Philippine Drug Industry, Drug Distribution, & Regulation (TG13-CG05) PDF

Philippine Drug Industry, Drug Distribution, & Regulation Module 01: Principles & Perspectives II Peter Glenn Y. Chua, MD-MBA |Asynchronous TABLE OF CONTENTS I. WHAT IS HEALTH?................................................................. 1 ● A. PERSPECTIVES ON HEALTH.............................

Philippine Drug Industry, Drug Distribution, & Regulation Module 01: Principles & Perspectives II Peter Glenn Y. Chua, MD-MBA |Asynchronous TABLE OF CONTENTS I. WHAT IS HEALTH?................................................................. 1 ● A. PERSPECTIVES ON HEALTH............................................... 1 II. PHILIPPINE BIOPHARMACEUTICAL INDUSTRY...................... 1 A. ADOPTION OF DEFINITIONS............................................. 1 ● B. WHY IS THE PHILIPPINE-PHARMA INDUSTRY NOT MAKING DRUGS?.................................................................. 2 C. WHAT DOES THE BIOPHARMACEUTICAL INDUSTRY DO?. 2 D. THE PHILIPPINES IN THE HEALTH PRODUCT SUPPLY.........3 ● CHAIN................................................................................... 3 E. PARTNERSHIPS: COMPLIANCE AND DISCLOSURES............3 F. THE REGULATOR................................................................ 4 G. TRENDS IN REGULATION.................................................. 4 III. COMMUNITY AS THE OBJECT OF THE PUBLIC SECTOR’S AUTHORITY..............................................................................5 A. PROVISION OF PUBLIC HEALTH GOODS............................5 B. HUMAN RESOURCE: PROFESSIONALS.............................. 5 C. MONEY............................................................................. 5 D. TRANSPARENT, ACCOUNTABLE, AND UNIVERSAL SUFFRAGE............................................................................. 6 IV. DRUG DISTRIBUTION IN THE PHILIPPINES............................6 A. POTENTIAL GROWTH OPPORTUNITIES.............................7 B. CHEAP VS EFFECTIVE DRUGS............................................ 7 C. GOVERNMENT INFLUENCE ON THE FLOW OF DRUGS......9 D. LOCAL GOVERNMENT CODE OF 1991............................ 10 E. GOVERNMENT PROCUREMENT REFORM ACT................ 10 QUESTIONS............................................................................11 ANSWER KEY......................................................................... 11 RATIONALE............................................................................ 11 LEARNING OBJECTIVES 1. Expand awareness of the ecosystem in which the Philippine biopharmaceutical industry exists 2. Introduce instruments and organizations that are influential in the ecosystem 3. Reinforce values that underlie decision making I. WHAT IS HEALTH? ● Objectives: ○ To understand the concept of health ○ To view health in different perspectives and the effects different actors have on health A. PERSPECTIVES ON HEALTH ● To properly understand the concept of health: YL6: 01.26 ● ○ We need to see the different perspectives that different actors have with regards to health Health is a commodity ○ Useful as a tool or means to mobilize communities to enforce a form of social engineering Health is a right ○ Innate to every individual ○ All have access and are able to receive health goods and services ○ Everyone is covered by health financing Health is a form of wealth ○ It is discrete and measurable ○ A measure of power that can assess progress and relative strength These perspectives are in constant interaction with each other, within individuals, and within organizations ○ It’s not that one perspective is better or more correct than the other ○ For one to be able to properly navigate the health sector, one must be aware of: ▸ The interactions between these perspectives ▸ Value propositions II. PHILIPPINE BIOPHARMACEUTICAL INDUSTRY ● Health perspective taken in by the public sector/government: health is useful ● The government works as a whole in affecting laws and determining policies ○ Where agencies work in coordination with other sectors and stakeholders ● Government agencies have to be consistent with each other ○ E.g., COVID-19 response, wherein there is a great lack of communication and coordination ● Consistency, coherence, and involvement of all of its parts are expected of the government ○ These need to be expressed in the policies and standards ● The Philippine government does not exist in a vacuum ○ It does not exist in loyalty to one master ○ It has to be in coordination with all the different actors in the world, and, because of this, it has to be: ▸ Rational so that it can be understood ▸ Consistent in that outcomes are predictable so that it is not taken to be an enemy ▸ Clear so that meaningful action is made ○ The perspective of the government is expected to be global yet flexible ▸ We have to be able to play and work well with others ▸ We have to learn how to navigate the field with other players A. ADOPTION OF DEFINITIONS ● One way we can be more informed is by adopting definitions for use TG13: Abad Santos, Ahalajal, Alba, Bernardo, Binobo, Cai, Dy, Gamboa, Pacis, Rejuso, Tan CG05: Artillaga, Avila, Cheng, Escalante, Lim, Marcos, Palencia, Quimson, Remitio, Salvador, Sandoval 1 ● These definitions for health products are all derived from existing legislature ● The fact that these are defined in a standard manner globally is to ensure that we understand each other when we talk especially when it comes to trade ○ Trade and health products ▸ Important component of the health policy Definition of Terms ● Health products ○ Food, drugs, cosmetics, devices, biologicals, vaccines, in-vitro diagnostic