Guidelines Institutionalizing and Strengthening the Essential Drug Price Monitoring System

February 14, 2006

DOH ADMINISTRATIVE ORDER NO. 2006-0009

 

I. RATIONALE

The 1987 Philippine Constitution mandates the right of every Filipino to health. The State, under Section II of Article XIII, shall adopt an "integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services acceptable to all the people at affordable cost".

The state policy enunciated in Article II, Section 15 of the 1987 Constitution, that "The State shall protect and promote the health of the people and instill health consciousness among them".

Republic Act (RA) No. 6675 known as the "Generics Act of 1988," prescribes that it is the policy of the State to "ensure the adequate supply of drugs with generic names at the lowest possible cost".

RA No. 7581 also known as the "Price Act" and its Implementing Rules and Regulations (IRR) explicitly identifies the Department of Health (DOH) as the lead implementing agency in identifying essential drugs "basic necessities" and monitoring their corresponding prices.

RA No. 8792 also known as the "Electronic Commerce Act" was formulated to facilitate exchanges and storage of information through the utilization of electronic, optical and similar medium, mode, instrumentality and technology, to recognize the authenticity and reliability of electronic documents related to such activities and to promote the universal use of electronic transaction in the government and general public.

Department Order No. 238-T s. 2000, and as amended by Department Order No. 265 H s. 2002, were created in order to provide a system and procedure for the data collection on prices of selected essential drugs which is now known as the Essential Drug Price Monitoring System.

The DOH recognizes the need to sustain the operations of the EDPMS and at the same time adaptively upgrade its specification to suit current and emerging trends in the market.

Also, the DOH recognizes the need for the greater involvement and coordination between and among the various units under it, so as to synergize their collective efforts in fulfilling the given mandates as reflected in the foregoing.

II. SCOPE

This Order shall cover all data collection activities and analyses undertaken by all Health Facilities, and Units under the Department of Health on the prices of essential drugs sold to the general public.

III. OBJECTIVES

This Order is formulated in order to:

1. Provide systems and procedures for:

a. The identification of essential drugs that will be considered as basic necessities,

b. The identification of firms carrying inventories of the generic drugs considered as basic necessities,

c. The identification of branded medicines considered as basic necessities

d. Data collection on prices of essential drugs considered as basic necessities

e. Data collection on the inventory and distribution pathway of essential drugs considered as basic necessities

f. Analyses and interpretation of Essential Drug Price and Monitoring Reports

2. Identify the roles and responsibilities of various units of the Department of Health, which are involved in drug price monitoring.

IV. GENERAL GUIDELINES

1. The Department of Health shall prepare all necessary reports to determine the price levels and inventory of essential drug prices classified as basic necessities in accordance with the pertinent provision of the Price Act and within the timeframe so prescribed.

2. The Department of Health shall determine illegal acts of price manipulation on essential drugs as defined in section 5 of the Price Act such as hoarding, profiteering, and cartel.

3. An Essential Drug Price Monitoring Oversight Committee (EDPMOC) shall be created by the Department of Health that will monitor and ensure the prosecution of the powers and responsibilities of the Department of Health as an implementing agency with reference to drugs as defined in section 10 of the Price Act. The same oversight committee shall be responsible in determining mandated price ceilings whenever the conditions set under section 7 of the Price Act manifest. It shall be Chaired by an Official of the Department of Health who is at least an Assistant Secretary.

4. The National Drug Policy Program (NDPP), in collaboration with the National Formulary Committee (NFC) and the Philippine Health Insurance Corporation (PHIC), shall be the lead coordinating unit responsible for determining the generic names and specifications of essential drugs that are classified as basic necessities and that must be monitored nationwide.

5. The Bureau of Food and Drugs (BFAD) shall be the lead unit charged in determining the firms, (in case of generic drugs) and the brands of medicines whose generic names and specifications are classified by the NDPP as basic necessities.

6. The BFAD shall be the lead unit responsible for the data collection on the prices and inventory of essential drugs classified as basic necessities.

