Revised Guidelines in the Implementation of the Philippine Drug Price Reference Index (DPRI) to All Public Hospitals and Health Facilities

October 14, 2019

DOH ADMINISTRATIVE ORDER NO. 2019-0040

 

I. BACKGROUND AND RATIONALE

The high and extremely variable prices of medicines in the Philippines impact on access to effective, efficient and equitable health care. In 2009, a study conducted by Health Action International revealed that there was extreme variability in the procurement prices of essential medicines in the national and local public health facilities in the country. On average, originator brands and generic equivalents were procured almost 16 times and 3 times higher, respectively, compared to prices available on the international market. HSAcaE

In addition, the common unavailability of essential medicines in public health facilities forces patients to obtain their medicines requirements at a higher cost from private outlets. Furthermore, the No Balance Billing (NBB) policy implemented by PhilHealth in 2011 has so far only been adopted by few public health facilities, further limiting access to medicines, especially for the indigent population in the Philippines.

The enactment of the Universally Accessible and Affordable Quality Medicines Act of 2008 (Republic Act 9502) has created a momentum to improve access to medicines in the Philippines. Under Chapter 3, Section 19 C, the "Secretary of the Department of Health shall have the power to implement the fair price drugs and medicines for purposes of public health insurance and government procurement based on the order of the President of the Philippines imposing maximum retail prices." The law provides the government the mandate to institute a fair and rational drug pricing system in the country, where the cost of drugs consider the 'public interest' nature of access to essential medicines.

The law likewise ensures that transparency is guaranteed in the determination of medicines prices and mark-ups to give consumers informed choice and to help government in reducing cost of its procurement of essential medicines. The same mandate is articulated in the Philippine Medicines Policy (PMP), which proposes measures to ensure access to affordable medicines.

Republic Act 6713, otherwise known as "Code of Conduct and Ethical Standards for Public Officials and Employees," Rule IV, Section 2 also states that, "it is the responsibility of heads of departments, offices and agencies to establish measures and standards that will ensure transparency of and openness in public transactions in their respective offices such as in biddings, purchases, other financial transactions including contracts, status of projects and all other matters involving public interest."

The Philippine Department of Health (DOH) introduces the Drug Price Reference Index (DPRI) in 2014 through the Department Order (DO) No. 2014-0146, making it mandatory for all DOH hospitals and Regional Offices (ROs) to adhere to a price ceiling when procuring drugs listed in the Philippine National Formulary (PNF).

The DPRI aims to guide all public health facilities in the fair pricing of essential medicines and to increase efficiency of the drug procurement process in the public sector.

Among all the medicines procured by DOH hospitals, analysis showed that the top ten most commonly procured medicines costs the DOH around Sixty-Seven Million pesos. After using the Drug Price Reference, the DOH could potentially save as much as Fifty percent (50%) or around Thirty-Two Million pesos.

The DPRI is envisioned to improve the efficiency of procurement, stretch the health care budget by generating savings and prevent corruption in the sourcing of essential medicines not only across DOH hospitals but also across all public health facilities.

II. OBJECTIVES

A. GENERAL OBJECTIVE

To set national guideline for the implementation of the Philippine Drug Price Reference Index (DPRI) that will improve the efficiency of procurement and sourcing of medicines in all public health facilities nationwide and government agencies procuring medicines.

B. SPECIFIC OBJECTIVES:

1. To establish systems and methods for maintaining a database of reference prices for essential medicines from DOH facilities;

2. To create a formula in setting reference prices of medicines in the Philippine National Formulary;

3. To set the DPRI as the mandated ceiling price for all public health facilities and government agencies procuring medicines; and

4. To provide guidelines for the enforcement, implementation and monitoring of the DPRI system across public health facilities and government agencies procuring medicines nationwide.

III. SCOPE AND COVERAGE

This Order is issued to provide technical guidelines for all government agencies, government hospitals, hospitals managed by the DOH including specialty centers, government-owned and controlled hospital corporations, local government hospitals, all other types of government hospitals, and Ministry of Health-Bangsamoro Autonomous Region in Muslim Mindanao (MOH-BARMM) in implementing the DPRI as the unified pricing system for the procurement of medicines in the public sector.