reagents and household/urban hazardous substances and or a combination of and or a derivative thereof. It shall also refer to products that may have an effect on health which require regulations as determined by the FDA ○ Republic Act no. 9711, The Food and Drug Administration Act of 2009 ● Drug ○ Clause 1: Articles recognized in official pharmacopoeias and formularies, including official homeopathic pharmacopoeias, or any documentary supplement to any of them, which are recognized and adopted by the FDA ○ Clause 2: Articles intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in man or other animals ○ Clause 3: Articles (other than food) intended to affect the structure of any function of the body of human beings or animals ○ Clause 4: Articles intended for use as a component of any articles specified in clauses (1), (2), or (3) but do not include devices or their components, parts or accessories ○ Republic Act no. 9711, The Food and Drug Administration Act of 2009 ● Biological products ○ Derived from cells, tissues, or microorganisms ○ Reflect the inherent variability in the characteristics of living materials ○ WHO Expert Committee on Biological Standardization, sixty-sixth report (WHO technical report series; no. 999) ● Medical device ○ Any instrument, apparatus, implement, machine, appliance, implant, in-vitro reagent or calibrator, software, material, or other similar or related article intended by the manufacturer to be used alone or in combination for human beings for one or more of the specific purpose(s) of: ▸ Diagnosis, prevention, monitoring, treatment, or alleviation of disease ▸ Diagnosis, monitoring, treatment, alleviation of or compensation for an injury ▸ Investigation, replacement, modification, or support of the anatomy or of a physiological process ▸ Supporting or sustaining life; preventing infection ▸ Control of conception; disinfection of medical devices ▸ Providing information for medical or diagnostic purposes by means of in-vitro examination of specimens derived from the human body ○ This device does not achieve its primary intended action in or on the human body by pharmacological, YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation immunological or metabolic means, but which may be assisted in intended function by such means ○ RA no. 9711, The Food and Drug Administration Act of 2009 Active Recall Box 1. T/F. Health products only consist of food and drugs regulated by the FDA. 2. T/F. Biological products are derived from cells, tissues, or microorganisms. Answers: 1F, 2F B. WHY IS THE PHILIPPINE-PHARMA INDUSTRY NOT MAKING DRUGS? Take note! ● We have no active manufacturer producing pharmaceutical active ingredients in the country ○ Examples: ▸ Biogesic ⎻ Paracetamol is imported ⎻ Only made into a tablet in the Philippines ▸ Antibiotics (like Co-amoxiclav, Azithromycin) ⎻ Active ingredients are imported as well ▸ Although, we have glycerine manufacturers that make syrups ⎻ Active ingredients mixed with the glycerine are still imported ● Drug Complexity ○ Requires a lot of investment just to start producing drugs ○ Atlas of Economic Complexity by Harvard University ▸ Biochemical products are technologically complexed and distant for the Philippines compared to what we are producing ○ Just because vaccines, antibiotics, and pharmaceutical goods are economically complexed and distant capability wise ● The country should not rely on the supply of other countries ● We need to push for the establishment of a pharmaceutical industry in the Philippines that is political ○ It is tightly regulated and resource intensive ● Health and biopharmaceutical industry are important parts of any well-developed and economically stable country ○ Matter of national pride ○ Large biopharmaceutical are indications of economic development and sophistication 2 C. WHAT DOES THE BIOPHARMACEUTICAL INDUSTRY DO? ● Raw materials / active pharmaceutical ingredients to make drugs ○ We only have lagundi ● Suppliers for raw materials (e.g. nucleic acid, primers, antibiotic raw materials) ○ These are imported WHAT THE COUNTRY HAS Figure 1. Process of Production and Application of New Drugs ● The biopharmaceutical industry produces drugs ○ Illustration (Figure 1) shows that the pathway for the biopharmaceutical industry to produce a drug is daunting ● Factors that make it discouraging for companies to start innovating and manufacturing in the Philippines: ○ Extent of resources ○ Complexity of technology and the science required ○ Regulatory gauntlet drug companies have to go through to introduce products ● Not only the extent of resources, complexity of the technology and science requires, but also the regulatory gauntlet that drug companies have to go through to bring products to the market ● All these factors make it discouraging for companies to start innovating and manufacturing in the country Figure 2. Large pharmaceutical companies are shifting their presence to biopharma ● In progressive countries ○ Moved to a more specialized aspect of pharmaceutical, specifically for biologics ○ In the last 20 years,vaccines, monoclonal antibodies, serums have been the focus of these large companies ● Clinical trial facilities and contract research organizations ● Capability for manufacturing ○ We produce fluids (IV fluids/swero), laboratories, and a good intellectual property regime ● Good packaging and logistics despite our archipelagic situation ● Demand is large ○ Consumption side is not problematic ▸ There is space for illegal means to meet needs, such as ⎻ Counterfeits ⎻ Product diversions ⎻ Gray market ○ Satisfying this demand for health products and services is an important part not only for