7. The Food and Drug Regulatory Officers under the administrative supervision of the Centers for Health Development (CHD) shall be the frontline agents of BFAD for data collection on prices and inventory. In addition, the BFAD may also deputize consumer groups to assist the FDROs in data collection.

8. The Directors of the CHDs shall ensure that the monitoring activities of the FDROs administratively under them are adequately supported in terms of funding requirement, logistics and rational workload allocation. Such support must be manifested in the CHDs' Work and Financial Plan and Operational Plan.

9. The Information Management Service shall provide technical support in the systems design, development, deployment and maintenance of the required information infrastructure to ensure the implementation of the EDPMS and shall prioritize the said activity as belonging to its top priority list of activities.

V. SPECIFIC GUIDELINES

A. Determination of the Generic names and Specifications of Essential Drugs Classified as Basic Necessities.

1. The National Drug Policy Program in collaboration with the National Formulary Committee shall determine and recommend the list of drugs that must be considered as basic necessities and must be monitored throughout the country.

The list of essential drugs classified as basic necessities shall be primarily based on accepted therapies for the prevalent diseases among other criteria such as cost effectiveness and cost minimization as determined by the NDPP and the NFC. Additional criteria for drug selection shall be inclusion in PHIC's clinical practice guidelines and frequency of occurrence in PHIC's medicine claims reimbursement.

2. The NDPP and the NFC may invite resource speakers from the other units of DOH, the industry, the academe, the health sector, and other agencies of the government whose expertise and opinion are of value to their task.

3. Once the list is finalized, it shall be recommended for approval by the Program Manager of the NDPP to the Chairperson of the EDPMOC. If the list is found to be in order the Chairperson of the EDPMOC shall approve it, "By Authority of the Secretary of Health."

4. The subject approved list of essential drugs, which are classified, as basic necessities shall be applied for the succeeding year. It shall be reviewed and updated every year. The deadline for the review and updating of the said list shall be routinely scheduled every last day of the first semester.

5. The subject approved list of essential drugs shall be forwarded immediately to the BFAD for the determination of generic firms (in case of generic drugs) and brand names that carry inventories of the generic names under the said essential drug list for price monitoring.

B. Determination of Generic Drugs and Branded Drugs Classified as Basic Necessities

1. The BFAD shall determine the firms (in case of generic drugs) and the brand names that carry inventories of the generic names and specification based on the approved list of essential drugs for monitoring nationwide. The top five generic firms (if there's any) and the top five brand names (if there's any) in terms of inventory will be determined for every generic name and specification reflected on the approved list. This must be completed within the third quarter of every year and iteratively done every year.

2. The BFAD shall collect monthly inventory data from the manufacturer and importers of essential drugs reflected at the initial stage of distribution. Such data shall include the total quantity of the goods for distribution, their lot numbers and expiration dates, manufacturing date, and date of release from customs (if imported).

3. Also to be collected by BFAD from the manufacturers and importers will be the distribution destination or supply chain routes of the subject goods classified as basic necessities. Such supply chain routes may be broken down into quantity of the goods per intended distributors and per wholesalers or per intended geographic distribution of goods, i.e., regional or provincial.

4. Once the firms (in case of generic drugs) or brand names of the generic names and specifications that appear on the approved list of drugs classified as basic necessities are determined, these shall then be reflected on the price and inventory data entry forms template (as shown in Annex A), which shall be for dissemination to the FDROs under the CHDs and to the NDPP.

C. Data Collection on Drug Prices and Inventory Levels

1. The BFAD shall collect data on essential drug prices classified as basic necessities at the manufacturing, importation, wholesale and retail level of the distribution chain. The BFAD may accomplish this through its FDROs, through consumer groups, or both.

2. Data on drug retail prices and inventory shall be primarily obtained from three (3) general target sources per administrative region or per area of responsibility (AOR) of the CHD on a monthly basis. The data sources are the following:

a. Hospital Pharmacy of the Private Hospital that accommodated the highest number of patients (in-and out-patients) in the preceding year;

b. Hospital Pharmacy of the DOH Retained Hospital that accommodated the highest number of patients (in-and out-patients) in the preceding year;

c. The biggest private drugstore chain operating within the AOR of the CHD.

