GMA 50 Program:
Failed solution to the people�s severe health problems

Basahin ang artikulong ito sa Pilipino

To fulfill Gloria Macapagal-Arroyo�s promise in her first State of the Nation Address to allegedly reduce the prices of medicines by 50%, the Department of Health (DoH) launched GMA 50. The program�s avowed aim was to ensure the constant availability of affordable, high-quality, safe and effective medicines especially for the majority who are impoverished. But like her other promises in her first SONA, Macapagal-Arroyo failed to reduce the prices of medicines.

HYPOCRITICAL SOLUTION. The only measure taken by GMA 50 in its supposed bid to solve the problem of expensive medicines in the country is to import cheap medicines. Under this program, the Department of Trade and Industry (DTI) imports cheap medicines which are in turn sold in public hospitals and small drug stores set up by the government, the Botika ng Masa.

In March, the DTI imported up to P21.5 million worth of cheap medicines from India. Nonetheless, this accounted for less than one percent (only 0.16%) of the overall value of medicines purchased in the country in 1999. This amount is too small for the people to derive any significant benefit from the program.

Above all, Macapagal-Arroyo�s hypocritical importation of medicines did not result in any fundamental change. Instead, it ran roughshod over the need to set up a national drug industry. It merely buttressed the country�s dependence on imported products, to the detriment of local companies and the people as a whole.

WHY PRICES ARE HIGH. The Philippines ranks second in all of Asia when it comes to prices of medicines. According to no less than the Bureau of Food and Drugs, drug prices in the Philippines are currently 250 - 1,600% higher than in other member countries of the ASEAN. According to the Health Alliance for Democracy, drug prices in the country are 18 times higher that in India, Canada and other countries where the people receive higher wages compared to Filipinos.

Medicines are exorbitantly priced in the Philippines. For instance, anti-tuberculosis drugs like INH (300 mg.), Rifampicin (400 mg.) and Pyrazinamide (500 mg.) are sold for P1,066.60 even if the cost of manufacturing these medicines runs to a mere P321.30.

The Philippines does not have its own drug industry. What passes for a local drug industry is in fact involved only in repacking manufactured drugs from transnational companies. Processing involves a very tiny portion, if any, and is dependent on the importation of raw materials from transnational companies.

According to the Association of Drug Industries in the Philippines, 72% of the local drug market is controlled and monopolized by foreign companies like Zuellig Pharma, Bristol Myers Squibb and Johnson & Johnson. Eleven out of the 12 biggest drug companies in the country are foreign-owned. In 2000, they amassed combined profits of up to P4.2 billion in the Philippines.

Through the connivance of foreign monopolies and local businessmen, the following schemes are perpetrated, raising the prices of medicines in the country:

Through transfer pricing, local subsidiaries purchase raw materials from their mother transnational companies at the prices prevailing in the international market. This is done even if such raw naterials cost less if bought within the country or from other companies.

Foreign pharmaceutical cartels can likewise agree on the prices of their common products through the practice of fixed pricing.

Royalties, on the other hand, are paid by whoever wishes to produce a particular drug, to the companies that own the patents or the exclusive right to manufacture such medicines for a term of 17 to 20 years. This system decisively establishes a monopoly in the manufacture and pricing of medicines. Transnational companies scramble to monopolize the biggest number of, if not all, drug patents, especially of the most essential medicines. Royalties add such a tremendous amount to the prices of drugs in the Philippines due to the government�s zeal to protect the interests of the transnationals that monopolize patents to medicines. In India, however, quality medicines can be manufactured at very low cost because producers circumvent patents by employing modified processing methods. This they do with the government�s blessings. Thus, medicines imported by the Philippines from India cost 90% less compared to the prices of the same drugs in the Philippines. Foreign monopolies also block drugstores from selling medicines that will compete with their products, especially if these are cheaper. Should the drugstores sell the cheaper drugs, they are threatened with being cut off from receiving supplies of products made by foreign monopolies.

Transnational companies likewise pass on to the people the high cost of advertising on radio, television and print. High taxes imposed by the government also contribute to the exorbitant prices of medicines � import taxes, for example, range from 10 - 30%.

Due to the severity of the people�s health problems, programs like GMA 50 that rely merely on drug importation are not enough. The problem of the high cost of medicines is rooted in the monopoly of transnational pharmaceutical companies and the absence of a national drug industry in the country. As long as basic industries like the chemical industry, which is important to drug manufacturing, have not been established in the country, the people can never be free from the shackles of transnational companies. Only through the establishment of these national industries can the Filipino people be expected to have access to the services and benefits that will promote their welfare.

August 2002
English Edition

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