our economy but also for the overall human development in the country WHAT IS NEEDED TO STRENGTHEN OUR SUPPLY CHAIN ● We – individuals, communities, professionals, institutions, and the public sector – need to get the following elements together right so that the Philippines can do upstream biopharmaceutical industrial activities ○ Stable Water Supply ▸ Already being addressed in part by the dam being built in Quezon and Rizal ▸ Controversial because it is partly funded by China ○ Power Supply ▸ Currently at a surplus, but it is still questionable if it will be enough with our continuing economic momentum ○ Modernization of Agriculture ▸ Agriculture has been neglected in the Philippines ▸ A shift towards a more economically sophisticated environment for the Philippines will change the face of agriculture ▸ Has to be anticipated and planned for as a contributory factor to pharmaceuticals ○ Transport, Logistics, and Intensified Cleanliness Policy (ICP) ▸ Will tie together all the elements of the biopharmaceutical industry together ▸ All components will have to be in place first ● Putting these together will require a lot of resources, time, and effort from different individuals - this can’t be done by one person only D. THE PHILIPPINES IN THE HEALTH PRODUCT SUPPLY CHAIN ● We need to understand where we are in the health product supply chain WHAT THE COUNTRY LACKS ● Drug discovery YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation 3 MANAGING RISKS IN THE SUPPLY CHAIN ○ Is a little preoccupied with their political situation (especially with what happened in the UK) ○ But still a relevant economic partner when it comes to the pharmaceutical industry ● World Bank ● Asian Infrastructure Investment Bank ○ Currently bankrolled by China ○ Currently losing steam given that there is a resistance from the US against China’s growing influence globally ● Asian Development Bank (ADB) ○ Currently bankrolled by Japan ○ Has reached beyond the Philippines: South Asia, Southeast Asia, and the Pacific ○ Continues to be an important partner for the Philippines Figure 3. Different risks that can happen in the supply chain for drug manufacturers ● Leaders, managers, and decision makers have to be aware of the risks in the supply chain ● Drug manufacturers may encounter different pitfalls (Figure 3) in the process of producing a new drug, such as: ○ Active pharmaceutical ingredients sourced from India or China ○ Contract manufacturing organization ○ Intellectual property rights with the Food and Drug Administration ● There are many risks that need to be anticipated ○ Well documented by countries that have gone through this path before ○ If we are going to follow in their footsteps, we have to be ready for these risks LEADING TRADE PARTNERS OF THE PHILIPPINES E. PARTNERSHIPS: COMPLIANCE AND DISCLOSURES ● Partners become very important in: ○ Being ready for the challenges and resource requirements of establishing a biopharmaceutical industry ○ Pushing for domestic manufacturing in the country ● Because we will need to acquire the technology and move through the patents ● These partnerships are fundamentally based on trust ○ Need to be honest and truthful with these partners ○ Communication has to be complete, timely, consistent, and coherent ○ Not simply about money but also about knowledge and technology DIFFERENT PARTNERS THAT THE PHILIPPINES MAY TAP IN PUSHING FOR THE ESTABLISHMENT OF A BIOPHARMACEUTICAL INDUSTRY ● ● ● ● World Health Organization (WHO) United Nations (UN) and its different components Food and Agriculture Organization United States Government ○ An established partner of the Philippines ○ “Good” partner is subjective, but the US has given a lot of money via United States Agency for International Development (USAID) for development and execution of health projects ● Gates Foundation ○ Pushing vaccine creation and development for new diseases, orphan diseases, tropical diseases, neglected diseases ● European Union YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation ● Lead that can be considered in building the biopharmaceutical industry ● Leading trade partners of the Philippines in 2017 ○ Based on import data: ▸ China (26.52%) ▸ Japan (9.22%) ▸ South Korea (8.47%) ▸ Taiwan (7.95%) ▸ United States (6.95%) ○ Based on export data: ▸ China (21%) ▸ Hong Kong (11.26%) ▸ Japan (11.24%) ▸ United States (12.95%) ▸ Thailand (6.27%) ○ These partners are potential sources of technology transfer ▸ Important part in initiating the creation of pharmaceutical industries in the country ▸ Partnership is not only between other countries and the Philippines ⎻ Relationship between the public and private are important as well F. THE REGULATOR ● Need to understand the nature of the regulator in the relationship between the public and private ○ Responsibility, task, authority of the government in relation to the private sector and its citizens REGULATORY PYRAMID (HEALY & DUGDALE, 2009) ● 6 layers of instruments that the government can use in asserting its influence ○ Those at the bottom of the pyramid that are used more frequently (frontline) ○ Those at the top are used sparingly by the government 4 Figure 4. Regulatory Pyramid Level 6: Volunteerism, Peer Review, Clinical Guidelines ● Clinical guidelines made by professional organizations ● Form of peer review within organizations is also considered a form of regulation Level 5: Self-regulation, Accreditation, Disclosure ● Intellectual Property Office of the Philippines ○ Exerts a form of regulation that is largely self-driven by the private sector ○ Companies have the initiative to look into the intellectual property registry and see if copyrights and