It has been reported that the prices of medicines in the Philippines are among the highest in the world, and that we rank second only to Japan in having the highest medicine prices in Asia.

All that may soon change.

The Universally Accessible Cheaper and Quality Medicines Act (Cheaper Medicines Act), or Republic Act 9502, finally took effect on July 5, 2008, 15 days after its publication on June 19, 2008, in two newspapers of general circulation.

The law aims to bring down the prices of medicines in the country by encouraging competition in the local pharmaceutical market, and for this purpose amends the Generics Act of 1988, the Pharmacy Law and, more importantly, the Intellectual Property Code.

In the event that competition is not effective in ensuring access to affordable medicines, the Cheaper Medicines Act also provides a reserve instrument to address this problem in the form of price regulation. It, thus, gives the President the power to impose maximum retail prices on various important drugs, upon the recommendation of the secretary of health.

The Cheaper Medicines Act amends the Generics Act by requiring the inclusion of the statement: “This product has the same therapeutic efficacy as any other generic product of the same name. Signed: BFAD” in the label of a generic drug.

It further requires every drug-manufacturing company operating in the Philippines to produce, distribute and make widely available to the general public an “unbranded” generic counterpart of their branded product (the express requirement to market an “unbranded” version is not in the old Generics Act).

As regards the Pharmacy Law, the Cheaper Medicines Act amends the same by allowing nonprescription or over-the-counter drugs to be sold through supermarkets, convenience stores and other retail establishments, thus breaking the monopoly of established drugstore chains on the sale of medicines.

But the essence of the Cheaper Medicines Act is the amendments made to the Intellectual Property Code. Competition in the pharmaceutical market is encouraged in two ways: one, by expressly excluding from patentability certain drugs and medicines and/or their newly discovered uses or properties; and two, by imposing additional limitations on patent rights over drugs and medicines.

Exclusion from patentability

Under the Cheaper Medicines Act, newly discovered forms or properties of a drug that are already known which do not result in the enhancement of the efficacy of the drug are not patentable.

Our patent law is now unique in the sense that it provides an exhaustive list of the forms of drugs or medicines which are considered the same as the known drug, and, thus, not patentable if they do not differ from the known drug significantly in terms of efficacy.

Such forms are: “salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of a known substance.”

Also excluded from the scope of patentable inventions are newly discovered uses of a known drug. Examples of subsequently discovered new uses of a known drug are the use of finasteride for the treatment of prostate enlargement (previously used for the treatment of male-pattern baldness) and the use of sildenafil for the treatment of male erectile dysfunction (previously used for the treatment of hypertension).

This amendment will ensure that no new patents will ever be issued for off-patent or generic drugs and their marketing will not be encumbered by patent issues.

It is noteworthy that the Cheaper Medicines Act justifies the aforementioned exclusions by correspondingly amending the definition of inventiveness, a requirement for patentability, in the Intellectual Property Code by also expressly stating that such discoveries are not inventive.

Does this mean that the Cheaper Medicines Act raises the bar on the patentability of drugs and medicines by employing a stricter standard for inventiveness? Or is it a mere expression of an already clear policy under the Intellectual Property Code to afford protection only to inventions that comply with the requirements of patentability?

Advocates of the latter argument may claim that patents issued before the effectivity of the Cheaper Medicines Act for newly discovered forms, properties and uses of a known drug are vulnerable to cancellation.

Limitation on patent rights

Perhaps the provisions in the Cheaper Medicines Act that will have the most immediate impact on the lowering of drug prices in the Philippines are those that impose additional limitations on the exclusive rights enjoyed by patent owners.

Under these amendments, parallel importation of patented drugs from other countries where they are sold at a much lower price, e.g., India, by both the government and the private sector, are now allowed. The right to import used to be an exclusive right of the patent owner. Parallel importation will, thus, facilitate the introduction of more affordable versions of the same drug in the pharmaceutical market, which increases competition in the market and gives the public more choices.

As an added measure, the Cheaper Medicines Act ensures the availability of cheaper medicines by requiring drug outlets to carry a variety of brands for each drug, including those sourced through parallel importation.

Further, the Cheaper Medicines Act allows local generic companies to test, produce and register their generic versions of the patented drugs, which may take years to perform, while the patent over the drug still subsists so that the generic versions of the drug can be sold to the public immediately upon the expiration of the patent.

Currently, patent owners usually still enjoy a few more years of monopoly over their patented drugs after its expiration due to the absence of competition from generic companies.

Within 120 days after the enactment of the Cheaper Medicines Act, the Intellectual Property Office, together with the Department of Health and the Bureau of Food and Drugs, are supposed to issue the implementing rules and regulations (IRR). The drafting of the IRR has been characterized as the “next battle,” and the proponents of the law, such as Sen. Mar Roxas II and Rep. Antonio Alvarez, have warned that interest groups are expected to lobby for an interpretation of the provisions that will weaken the law and serve their interests by maintaining the status quo.

The drafting of the IRR will surely be a contentious and interesting proceeding. While Big Pharma is expected to lobby its interests, local generic companies, civil society and nongovernment organizations are also expected to put up a fight.

It, thus, remains to be seen whether we will actually see a reduction of “40 percent to 70 percent” in drug prices, as promised by the proponents of the Cheaper Medicines Act.

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