IV. DEFINITION OF TERMS

1. Access — refers to the ability to utilize health services and its logistics support without barriers or obstacles.

2. Affordability — cost of treatment in relation to peoples' income. In the WHO/HAI survey, this is defined by the numbers of days the lowest paid unskilled government worker would have to work in order to afford the cost of the complete course of treatment.

3. Anatomic Therapeutic Chemical (ATC) classification system — is a drug classification system that classifies the active ingredients of drugs according to the organ or system on which they act and their therapeutic, pharmacological and chemical properties.

4. Bioavailability — refers to the rate and extent to which the active ingredient or therapeutic ingredient is absorbed from a drug and becomes available at the site of drug action.

5. Bioequivalence — is the absence of a significant difference in the rate and extent to which the active ingredients or active moiety in pharmaceutical equivalents or pharmaceutical alternative becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.

6. Approved Budget for the Contract (ABC) — refers to the budget for the contract duly approved by the head procuring entity.

7. Current Good Manufacturing Practices (cGMP) — refers to the current system of quality assurance aimed at ensuring that products are consistently manufacturer to a quality appropriate for intended use. It is thus concerned with both manufacturing and quality control processes and procedures. AcICHD

8. Drug Price Reference Index (DPRI) — refers to the mandated ceiling price of essential medicines for government bidding and procurement set by the DOH for all government agencies, government hospitals, hospitals managed by the DOH including specialty centers, government-owned and controlled hospital corporations, local government hospitals, and all other types of government hospitals in order to have a transparent and unified pricing scheme in medicines procurement. Winning bid prices of essential medicines shall therefor not exceed the DPRI.

9. Essential Medicines — these are medicines that satisfy the priority health care needs of the population and which are selected based on the evidence of their efficacy, safety and comparative cost-effectiveness.

10. External Reference Pricing — the practice of using the price(s) of a pharmaceutical product in one or several countries in order to derive a benchmark or reference price for the purposes of setting or negotiating the price of the product in a given country.

11. Generic drugs — refer to drugs that have the same active pharmaceutical ingredient as the innovator drugs and are not covered by patent protection. These drugs are labeled by their international nonproprietary or generic name and may or may not have brand name.

12. Interchangeable Pharmaceutical Product — an interchangeable pharmaceutical product is one which is therapeutically equivalent to a comparator product and can be interchanged in clinical practice (WHO Technical Report Series 937, 2006).

13. Internal Reference Pricing — refers to the practice of using the price(s) of identical medicines (ATC 5 level) or similar products (ATC 4 level) or even with therapeutically equivalent treatment (not necessarily a medicine) in a country in order to derive a benchmark or reference price for the purposes of setting or negotiating the price or reimbursement of the product in a given country.

14. Mark-ups — refers to the amount added to a cost price in calculating a selling price, especially an amount that takes into account overhead and profit.

15. Philippine National Formulary — refers to a list of drugs prepared and periodically updated by the DOH on the basis of health conditions obtaining in the Philippines as well as on internationally-accepted criteria. It shall consist of a core list and a complementary lease of goods, and real estate.

16. Procurement — refers to the acquisition of Goods, Consulting Services, and the contracting of Infrastructure Projects by the Procuring Entity. Procurement shall also include the lease of goods, and real estate.

17. Procuring entities — refers to any branch, department, office, agency, or instrumentality of the government, including state universities and colleges, government owned and/or controlled corporations, government financial institutions, and local government units procuring goods, consulting services, and infrastructure projects.

V. IMPLEMENTING GUIDELINES

The implementation of the DPRI is in accordance with RA 9502 or the Universally Accessible and Affordable Quality Medicines Act of 2008 and the Philippine Medicines Policy.

A. GENERAL GUIDELINES

1. The Drug Price Reference Index (DPRI) shall be calculated every year based on prevailing procurement prices of medicines in government health facilities with data collected by the DOH-Pharmaceutical Division from Ministry of Health-Bangsamoro Autonomous Region in Muslim Mindanao (MOH-BARMM), Centers for Health Development (CHDs), DOH Retained and Specialty Hospitals and DOH Procurement Service (PS).