patents are compliant with global regulation Level 4: Financial Instruments, Extra Pay for Accredited Facilities, Case Mix Group Payment ● Philhealth can incentivize good or compliant behavior among those receiving its benefits ● Example: For a case-mix group payment, hospitals need to achieve a certain level of bed occupancy by indigent patients to receive reimbursements Level 3: Co-regulation, Medical Boards, External Audit ● Physician Licensure Exam administered by the Professional Regulation Commission (PRC) as a form of regulation ▸ Translates to more efficient resource spending of the private sector in bringing about and developing new drugs for the Philippines ● Shift from development aid to free-trade agreements ○ Has been reversed in the last 4 years in the Philippines ▸ Previous discussions with the European Union (EU) to craft a free trade agreement with the Philippines have been put on hold, if not, altogether discarded ○ One of the measures by which the Philippines can be said to be maturing as an economy ○ We are no longer relying on our trade partners to be donors, instead we are beginning to truly be a trade partner ● Data-driven medical devices & the Internet of things ○ More and more devices are plugged into the internet and coming online, especially now that physical interaction is limited ▸ This generates a wealth of information that needs to be looked at by statisticians and data scientists ▸ These can help regulators and the private sector become more innovative and to refine current practices III. COMMUNITY AS THE OBJECT OF THE PUBLIC SECTOR’S AUTHORITY ● Part of the Department of Health ○ Food and Drug Administration (FDA) ○ Health Facilities and Services Regulatory Bureau (HFSRB) ● Agents that enforce mandatory standards, accreditation, and meta-regulations ○ Meta-regulations: regulations that can require those subject to it to issue regulations themselves ▸ E.g. FDA can require drug companies to form drug recall regulations that will be applied to its operations ● The object of the public sector’s authority or power over the private sector/citizens is the community ● The public sector exists to protect and to serve the public ● By 2040: ○ There will be more Filipinos in their 20s than in any other age group ○ There will be around 35 million Filipinas of childbearing age ○ There will be 36 million more Filipinos ● What do Filipinos need to be healthy? ● What does the public sector need to provide to make sure Filipinos are healthy? Level 1: Command & Control, License Suspension A. PROVISION OF PUBLIC HEALTH GOODS Level 2: Meta-Regulations, Mandatory Standards, Mandatory Accreditation ● Primary agencies ○ Department of Health (DOH) ○ Supreme Court G. TRENDS IN REGULATION ● Instruments that the regulator of the public sector can look further into or have been doing so for the past 2 years ● Improvement of the public-private partnership ○ Not as rapid in the past 4 years ▸ Nonetheless, there is still an on-going public-private partnership ● Technology transfer ○ Aspect of trade that can be facilitated by the government ○ Many patented technologies do not exist yet in the Philippines ▸ Government has to negotiate (government to government) to allow Philippine companies to practice or acquire these technologies ▸ Specifically for the biopharmaceutical industry ● Regulatory harmonization & convergence ○ Alignment among the major health regulatory agencies (US FDA, European Medicines Agency, Ministry of Health, Labor and Welfare of Japan, etc.) ▸ All understand the same concepts and definitions ○ Reduction of redundancy when it comes to the regulatory effort of these health regulatory agencies YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation ● Public goods have to be provided to Filipinos, mainly by the public sector ○ Public goods that are anchored on equitability, consistency and justice SOCIAL SAFETY NETS ● Providing these public goods to the community can take the form of: ○ Establishing social safety nets ○ Protecting consumers ○ Ensuring that the private sector is responsible and reliable in its dealings with the public ○ Ensures that people are getting a fair trade ● Universal Health Coverage & Health Financing ○ Public sector should ensure that these are available to all, especially to those who need it PATIENT EDUCATION AND PRODUCT LABELING ● There has to be patient education for individuals/citizens to be functional as ultimate vanguards of health and their communities ● Individuals have to be sufficiently educated to make sure that their decisions are informed ● Informed decision making is anchored on what is available to read and comprehend ● Product labeling, fairness and truth in advertisements 5 ○ Important applications of public sector authority and regulation ○ Makes sure that patient education and product labeling are oriented towards public safety ● ELECTRONIC COMMERCE ● Safety of trade and individuals through electronic commerce ● Public has to be assured that the health products individuals buy online are safe and effective ● If there are failures in transaction, there are: ○ Ways for correction to be made ○ Means for correction of products ○ Means for purchases to be reversed ● Community is the object of the public sector’s authority ○ Public sector exists to serve the community ● ● ● B. HUMAN RESOURCE: PROFESSIONALS ● When a community is sufficiently protected and served, they give rise to human resources or professionals ● Professionals are able to give back to the community by: ○ Engaging with private sector ○ Providing and extending their skills in service to private sector, public sector, and community ● Based on the World Economic Forum’s