Thursday, January 21, 2016

DILG-Bicol reminds LGUs of DOH’s price ceiling vs overpricing in medicine purchases
By Danny O. Calleja

LEGAZPI CITY, Jan. 20 (PNA) – The Department of Interior and Local Government (DILG) regional office here has reminded local government units (LGUs) in the region of an order recently issued by the Department of Health (DOH) against suspected overpricing of medicine purchases.

Administrative Order (AO) No. 2015-0051 issued by Health Secretary Janette Garin last Dec. 17 establishes the guidelines in the implementation of the Philippine Drug Price Reference Index (DPRI) in all public health facilities, including hospitals and rural health units run by LGUs, DILG-Bicol Regional Director Eloisa Pastor said on Wednesday.

The order, according to Pastor, took effect last Jan. 7 after 15 days of its publication in national newspapers last Dec. 23.

First introduced in 2014 through DOH Department Order No. 2014-146, the DPRI initially made it mandatory for all DOH-run hospitals and regional offices to adhere to the price ceiling when procuring drugs listed in the Philippine National Drug Formulary (PNDF).

The PNDF, whose formulation by the DOH has been mandated by Republic Act No. 6675, otherwise known as the Generics Act of 1988, is an integral component of the national drug policy aimed at making available and accessible, essential medicines of proven efficacy, safety and quality at affordable cost.

Aimed at guiding all public health facilities in the fair pricing of essential medicines and increasing efficiency of the drug procurement process in the public sector, the DPRI is envisioned to stretch the health care budget by generating savings and prevent corruption in the sourcing of essential medicines.

The DPRI also establishes systems and methods for maintaining a database of reference prices for essential medicines from DOH facilities and create a formula in setting reference prices of medicines in the PNDF.

The reference prices can be accessed online at and its database is updated annually and disseminated to all health stakeholders to serve as a guide in rationalizing the procurement prices of medicines in the public sector.

Its introduction paved the way for the planned creation of Drug Price Regulatory Board, which will assess the prices at which drugs represent good value for the DOH and the Philippine Health Insurance Corp. (PhilHealth) and the likely integration of pharmacoeconomic criteria into its pricing and reimbursement system.

In 2011, the DOH began to study the procurement prices of essential medicines in public hospitals with the aim of coming up with a standardized reference for public funding and address the problem on lack of access to the life-saving commodities in many health facilities.

Local chief executives, according to Pastor, are mandated to ensure the compliance with the latest order and adherence to the price reference set by DOH, with an option to source their medicine procurement at the PITC-Pharma Inc. (PPI) in case of bid failures.

Classified under the Human Development and Poverty Reduction Cluster by the Governance Commission, the PPI, which provides support to the DOH in the determination of the maximum retail price of medicines, is the only pharmaceutical government-owned and controlled-corporation tasked to provide low-priced quality medicines to the Filipino people.

PPI also acts as a servicing agency and that government agencies may directly procure imported medicines under the alternative mode of negotiated procurement or agency-to-agency agreements subject to the rules under R.A. 9184 or the Government Procurement reform Act.

AO 2015-0051, Pastor said, does not only intend to put an end to overpricing in procurement of medicines believed to be prevalent among LGUs but is also directed to suspected illegal acts of price manipulation such as hoarding, profiteering and cartel.

The DILG adopts the DPRI as the ceiling price for medicine procurement across all LGUs as the agency will help ensure compliance with the order and report to DOH all cases of non-compliance, she said.

Apart from covering all public health facilities, the DOH regional offices and LGUs, Garin’s order also directs the PhilHealth to adopt the DPRI as reference in determining the cost of health services that it will pay in favor of its members and beneficiaries.

In the same order, Garin cited the high and extremely variable prices of medicines in the Philippines that impact on access to effective, efficient and equitable health care, referring to a 2009 study by Health Action International on overpricing of medicine procurement prevalent among national and local health facilities.

The study says that originators brands and generic equivalents were procured almost 16 times and three times higher, respectively, compared to prices available in the international market.

Assessments showed that the 10 most essential medicines earlier procured by DOH-run hospitals cost the government around Php67 million and using the DPRI defined by AO 2015-0051 could possibly save as much as Php32 million or about 50 percent.

Garin further noted that the common unavailability of essential medicines in public health facilities forces patients to obtain their medicine requirements at a higher cost from private outlets.

She has expressed optimism that the DPRI this time will be more useful as a tool for government hospitals, health agencies and LGUs to improve good governance in medicines as it is believed that transparent and fair pricing is an important pillar of universal health care by improving the availability and access of patients to medicines. (PNA) SCS/FGS/DOC/CBD