The BFAD in coordination with the National Center for Health Facilities Development (NCHFD), Bureau of Health Facilities Services (BHFS), and the CHDs shall identify the three (3) target data sources per CHDs from which regular monitoring shall be performed. The data from drugstore chains shall be collected by BFAD from its frontline FDROs within one (1) week after the end of each month and shall thereafter be submitted by the BFAD to the NDPP within one (1) week from its consolidation. On the other hand, data from hospital pharmacies shall be collected by the PHIC at the same frequency and shall also be submitted to the NDPP.

3. All wholesalers of essential drugs shall be required to submit their wholesale price and inventories sold to retail outlets to the BFAD within one (1) week at the end of each quarter. Such submissions may be through traditional snail mail, or through electronic means. The BFAD shall thereafter submit the consolidated data to the NDPP within one (1) week.

4. All manufacturers, importers and distributors of essential drugs shall be required to submit their factory gate prices and sales information to the BFAD within one (1) week at the end of each quarter. Such submissions may be through traditional snail mail, or through electronic means. The BFAD shall thereafter submit the consolidated data to the NDPP within one (1) week.

5. Information data requirement (IDR) on drug prices and inventory levels shall be part of the performance evaluation of all drug retail outlets and wholesalers for the issuance and renewal of their License to Operate (LTO). For the initial issuance of LTO, drug retail outlets, wholesalers, manufacturers, importers and distributors shall be compelled to concur for the submission of said IDRs as a condition for the release of their LTO. However, data gathering from the drug retail outlets, except those identified as regular targets for monitoring (as described in V.C.2) shall be performed in accordance with the approved inspection schedules of frontline FDROs and until such time that these outlets are electronically link with BFAD as a consequence of the incipient modernization of the latter.

6. The NDPP shall prepare the necessary reports and analysis to be approved by the Chair of the EDPMOC, "By Authority of the Secretary," that are for presentation to final data and information recipients such as the general public or the National Price Coordinating Council and other interested and authorized parties. Such reports and analyses must be prepared by the NDPP within one (1) week every after submission of the consolidated inventory and price data from BFAD.

D. Preventive Measures on Price Manipulation

1. Final approved reports on drug prices and inventories must all be posted and updated in the DOH website on a regular basis. A special web-based window shall be created to this effect.

2. The NDPP shall conduct drug price surveillance of essential drugs classified as basic necessities using the drug prices of equivalent medicines available in the international market. An analysis shall be made by the same unit to compare the price of the subject goods with those that are domestically available. Such price surveillance in the international market shall be done at least once a year.

3. The BFAD shall include in their essential task list for inspecting drug retail outlets indicators that would ensure compliance to the display of price tags and the conspicuous display, availability of an updated price menu books. Such requirement shall be included in the performance evaluation criteria of drug retail outlets for the issuance and renewal of their LTO.

4. Display of Information, Education and Communication (IEC) materials issued by the Department of Health, which provide advice and information to the public to exercise their freedom of choice by asking for available generic equivalent of their sought drugs shall be mandatory to all drug retail outlets. Information that shall be included in the said IEC materials must contain telephone hotline, e-mails of the DOH unit responsible for monitoring compliance to the laws and other statutes implemented by the DOH.

E. Organization Support Structures

1. Composition of the Essential Drug Price Monitoring Oversight Committee (EDPMOC)

a. The EDPMOC shall be Chaired by a DOH official who is at least third ranking or an Assistant Secretary

b. The ex-officio vice-Chair of the EDPMOC shall be the Director of the Bureau of Food and Drugs.

c. The Program Manager of the NDPP shall serve as the Head of the EDPMOC Secretariat.

d. The Directors and Vice President of the following units of the DOH shall serve as permanent members of the EDPMOC:

i. National Center for Health Facilities and Development (NCHFD)

ii. Health Policy and Planning Development Bureau (HPPDB)

iii. Bureau of Local Health and Development (BLHD)

iv. Bureau of International Health Cooperation (BIHC)

v. Philippine Health Insurance Corporation (PHIC)

vi. Information Management Service (IMS)

e. Non-permanent members of the EDPMOC shall include the following:

i. Chairperson of the National Formulary Committee

ii. Director of the Bureau of Consumer Welfare and Protection

iii. Representative (s) from the academe as resource person (s) for specific topics or to assess and to improve on the data collection methodology.