Analysis of necessary skill sets in the next 5-10 years, the human resource needed are expected to be able to do: ○ Complex problem solving ○ Critical thinking ○ Creativity ● Among other skills, human resource have these abilities to negotiate the already evolving industrial revolution that is pushing more computers into the mainstream and into the supply chain ○ Requires not only the push of human resources but also the private sector to accommodate these changes ● Professionals are the gateway and middlemen for provision of goods and services for the community. C. MONEY ● Lubricates the exchange of goods and services between the public sector, private sectors, and the community ● Space for dividends, incentives, kickbacks, etc. ○ Can be questionable in the engagement of health professionals, specifically doctors, within the public sector ○ Receiving incentives such as travel, vehicles, placements in schools, shopping opportunities, real estate, and even sex ● Hierarchy of Maslow’s needs have been exploited to manipulate and influence health professionals in the conduct of their profession and service ○ Why? To have them cooperate with the objectives of the one providing them the incentives ● A challenge for health professionals who are navigating the pharmaceutical sector ● Health professionals must be reminded that we are here to provide medical goods and services that are sustainable, effective, safe and all the while ensuring access and convenience for the community ○ Not here only to make money or develop ourselves ● As middlemen for the community, we must understand that many Filipinos do not have an appreciation of the complexities of the biopharmaceutical industry YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation ○ Many Filipinos as still clinging to faith or having hand-to-mouth existence In the last two years, poverty incidence has been questionable ○ Said to have been improved but it’s because its definition was changed ▸ Lowered the bar for poverty With the distortion in truth and proliferation of untruths, the middlemen/health professional’s role in ensuring safe and effective goods and services has become more important As health professionals, we already have our own challenges ○ We are drawn to provide for ourselves yet we have to maintain our vocation ○ We need to look out for our fellow Filipinos who have nothing (i.e., those who are scavenging, have food-to-mouth existence) While this may not be true for us, the marginalized are around us D. TRANSPARENT, ACCOUNTABLE, AND UNIVERSAL SUFFRAGE ● For many Filipinos, the only way their voice can be heard is through elections (suffrage) ● We have institutions for elections and yet their validity is questioned ○ Has the public sector been effective in providing the public good of education? ▸ Public sector has provided education but in a revisionist approach by changing established historic truth ● Shift in the appreciation of truth is undermining the existing relationship between the public and private sector with the object of serving the community ○ Thus, education continues to be the core public good ○ As doctors, this is our fundamental vocation ○ We are, after all, teachers ▸ Docere = we teach Take note! ● Health may be a form of commodity, a form of power ● Regardless of which way you lean, you should still believe that: ○ Health is fundamentally a right innate to each Filipino, to each human being ● It requires a lot of effort, time and resources for the Philippines to have its own biopharmaceutical industry ○ This must be done collectively; cannot be done alone Active Recall Box 3. T/F: Progressive countries have already moved to a more specialized aspect of pharmaceutical, specifically for biologics 4. Who are the potential sources of technology transfer? Answers: 3T, 4 Leading trade partners of the Philippines 6 IV. DRUG DISTRIBUTION IN THE PHILIPPINES ● Based on the 2018 data, chemicals occupy a small portion of the export portfolio/ export basket of the Philippines ○ Chemicals: light pink color block above gold on the lower right quadrant ● One of the squares inside the section for chemicals represents pharmaceuticals ○ At present, it is a small part of the Philippine economy A. POTENTIAL GROWTH OPPORTUNITIES Figure 5. Graph representing the product space of the Philippines Figure 5 ● Philippines as a country with limited capability to export biopharmaceutical products ● In this graph from the atlas of economic complexity posted by the Harvard university with data from 2018: ○ The product space of the Philippines for biopharmaceuticals is vast ▸ Plenty of space surrounding biopharmaceuticals ▸ Not enough products that are complementary or that lead to the production of these products ▸ This illustrates the capability distance of biopharmaceutical manufacturing in the Philippines ● Though it is technologically more complex and more distant capability-wise: ○ We do not have to forgo the responsibility to push for our own biopharmaceutical industry in the country ○ Ensuring that we are able to protect our own interests in the form of biopharmaceuticals is part of our sovereignty and development as a country ○ By extension, a form of ensuring public health of Filipinos Figure 7. Potential growth opportunities of the Philippines ● The highlighted circles are quite distant from those recommended by the model of Harvard university ○ This is something we need to plan for ○ ​We should still set our sites for this far reaching industry because it is an apex industry that will ensure maturity of the economy B. CHEAP VS EFFECTIVE DRUGS ● Which is more urgent for us now: cheap or safe and effective drugs? ○ Pushing