Why the cost of medicines is high

A few weeks ago I wrote about a bill filed by Rep. Ferginel G. Biron, a medical doctor by training, which seeks to reduce the high cost of medicines, thereby putting them within the reach of many poor Filipinos. The other day, Rep. Biron and members of the congressional medical committee summoned representatives of the pharmaceutical industry to explain why the prices of medicines are high. Only one representative from the industry showed up, Karen A. Villanueva, corporate affairs director of Pfizer, Inc. Naturally Karen bore the brunt of the legislators incisive questioning.

You and I can only hope that some solutions are found to make medicines affordable and not a cause for high blood pressure and cardiac arrest.

Karen and I had an informal meeting yesterday, during which she told me why medicines are priced the way they are. For starters, she said Pfizer is one with the Philippine government in helping increase access not only to medicines but to affordable and quality healthcare for every Filipino, and Pfizer's medicines are appropriately priced, and we attest to the value that our products and services bring to Filipinos.

Karen said there are many factors that affect the prices of medicines. Just like other commodities, prices of medicines vary from one country to another. Medicines reach the patient via an established supply chain. Local distributors and retailers rightfully add their own mark-ups, a cost that must be reflected in the price, as well as the government's 10 percent value added tax. For imported products, three to 10 percent customs duties have to be paid to the government as well. Other factors that can influence pricing include fluctuation of currency exchange rates, domestic inflation rate, local competitive conditions within the industry, and a public health insurance system that could subsidize the cost of medicine.

In many countries, the government subsidizes healthcare for their constituents, said Karen. By increasing the purchasing power of the government through bulk purchases, the government is able to buy medicines at lower prices. In relation to this, the World Health Organization recommends that governments should allocate 5 percent of their GDP to healthcare. We note though that the Philippine government spends only about 1.8 percent of our GDP on healthcare, a figure much less than the WHO recommendation.

The pharmaceutical industry, said Karen, is a very high-risk business. It takes between 10-14 years and about US$800 million to develop a medicine. Just to demonstrate this high-risk business, in the last six years, four new major products of Pfizer alone were withdrawn from the market due to safety considerations. Billions of dollars were lost as a result of lost revenues, litigation and unrecovered R & D costs. Companies invest in research and development in the hope that we can find cures for people suffering from dreaded diseases and their complications.

Karen believes that lowering the prices of medicines is not the answer to making healthcare accessible to all Filipinos. Rather, the healthcare infrastructure in the Philippines must be improved. This is done by improving healthcare at the primary level by ensuring that local government units allocate a fixed budget for health and give it the priority it deserves; increase national spending on health at levels recommended by the WHO: 5 percent of GDP; ensure expansion and full coverage of every Filipino under the Philippine Health Insurance Corporation; ensure a generics industry that produces high quality, safe and effective medicines; ensure a level playing field for both local and international companies by adopting a common Code of Ethics to ensure that dealings with healthcare professionals are governed by agreed rules, and review the taxes being imposed on pharmaceuticals.

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We've been told over and over again that the quality of teaching in the past was so good that First Year High School students could teach first and second graders. Today, many college graduates education majors at that – are not academically equipped to teach grade school pupils. They cannot write simple correct English, they cannot communicate ideas or understand the subject matter they are teaching. What went wrong?

I received a letter from Apolonio G. Ramos of Marikina, Metro Manila, which talked about the quality of Philippine education in the past. Its message is that our educators and legislators look back to the old education system and see how it can be adopted to improve the present system, which has been bastardized and emasculated by silly experiments. I'm printing portions of Mr. Ramos' letter.

I am 80 years old and a product of the old school, having gone through the primary and intermediate grades in the ’30s and graduated from high school in March 1941. The elementary and high school curricula required seven and four years, respectively. Nursery and kindergarten were not prerequisites. English was the sole medium of instruction in all subjects, from Grade I to 4th year high school.

Of course, our teachers were very good products of the sound education system. Our textbooks were far superior to the present ones. Does anyone still recall The Philippine Readers by Camilo Osias? In the primary and intermediate grades, we were taught language (English), reading and phonics, arithmetic, drawing, writing, music, health education, Philippine geography, world geography, industrial arts for boys and home economics for girls, social science, Philippine history and government, civics.

And of course, good manners and right conduct. Physical education was taught in all grades, too.

In high school, we were taught English literature and composition, world history (ancient and medieval), current events, algebra (1st course and advanced), plane geometry, general science, biology, Philippine social life, Oriental (Asian) history, American history, applied arithmetic, economics, physics, Tagalog and physical education. We had a choice of Boy Scouting, Girl Scouting or military training.

The annual achievement tests confirmed the superiority of public school education over that of the private schools. The high school publications and newsletters had the professional touch. The high school graduate then was substantially prepared to pursue a college education. We were not less patriotic and nationalistic than the graduates of today, despite being taught in English. In fact, many in our generation volunteered to fight in Bataan, despite the shortage of arms and ammunition. Nowadays, students shun military training and conveniently opt for so-called civic activities to avoid its physical requirements.

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