2. The DPRI shall be the maximum procurement price of essential medicines across all government agencies, government hospitals, hospitals managed by the DOH including specialty centers, government-owned and controlled hospital corporations, local government hospitals, and all other types of government hospitals applicable to all forms of procurement such as public bidding, direct contracting, local shopping, negotiated procurement, emergency procurement and consignment. In cases where the previous year's procurement of government health facility or agency is lower than the set DPRI, the latter may set the ABC at the level of the previous year's procurement with an allowable variation of plus 10% to account for inflation.

3. For patented products and drugs with limited competition (i.e., one (1) manufacturer), the DOH-PD may derive the DPRI from the lowest bid price plus an allowable margin of 10% to account for inflation or through direct price negotiation with the suppliers to obtain the most affordable and efficient price for the government purchasing.

4. The DPRI shall include all medicines listed in the Philippine National Formulary.

5. The DPRI shall be implemented in all public health facilities as defined in the scope and coverage as the ceiling price for medicines procurement.

6. The DPRI shall be reviewed and updated annually and shall be made public by the DOH through web-based posting, publication in newspaper of general circulation or distribution of price booklets to all government health facilities.

B. SPECIFIC GUIDELINES

1. All CHDs, DOH Retained and Specialty Hospitals, MOH-BARMM, DOH Procurement Office and PPI must submit a copy of their Annual Purchase Orders (PO) and list of procured medicines to the DOH-Pharmaceutical Division. The PO shall include: active pharmaceutical ingredients, strength, dosage form, quantity procured, acquisition cost per unit, total cost, mode of procurement, supplier and manufacturer (with current Good Manufacturing Practice Certificate both Local and International issued by FDA). The List of Procured shall include all the details on the PO, brand name, delivery status and bid attempt. TAIaHE

2. All PO and list of procured medicines from the previous year should be submitted to the DOH-Pharmaceutical Division on or before the end of first quarter of the succeeding year.

3. The DOH-Pharmaceutical Division shall consolidate, process, analyze and synthesize the price data coming from DOH facilities and generate a price report to be disseminated every third quarter of the year through an official website and medicines price booklet.

4. The DPRI shall be calculated from the lowest winning bid prices of essential medicines sourced from reputable cGMP suppliers as certified by the Philippine FDA.

5. The DPRI shall reflect the final acquisition cost to government health facilities which should include the landed cost, packaging, drug content, quality assurance, manufacturing overheads and FDA fees. The DPRI excludes other cost such as pharmacy services, preparations and storage fees and applicable taxes to medicines (i.e., VAT) and other reasonable pharmacy mark-ups to be determined by the DOH.

6. In case of failed biddings, provisions of RA 9184 and its IRR shall apply.

7. In general, the DPRI for each essential medicine shall be set at the median of the range of lowest bid price collected from the previous year for a particular dosage strength and formulation. For medicines with only two (2) entries the DPRI will be set at the lowest. Health facilities may have a price variation up to 10% above the DPRI to account for inflation.

8. Where there is limited participation in government tenders for particular medicines because of limited number of manufacturer, existing market exclusivity for patented medicines or a non-responsive bid in the previous year, the government shall develop a pooled sourcing mechanism and a system of price-volume negotiations with suppliers guided by external reference pricing and economic evaluations conducted in the Philippines to determine the best value for money for such products. The DOH may also set the DPRI at the lowest winning bid price achieved for this product for the previous year plus an allowable margin to consider inflationary cost.

9. In situations where there is difficulty in achieving the mandated price ceiling, the DOH and PPI shall develop an alternative procurement mechanism such as importation as provided for by law accessible to all national and local government procuring agencies.

10. PHIC shall consider the DPRI when reviewing the rates or costing its new benefits.

11. DOH-Field Implementation and Coordination Team through Pharmaceutical Division shall disseminate this Order to the directors of CHDs, medical directors of DOH retained hospitals and MOH-BARMM to have proper channeling in the regions.

12. In the event that there is undue increase in the price of a certain medicines (i.e., more than 10% of the previous year's procurement price) the DOH-Pharmaceutical Division shall notify the facility to justify the sudden increase in prices.

