price effect of direct imports.

Health department insiders do not expect Zuellig to take it sitting down. They say the Swiss-owned group operates through publicly-listed Interphil Laboratories Inc. GSIS owns enough shares in Interphil to command two board seats with other Filipino minority shareholders. That puts it in a position to influence drug pricing for the benefit of its 1.5 million lowly, low-paid government employee-members. Why GSIS isn't doing so is the big exclamation point.

Sigma Kappa Pi invites members of U.P. Barkada frat alumni to its 1st Raul Bartolome Memorial Cup on Apr. 14 at the Clark Golf & Country Club (Mimosa). The games aim to foster friendship and end frat wars.

YOUR BODY. Millions of people face health risks from unsafe blood in developing countries, where a fifth of donations are not screened for infections, the World Health Organization warns.

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