Generic drug substitution is expected to increase once the executive order (EO) that would impose a cap on prices of lifesaving medicines has been signed.
In a report, Fitch Solutions Macro Research, said while the measure would be a threat to multinational drug-makers, it would be positive for the people and the sector in the long run.
“An increasing focus on cost-effective expenditure will further promote generic substitution rhetoric. As such, generic medicine sales growth will outperform overall market growth over the long term,” it said.
The Department of Health (DOH) has proposed maximum retail prices (MRP) for about 122 medicines for more than 40 diseases, among them hypertension, diabetes, cardiovascular disease, neonatal diseases, and cancer.
Prices of the covered medicines are projected to decline as much as 56 percent from their current retail price.
The report said the introduction of a cap on the maximum retail price of medicines “will exacerbate a tough environment, with price controls being applied at all stages of (the) supply chain.”
The move is in line with the Duterte administration’s bid to provide Filipinos a comfortable life, which is also the reason for the signing of the Universal Healthcare Act in February 2019.
The report also cited Health Secretary Francisco Duque who cited the need for pharmaceutical companies to be sensitive to the needs of patients because even the middle class finds it difficult to buy medicines for certain cases.
Medicines that will be affected by the proposed MRP are newly-introduced products, many of which are complex biologicals manufactured by large pharmaceuticals from the US and Europe, it said.
Other parties that will be affected are local distributors, pharmacies and private hospitals, it added.
Fitch said this situation might force manufacturers to reconsider plans to launch new medicines in the country or even withdraw existing products to the detriment of the public.
Over the longer term, it said these price controls could be positive for the market with higher volume sales and greater competition in the market.
“If patients and other payers are attracted to the new lower-priced pharmaceuticals, greater demand should attract more suppliers to the Philippine market, which is often overlooked by firms seeking opportunities in (the) Asia Pacific,” it added. (PNA)