"Shameless People."

The shameless attempt by lawyers of multinational drug company Pfizer to interfere during the hearing of House Bill 6035, popularly known as the "Cheaper Medicine Bill" reveals the extent that these companies will go to protect their exhorbitant margins.

It shows the tragic extent that some Filipinos will go to betray our country’s interests to protect their paychecks.

Rep. Teddy Boy Locsin was correct to show Pfizers lobbyists the door, as a fuming Representative Ferjenel Biron (4th District, Iloilo) called them "shameless people."

HB 6035, certified as urgent by no less than President Gloria Macapagal, seeks to make changes in the Intellectual Property Code to allow the parallel importation of drugs sold cheaper elsewhere.

These are the same drugs sold here, but because of different pricing models in different markets, many drugs sell for as much as 80% less in other countries.

To understand why this is so, one needs to understand the pricing models that drug companies use.

The manufacturing cost of each pill, or bottle of syrup, is usually a mere fraction of the selling price.

Medicine which sells for fifty pesos a tablet may cost only five pesos to produce. The rest of the wholesale price, as much as 80%, goes to amortizing the research, development, and marketing costs of the drug.

Because some countries have well-crafted laws to limit excessive margins, multinational drug companies have lower prices in these countries.

In countries where they can get away with it, they price as aggressively as they can.

They also use expensive sales tactics, employing hundreds as "medical reps," providing them with fleets of cars to regularly visit medical doctors and aggressively push their products. Drug companies also routinely sponsor "medical conventions," and "educational trips," free to doctors but paid for by the exhorbitant retail drug prices.

Some doctors say med reps can be persistent—and annoying.

St. Luke’s Hospital parking has a sign: "Medical Reps are not allowed to park here." Otherwise, the cars of the medical reps would fill up the parking spaces.

The World Trade Organization specifically emphasizes that safeguards should be written into Intellectual Property Laws as they are not intended to be used to create quasi-monopolies within countries.

In WTO’s view, IP laws mean no one else can copy the brand name and product (if still under patent), but it does not mean that it is a license for a multinational to charge exhorbitant prices in one country while charging far less for the same product in another.

IP laws are not intended to prevent the importation of identical goods from a country where prices are lower. Nor are IP laws intended to create opportunities to "extend" patents that have expired elsewhere.

Says Celine Charveriat, head of Oxfam’s Make Trade Fair campaign:

"The (multinational drug) industry is fighting hard because developing country markets, especially in Asia, are vital for its future growth and these medicines under dispute are so valuable. These disputes put monopolies and profits over public health, which is exactly what world leaders promised would never be allowed to happen under WTO intellectual property rules."

Last year, Pfizer sued Roberto "Obet" Pagdanganan of the Philippine International Trading Corporation (PITC), the heads of the Bureau of Food and Drug, other government agencies in their personal capacity, despite the fact that they were fulfilling official functions by importing Norvasc from India, not for sale, but for product testing.

Norvasc’s patent expires in June 2007 and the our existing laws allow parallel importation when that happens.

All Chairman Obet was doing was ensuring that when the patent does expire, the Indian version of the drug would have been tested and approved by the Bureau of Food and Drug and other relevant agencies.

This is known as "early working" of a patent in anticipation of a change in the patent.

A precedent was set in 1983 in the United States when Roche sued Bolar Pharmaceuticals, which was preparing a generic version of a Roche drug whose patent was due to expire. Bolar was not yet engaged in the sale of the drug, it was merely preparing for the patent expiry. The Roche suit was successful and delayed the entry of a generic equivalent for up to eighteen months.

However, recognizing the flaw in the patent law, the U.S. Congress created the Bolar amendment, which recognized that potential competitors have the right to "early-working" to prepare for the expiration of a patent, effectively overturning Roche’s court victory.

Several countries have since implemented similar changes (early Australia, Canada, Argentina, Israel), and recently the European Union has required member states to do so as well. Drug companies can no longer sue people or companies preparing for the expiration of their patents.

The Philippines has no express provision for "early working," however, it has been the de-facto practice for several years and has never been challenged before the Pfizer lawsuits.

The President herself has had to shoo away drug company lobbyists during the World Economic Forum in Davos, Switzerland.

Obet has recently announced that PITC will increase generic drugs importation from R115 Mln to R400 Mln by the end of March 2007, and will focus on the creation of 4,000 Botika ng Bayan outlets specializing in generic drugs.

He laments that generics comprise only 3% of our drug market. In other countries, generics account for as much as 70% of the drug market.

We salute your determination, Madame President and Sir Obet!

The passage of House Bill 6035 will mean cheaper drugs for Filipinos and cheaper drugs for the Department of Health’s medical programs.