for the local biopharmaceutical industry of the local production of active pharmaceutical ingredients is determined by asking this question ○ The question has been asked in legislation, leading to the Cheaper Medicines Act (RA 9502) ▸ Enacted because there was a preference to lower the price of drugs ● However, this question is a false dichotomy ○ For drugs to be cheap, do they have to be expensive? ○ Conversely, for the drug to be safe, do they have to be expensive? ○ These are choices that we should not be making ○ These should not be the primary focus of our legislators ● The questions should instead be: How can we ensure that safe and effective medicines are consistently supplied to Filipinos? Figure 6. Visual Representation of the Export Portfolio of the Philippines Figure 6 YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation 7 FLOW OF FUNDS ▸ Local pharmaceutical companies apply a significant margin because they are importing a lot of the components ▸ Impression: margin is not in favor of the public ▸ Effect of competition: forces the prices lower in favor of patients and consumers ● There are several Medicine Access Programs, as seen in the table below Figure 8. Flow of Funds ● Money PCSO receives is also used to finance healthcare expenses by by the Filipino citizens ● Local government, having received general appropriation from the national government pays for the healthcare services of its citizens ○ Despite the large amount of money being spent, out of pocket expenses is still an important segment of healthcare spending FLOW OF GOODS Figure 10. Table for Other MAPs Available Figure 9. Flow of Goods ● We can see a different MAP for the DOH ○ MAP when it comes to goods is the Medicines Access Program ▸ Centralized procurement program of the DOH ▸ Able to consolidate demands from the different regional offices, hospitals and clinics ⎻ DOH can bulk purchase; much cheaper than individual hospital buying ⎻ Savings in bulk purchasing can be made other drugs that are needed for health programs of the department ● Since we do not have active pharmaceutical ingredient manufacturers, these manufacturers included in Figure X are more of formulation and filling facilities ○ They have the active ingredient imported, mix it with excipients, put it into a pill or capsule form, or dissolve it into a syrup ○ It is packed and labeled, distributed and sent to wholesalers, importers, and distributors onto different units and offices that are going to use these medicines ● An important instrument of the Philippine government is the Philippine International Trading Corporation (PITC) ○ Government-owned and controlled corporation ○ Can purchase medicines directly from sources abroad and provide alternatives for domestically produced and supplied health products ○ PITC’s intention: provide competition YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation ● MAP through PhilHealth is provided through the Z packages and Primary Care Benefits (TSeKaP) ● Local Government Unit based MAPs ○ Medicines provided by the LGU including: ▸ ComPack for non-communicable diseases like hypertension (Amlodipine, Losartan, Metropolol) and diabetes (Metformin) ▸ Expanded program on immunization for infants ▸ Reproductive health - LGUs are supposed to provide prophylactics like pills, condoms, injectables depots, etc. to suitable individuals ▸ Soil-transmitted helminthiasis for worms DRUG LISTS ● There are two main drug lists that are relevant to the Philippine environment Formulary ● A manual containing clinically oriented summaries of pharmacological information about selected drugs ● The manual may also include administrative and regulatory information pertaining to the prescribing and dispensing of drugs. ● National formulary concentrates on available and affordable medicines that are relevant to the treatment of diseases in a particular country. ● Frequently created for different levels of healthcare, different sectors, and for individual hospitals. ● Example: hospital formulary, clinic formulary, ○ Includes all the drugs that may be used for that particular setting ● Oriented towards what is usable and available to the clinician Essential Medicine ● Satisfy the priority healthcare needs of the population ● Created and selected with due regard to disease prevalence and public health relevance, evidence of clinical efficacy and safety, and comparative costs and cost-effectiveness. ● Oriented towards the needs of the population 8 ● Lists of essential medicines also guide the procurement and supply of medicines in the public sector, schemes that reimburse medicine costs, medicine donations, and local medicine production. Table 1. Formulary and Essential Medicine Formulary Essential Medicine Concentrates on available and Satisfy the priority healthcare affordable medicines that are needs of the population relevant to the treatment of diseases in a particular country. Containing clinically oriented summaries of pharmacological information about selected drugs Selected with due regard to disease prevalence and public health prevalence, evidence of clinical efficacy and safety, and comparative costs and cost-effectiveness Containing clinically oriented summaries of pharmacological information about selected drugs Lists of essential medicines guide the procurement and supply of medicines in the public health sector, schemes that reimburse medicine costs, medicine donations, and local medicine production Oriented towards what is usable and available to the clinician Oriented towards the needs of the population Figure 11. Example of WHO Formulary Based on Figure 12, it is a listing of different forms of the particular