13. Health facilities in Geographically Isolated and Disadvantage Areas (GIDA) are allowed to utilize the maximum price in the range used in the calculation of the DPRI. The list of GIDA shall be based on the updated list from the DOH-Bureau of Local Health System and Development (BLHSD) refer to Department Memorandum No. 2019-0277 entitled "Consolidated List of Geographically-Isolated and Disadvantages Areas Based on the Submission of the Centers for Health Development and Ministry of Health-Bangsamoro Autonomous Region in Muslim Mindanao as of April 30, 2019" and its amendments.

14. All DOH facilities shall submit an annual bidding report containing the generic name with strength and form, ABC per unit, result of bidding, and possible reason of bid failure. The report shall be submitted to DOH-PD once the bidding outcome is available. (See Annex A for template)

15. The Regional Drug Price Monitoring Officer (RDPMO) of each DOH CHDs shall aid the DOH-PD in the collection of annual bidding report of the DOH facilities.

16. For newly approved drugs and medicines in the Philippine National Formulary (PNF), the DPRI shall be set based on the price used by the Formulary Executive Council (FEC) in their evaluation.

17. In cases where the latest DPRI published has no reference price available for certain essential medicines, the method in setting the ABC shall depend on the lowest prevailing price surveyed by the procuring entity.

18. Hospitals are encouraged to enter into a pooled purchasing agreement (pooled bidding) with nearby government hospitals licensed by the FDA as retailer and distributor to achieve efficiency. In this case, the government hospital which shall conduct the bidding is allowed to charge an additional 10% above the acquisition cost to account for the distribution and administrative costs.

19. Procuring entities may also source their medicines through the Philippine Pharma Procurement, Inc. (PPPI), a government owned corporation under the Department of Trade and Industry (DTI) duly mandated by virtue of RA 9502 to conduct pooled procurement for government health facilities and agencies.

VI. ROLES AND RESPONSIBILITIES

The following roles and responsibilities of all parties concerned shall be observed for the purpose of the implementation of the system:

A. DOH-Pharmaceutical Division

1. Set policies, procedures and guidelines relative to DPRI which will serve as a tool in setting a standard pricing scheme that shall be used in all public health facilities procuring medicines.

2. Oversee and manage the overall implementation of the DPRI.

3. Develop tools to monitor the adherence of all public health facilities covered by this Order.

4. Provide technical assistance to the MOH-BARMM, CHDs and DOH hospitals on the implementation of the program.

5. Address issues and concerns encountered in the implementation of the program to guide its improvement.

6. Conduct a regular assessment of the program together with all the stakeholders in public health facilities, other government agencies, health providers, patients and the industry.

7. Monitor the compliance of DOH facilities to the set guidelines for the DPRI and impose appropriate sanctions for overpricing and/or illegal act of price manipulation when necessary and submit it to Philippine Competition Commission (PCC) for investigation.

8. Advise the Secretary of Health on appropriate pricing strategies on essential medicines that will ensure their affordability across the government.

B. Philippine Health Insurance Corporation (PHIC)

1. Ensure the adoption of DPRI as reference in the costing of health services that will be paid by PHIC. cDHAES

C. Food and Drug Administration (FDA)

1. Set the minimum standards of safety, efficacy and quality as a basis for qualification of the suppliers in all government sourcing and procurement of medicines.

2. Provide an updated list of cGMP certified suppliers and manufacturers (local and international) through their official website.

3. Act on reports for sanctions and collect the charged imposed that have accrued as a consequence under the provision of Implementing Rules and Regulations of RA 9502.

D. Philippine Pharma Procurement, Inc. (PPPI)

1. Adhere with the prescribed DPRI of the DOH when conducting its procurement activities.

2. May serve as the procuring arm of the DOH and other government agencies as mandated by law and ensure the selection and identification of national and international legitimate suppliers which can provide quality pharmaceutical products and services advantageous to the government.

3. Establish a system that will ensure fair pricing and the efficient supply and distribution of medicines through pooled procurement, parallel importation and other means of sourcing as accorded by RA 9502.