iv: Representative (s) from the pharmaceutical industry as resource person (s) to specific topics

2. Duties and Responsibilities of the EDPMOC

a. The primary duties of the EDPMOC are as follows:

i. Review all activities undertaken to implement the Generics Law and the Price Act.

ii. Recommend to the Secretary of Health mandated price ceilings of essential drugs when conditions under section 7 of the Price Act become prevalent.

iii. Review and approve policy statements, pronouncement and informational materials relating to essential drug prices.

iv. Directs the NDPP to coordinate with other Agencies of the Government and other Parties for the development of ways and means that would enhance access to essential drugs.

v. Submits annual accomplishment report to the Secretary of Health

vi. Reviews and approves the Operational Plan of the NDPP in implementing the EDPMS

vii. Implement other specific instructions given by the Secretary of Health relating to essential drug prices and access issues

b. The primary duties of the NDPP as EDPMOC Secretariat are as follows:

i. Provides administrative support to the EDPMOC.

ii. Provides secretariat work in support of the EDPMOC.

iii. Conducts research and development analyses using input data from other units of the DOH and other parties.

iv. Main DOH coordinating for inter-agency works and intra-DOH unit works relating to essential drug price monitoring.

v. Conducts IEC Campaign strategies and partnership development works that would enhance institutional support to the EDPMS.

vi. Prepares annual accomplishment report in implementing the EDPMS,

vii. Submits work and financial plan and operational plan to the EDPMOC for the implementation of the EDPMS.

viii. Maintains essential databases and other forms archive and retrieval systems for the implementation of the EDPMS.

F. Sanctions for Non-Compliance

1. Pursuant to section 10, no. 11 of the Price Act, and Rule IV, section 8 of its IRR, the DOH may impose the following sanctions to drug establishments who fail to comply with the submission of Informational Data Requirements and other tangible proofs that preclude asymmetric information on drug prices in the following calibrated order:

a. 1st Offense: Written Warning;

b. 2nd Offense: Suspension of LTO until proof of compliance is submitted;

c. 3rd Offense: Revocation of LTO

2. Officers of the DOH who failed to submit the required reports and other duties required hereof shall be sanctioned based on the appropriate provisions of the Laws and statutes governing employees and officers of the Government.

VI. Coordinating Instructions and Transitory Provisions

1. The BFAD shall implement in its automation and modernization program the capture of informational data requirements (IDRs) on drug prices and inventory through electronic means.

2. The submission of IDRs through electronic means on drug prices and inventories of all essential drugs from all drug establishments shall be made as an integral part of the requirements for the issuance and LTOs that must be carried out in a mandatory fashion within one (1) year from the effectivity of this Order.

3. The EDPMOC and the BFAD shall accredit People's Organizations, Non-Government Organization or other parties of the Third Sector who may act as force multiplier in monitoring essential drug prices and inventory levels that would provide institutionalized assistance to the current manpower of BFAD. A specific mechanism that will provide procedures on the deputization of individual drug price watch officers shall be designed by the EDPMOC that shall be released through a supplemental issuance.

4. The IMS shall give priority in providing institutional support to BFAD in ensuring the development and deployment of the essential information structure as described in this Order.

VII. ANNEXES

Annex A — Essential Drug Price and Inventory Level Form Template

VIII. SEPERABILITY CLAUSE

If any provision in these Guidelines, or application of such provision to any circumstance, is held invalid, the remainder of these Guidelines shall not be affected thereby.

IX. REPEALING CLAUSE

The provisions of previous issuances, which are inconsistent with those provided in this Order, are hereby rescinded and modified accordingly.

X. EFFECTIVITY

This Order shall be effective immediately.

(SGD.) FRANCISCO T. DUQUE III, MD, MScSecretary of Health

Annex A is available upon request.