drug Figure 12. Example of WHO Essential Medicine List YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation 9 ● In the Philippines, we have a Philippine National Formulary Essential Medicines List ○ Outside, it bears the name of the national formulary ○ Inside it is an essential medicines list ▸ Used to guide procurement decisions since it is oriented towards the needs of a population/community C. GOVERNMENT INFLUENCE ON THE FLOW OF DRUGS ● What should be provided to patients and consumers? ○ Money: patients can buy the brands of medicine they prefer ○ Medicine: in favor of the supplier of the government, because these medicines can be purchased in bulk at a price favorable to the government ● Both are being done ○ Cash is provided via PhilHealth wherein they pay for the healthcare expenses of admitted/confined citizens ○ Medicines Access Program (MAP) of the DOH provides medicines to Filipinos Figure 13. Flow of Goods ● Flow of goods from private and public sectors to patients and consumers are guided by government procurement ○ Philippine International Trading Corporation (PITC) Is a government instrument, a government-owned and controlled corporation ▸ Able to compete with manufacturers and pharmaceutical companies in the Philippines ▸ Can bring down the cost of the medicines by importing cheaper goods abroad, most commonly from India Figure 14. Government Procurement - Flow of Goods YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation ● DOH, Medical centers aligned under the DOH, and the local government are each conducting their own procurement activities ○ All of them are directly engaging with drug distributors, manufacturers, and retailers to purchase medicines ○ Purchases are guided by the Local Government Code of 1991 D. LOCAL GOVERNMENT CODE OF 1991 ● Republic Act No. 7160 ● Tasked the Local Government Units (LGUs) with the authority to provide for the health care needs of their constituents ● Even if the DOH is organizing bulk purchasing for the department’s regional offices and hospitals all over the country, LGUs are still authorized by law to buy medicines even if the medicines are already provided by the DOH → redundancy ○ Not necessarily a bad thing ○ This redundancy is a form of supply stability ○ If ever there is a challenge in the difficulty in the supply chain of DOH, the LGU can swiftly act to compensate by buying from an accessible drug store ● However, LGU must ensure that drugs are not excessively purchased and stocks are carefully monitored ○ To avoid expiration from oversupply and lack of purchase planning ● Provincial, District, Municipal, and City health facilities were aligned under the LGUs for administration ● LGUs are responsible for the procurement needs of the health facilities it administers ● Previously, the Department of Health headed the chain of command until the Rural Health Units ● Specialty hospitals and regional medical centers were retained by the DOH E. GOVERNMENT PROCUREMENT REFORM ACT ● Republic Act No. 9184 ● Planning for purchasing of medication is an important component of the Procurement Reform Act ● Planning for procurement has to identify the mode of purchase ● Competitive Bidding ○ Default mode of procurement by all government units and agencies ● Alternative methods of procurement in the absence of competitive bidding (e.g., only one drug company supplies a particular good): ○ Negotiated Procurement ▸ Requires bidding to have failed at least twice beforehand ▸ Other suppliers may be available but are not participating in competitive bidding ○ Shopping ▸ Up to Php 200K for National Government Agencies ▸ Often resorted to during calamities ▸ Opening of emergency funds, LGUs, and national government agencies can directly purchase goods for supply to offices and units that require the goods ○ Direct Contracting or Single Source Procurement ▸ For highly technical or complex goods ▸ Unlike negotiated procurement, no other supplier is available 10 ○ Repeat Order: up to 25% of the quantity in the original contract ▸ Procurement can be repeated QUICK REVIEW DRUG PRICE REFERENCE INDEX (DPRI) 1. Drug manufacturers can encounter different risks in the supply chain. However, since there are various risks, it is impossible for drug manufacturers to come up with precautions that address those risks. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are false 2. Which of the following aspects of the country's supply chain is currently lacking in the Philippines? A. Consumption side or demand for health products and services B. Suppliers for raw materials such as nucleic acids, primers, and antibiotic materials C. Packaging and logistics for transport of pharmaceuticals D. Clinical trial facilities and research organizations 3. T/F: There are seven layers in the regulatory pyramid. 4. In the regulatory pyramid, the ones on the bottom are rarely used, On the other hand, the ones on the upper parts are more frequently used. