Price cuts on drugs could lead to retrenchments

The reduction in revenues brought upon by the implementation of 50-percent price cuts on 21 essential drugs might force local pharmaceutical firms to trim down their workforces, an industry leader said on Monday. Asked by reporters during a roundtable discussion at the Diamond Hotel in Manila on the likelihood of retrenchments, Oscar Aragon of the Pharmaceutical and Healthcare Association of the Philippines (PHAP) said, “I think it’s a possibility." Aragon said many of their members, especially the local firms, have been having trouble keeping up with the losses brought about by the price cuts. “It looks like it’s hitting the big multinational companies, but the most affected are actually the local companies," he said. About 20 of the 50 PHAP members are local companies. A member-company of PHAP had earlier announced that it is cutting down its workforce by 10 percent due to profit losses. Effective last August 15, the prices of at least 21 medicines were slashed by 50 percent in compliance with the Cheaper Medicines Law. Smaller pharmacies have until September 15 to comply. Last July, President Gloria Macapagal Arroyo signed Executive Order 821 which prescribes the maximum drug retail price (MDRP) for five selected drugs and medicines after firms reportedly refused voluntary price cuts on the said products. But Aragon argued that the MDRP was unnecessary as they had already voluntarily reduced the prices of 16 other medicines. Pharmaceutical firms had also offered to slash the prices of 22 other drugs before the signing of EO 821. Last August, the Private Hospitals Association of the Philippines warned that the price cuts might lead to bankruptcy of some hospitals. It also warned that the possible revenue losses might delay salary release or even result in salary reduction, eventually leading to work slowdown. But even if the price cuts change the “investment climate" in the country, Aragon said they hope that it might still “expand" their businesses. “We are hoping that the reduction in price will lead to an increase in consumption," said Aragon. The Department of Health has said that it is already eyeing price reduction for a second batch of medicines, including drugs for asthma, breast cancer, high blood, and infection. - GMANews.TV