E. DOH Hospitals, Ministry of Health-Bangsamoro Autonomous Region in Muslim Mindanao and Centers for Health Development

1. The Head of agency shall ensure the compliance and adherence to the price reference set by the DOH.

2. Regularly submit the updated procurement price data to the DOH-Pharmaceutical Division through actual Purchase Orders and standard forms prescribed by the DOH.

3. Ensure the fair and efficient pricing of essential medicines through good governance in procurement using PPPI or other mechanisms as allowed by RA 9184.

4. Report suspected illegal acts of price manipulation to the DOH through DOH-Pharmaceutical Division as specified in the law such as hoarding, profiteering and cartel.

5. The MOH-BARMM and CHDs in coordination with the DOH-Pharmaceutical Division shall conduct annual monitoring of DOH hospitals in adherence to the DPRI. The post-monitoring reports shall be submitted by the CHDs to the DOH-Pharmaceutical Division.

6. The assigned RDPMO shall provide technical support to the DOH-PD in relation to this policy, which shall include but not limited to: dissemination of all related issuances to its stakeholders, and collection of annual bidding report and procurement data from DOH facilities.

7. All NDPCO shall supervise the duties of the RDPMO related to this policy.

8. All NDPCO or RDPMO together with the Development Management Officer (DMO) shall monitor the adherence of the LGU to the DPRI. The findings of the report shall be consolidated and submitted to DOH-PD.

F. Local Government Units (LGUs)

1. The Head of agency shall ensure the compliance and adherence to the price reference set by the DOH.

2. In cases of bid failures, the LGUs may opt to source out their medicine procurement at PPPI.

3. Report to the DOH-Pharmaceutical Division suspected illegal acts of price manipulation as specified in the law such as hoarding, profiteering and cartel.

G. Commission on Audit (COA)

1. Monitor the compliance of all government health facilities and agencies when procuring medicines.

2. Enforce compliance by imposing appropriate penalties in accordance with their usual accounting and auditing rules and regulation.

H. Department of Interior and Local Government (DILG)

1. Adopt the DPRI as the ceiling price for essential medicines procurement across all local government units.

2. Help the DOH to ensure compliance of the LGUs to the DPRI.

3. Report to the DOH cases of LGU non-compliance to the DPRI.

I. Department of Trade and Industry (DTI)

1. Help the DOH monitor the compliance of drug manufacturers and suppliers to the DPRI when participating in the government sourcing of medicines.

2. Enforce policies and sanctions pertinent to illegal acts of price manipulations of medicines as provided for in RA 7581.

VII. ENFORCEMENT AND SANCTIONS

A. All non-compliant government health facilities are subject to usual accounting and auditing rules and regulations by the Commission on Audit (COA).

VIII. REPEALING CLAUSE

Administrative Order No. 2015-0051 dated December 17, 2015 and Administrative Order No. 2015-0051-a Dated April 11, 2016 and other provision of previous issuances, inconsistent with this Order are hereby repealed, amended and modified accordingly.

IX. SEPARABILITY CLAUSE

If any provision of this Order is declared invalid by any court of law or any competent authority, those provisions not affected shall remain valid and effective.

X. EFFECTIVITY

This Administrative Order shall take effect after (15) days following its publication in a newspaper of general circulation. ASEcHI

(SGD.) FRANCISCO T. DUQUE III, MD, MSc

Secretary of Health

ANNEX A

20xx Bidding Report

Facility Name: ____________________________________________________________

Region: _____________________ Facility Email Address: ________________________

 

Generic Name	DPRI Version	ABC per Unit	Quantity	Result of Bidding	Possible Reason that lead to Bid Failure
Amoxicillin 250 mg Capsule	6th	0.76	1,000	Failed	1
Amphotericin B 50 mg Vial	6th	2,748.00	20	Failed	2
Amlodipine 10 mg Tablet	6th	0.72	3,000	Successful	n/a

Legend: Reason for Failed Bidding Codes: 1 — Low ABC 2 — No Bidders 3 — Bidders Disqualified (failure to comply with requirements) 4 — Others (pls. specify) n/a — If Bid Results is successful

 

Prepared By:	Approved By:
_______________________	_______________________
Date: __________________	Date: __________________