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are false 5. Under which level of the regulatory pyramid does the FDA fall under? A. Level 1: Command & Control, License Suspension B. Level 2: Meta-Regulations, Mandatory Standards, Mandatory Accreditation C. Level 3: Financial Instruments, Extra Pay for Accredited Facilities, Case Mix Group Payment D. Level 4: Financial Instruments, Extra Pay for Accredited Facilities, Case Mix Group Payment E. NOTA 6. Which of the following is NOT a skill required of human resources under the World Economic Forum's Analysis? A. Complex problem solving B. Critical thinking C. Creativity D. NOTA 7. Based on the lecture, what lubricates the exchange of goods and services between the public sector, private sector, and the community? A. Ethics B. Power C. Money D. Prayer 8. Which among the following are forms of public goods that MUST be provided for the Filipinos? A. Unlimited Internet access B. Protecting producers C. Ensuring that the private sector is responsible and reliable in its dealings with the public ● DILG Memorandum Circular 2017-06 ● Publish by DOH regularly ● Lists the ceiling prices of essential medicines for government bidding and procurement set by the National and Local Government Health Facilities and Government Agencies ● LGUs are mandated to observe the price ceiling set in DPRI ○ Guides government drug procurement ● Form of price control that has been effective in maintaining resources for LGUs HOW CAN THE PUBLIC AND PRIVATE SUPPLY CHAINS SYNERGISE? ● There is still space to improve the quality of goods and services provided to consumers/patients ● Long-term objective: establishing a local biopharmaceutical industry ● Leads to the question: ○ How can the supply chain be incentivized for local biopharmaceutical players to invest in local manufacturing? Active Recall Box (℅ Doc Chua) 5. What is the list of drugs for priority health care needs of the population? a. Formulary b. Essential medicines list c. Drug price reference index d. Pharmacopeia 6. Which alternative method of procurement requires competitive bidding to have failed at least twice? a. Shopping b. Direct Contracting c. Negotiated Procurement d. Repeat Order 7. The DOH is able to consolidate demand and select medicines & negotiate for the best possible price with this strategy. a. Mean Arterial Pressure b. MGMT Assoc. Of the Philippines c. Medical Assistance Program d. Medicines Access Program 8. If you are the mayor of the city, what do you have to consider in buying medicines? a. RA 9184 b. RA 7160 c. DILG MC 2017-06 d. All of the above 9. A local government unit is expected to provide free medicines to its citizens for which disease? a. Soil-transmitted helminthiases b. Acute lymphocytic leukemia c. Sexually-transmitted infections d. Breast cancer Answers: 5B, 6C, 7D, 8D, 9A YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation QUESTIONS 11 D. Ensure that pharmaceutical companies earn as much as they can to fuel innovation and advancements in medical technology, ultimately benefiting the Filipinos 9. What is the memorandum containing the Drug Price Reference Index? A. DILG Memorandum Circular 2017-06 B. DILG Memorandum Circular 2017-07 C. DILG Memorandum Circular 2018-07 D. DILG Memorandum Circular 2020-07 10. What is the default mode of procurement? A. Shopping B. Negotiated Procurement C. Competitive Bidding D. Single Source Procurement ANSWER KEY 1A, 2B, 3F, 4D, 5B, 6D, 7C, 8C, 9A, 10C RATIONALE 1. A. Only statement 1 is true. While there are different risks that drug manufacturers may face, it is not entirely possible for them to prepare for such since there are already countries that may have experienced the same risks and documented their past circumstances. Their experiences can then be used as stepping stones by the drug manufacturers to prevent or decrease the impact of risks. 2. B. Suppliers for raw materials such as nucleic acids, primers, and antibiotic materials. Suppliers for raw materials such as nucleic acids, primers, and antibiotic materials. Currently, the Philippines is still importing its raw materials for pharmaceuticals. The rest of the choices are what the country has in terms of the health product supply chain. 3. False. There are six layers in the regulatory pyramid. 4. D. Both statements are false. The ones on the bottom are frequently used, called frontline. Meanwhile, the ones on the upper parts are sparingly used. 5. B. Level 2: Meta-Regulations, Mandatory Standards, Mandatory Accreditation. As an agency that enforces mandatory standards, accreditation, and meta-regulations, the FDA falls under Level 2: Meta-Regulations, Mandatory Standards, Mandatory Accreditation. 6. D. NOTA. All of the choices are skills required of human resources under the World Economic Forum’s analysis. 7. C. Money. It is money that lubricates the exchange of goods between the public sector, private sector, and the community. 8. C. Ensuring that the private sector is responsible and reliable in its dealings with the public. The other public goods that the public sector must provide for the community may come in the form of social safety nets, consumer protection, and ensuring that people are getting a fair trade. 9. A. DILG Memorandum Circular 2017-06. DILG Memorandum Circular 2017-06 is the memorandum containing the Drug Price Reference Index. 10. C. Competitive Bidding. Under the Government Procurement Reform Act, competitive bidding is the default mode of procurement by all government units and agencies. YL6:01.26 Philippine Drug Industry, Drug Distribution, & Regulation REFERENCES REQUIRED ● 💻 Chua,Industry P,Y. (2020, September 13). 2020 Biopharmaceutical 1 of 2. [Video]. YouTube. https://www.youtube.com/watch?v=gc-u8_UwhPI&t=435s&ab_chan nel=PeterGlennChua ● Chua, P,Y. (2020, September 13). 2020 Biopharmaceutical Industry 2 of 2. [Video]. YouTube. https://www.youtube.com/watch?v=fZcsFNPScTo&ab_channel=Pete rGlennChua 💻 SUPPLEMENTARY ● 💻 Chua, P,Y. (2020, September 13). 2020 Philippine Drug Distribution. [Video]. YouTube. https://www.youtube.com/watch?v=VcLm-jBMbkI&t=186s&ab_chan nel=PeterGlennChua Concerns and Feedback form: http://bit.ly/YL6CFF2027 How’s My Transing? form: https://bit.ly/2027YL6HMT Mid-Semester Evaluation form: https://bit.ly/2027YL6MidSem End-of-Semester Evaluation form: https://bit.ly/2027YL6EndofSem YL6 TransMap: https://bit.ly/2027YL6TransMap 12