In the meantime, there is plenty that we can do as drug consumers to ensure that we get the most value from our medicine budget.

Many doctors are not aware of the market prices of drugs recommended by medical representatives.

If the drug prescribed carries a "shocking" price tag, immediately contact your doctor and ask him for a cheaper equivalent. You may find that some may even be surprised that the original drug sells for so much, and will gladly issue a new prescription for less expensive drug.

Second, be aware that there are also fake drugs. Purchase only from reputable drugstores, and you’ll have little to worry about. Caution: many of Internet Drugstores sell fake drugs.

However, the possibility of fake drugs getting into the market is not an excuse to prohibit the importation of cheaper genuine drugs. IP Laws prohibit fake drugs, even after H.B. 6035 passes into law.

But, most importantly, stay healthy. Eat a proper diet, with minimal red meat, fair amounts of fish and poultry, and lots of fruits and vegetables. Then, no matter what local drugs will cost, it won’t affect you as much.

And when you do need to buy maintenance drugs, ask a relative who lives abroad to buy them for you from a reputable drugstore overseas, at least until local drug prices go down and there are less of those Rep. Biron calls "Shameless People."

Let them do it!

The Cable TV operators convention at the Dusit Hotel on March 1st has one overriding theme: Broadband Internet and the right to provide the service over cable TV networks to their thousands of subscribers throughout the nation.

Broadband over Cable was the world's first broadband service, pre-dating the DSL technology of the telephone companies by at least a year. In the United States, the first broadband subscriptions were over Cable TV networks.

In the Philippines, however, this medium for providing high-speed Internet is underdeveloped with only Metro Manila cable providers PLDT-affiliated Sky/Home Cable and Destiny Cable offering the service.

Why is this so?

It certainly couldn't be for any technical reasons: Cable Broadband is a mature, cost-efficient and proven technology that has reliably delivered high-speed Internet to areas worldwide that telephone companies have been unwilling or unable to service.

The Cable TV association are lobbying the NTC to allow them to provide this service, correctly pointing out that they already have the infrastructure in place to offer this service. The problem appears to be regulatory in nature, with the NTC requiring an investment of P10 Million from the cable companies to “qualify” for the privilege.

The millions of pesos in investments in the cable TV infrastructure should already qualify cable operators, but these investments do not count, according to the NTC. The P10 Million should be invested in Internet equipment, they say.

But with the cost of Internet equipment falling, Internet providers would be hard pressed to spend P10 Million pesos to establish a network. Internet equipment that cost millions a decade ago can be purchased at computer shops for less than ten thousand pesos.

More so when the provider already has a viable infrastructure on which to deliver the service, which is exactly what the Cable TV operators association is lobbying for: That their existing investments in their cable network be considered as fulfilling that investment requirement. Their Internet service runs on their existing networks after all!

To economists, such unneccessary regulatory restrictions are deemed protectionist, designed to protect another sector that provides equivalent services and create barriers to new entrants with more efficient alternatives. The restrictions are also rent-seeking, allowing the competing sector to charge higher prices than would be if the technologies are allowed to compete on a level playing field.

It is also horribly hobbles our national competitiveness, at a time when governments worldwide are racing to connect their entire countries to the Internet. The Association correctly points out that many members operate in areas where telephone services are scarce and the operating telephone companies don't have the capacity to provide DSL. Having Cable TV operators as partners in the delivery of Internet services throughout the archipelago is essential to National competitiveness.

If your view of the Internet is reading online news, checking email from friends, and watching videos on YouTube, you may miss the reason why the Internet is so essential to modern economies.

For manufacturing companies, it is a way to keep in touch with the latest industry trends, a way to search for and communicate with suppliers and purchasers. For farmers, it is a way to study the latest agricultural technologies, a way to obtain accurate weather information, a way to identify markets and correctly price products. For service companies, it is a way to market services, and deliver those services to the global marketplace.

For students, it is a way to learn outside the classroom.

Think about the situation in rural areas, with hardly any libraries and educational materials around, then think about the impact of the Internet in a rural barangay (perhaps in the barangay hall or public school). Many schools in developed countries publish their educational materials online, free for downloading: With widespread Internet access, a student in Mindanao has the same access to materials as a student in New York, or Hong Kong, or London.

The CITC and DOST's promotion of the cooperative Philippine Open Internet Exchange makes it easier for SMEs to join and build our nationwide Internet (previously limited to large national operators). Encouraging more sectors to provide Internet services increases participation and promotes its success, and consequently the success of the nationwide technology corridor.
Now is not the time for the government to be limiting which sectors should or should not be providing Internet access.

Any sector, that due to advances in technology, can provide Internet, should not be restricted from doing so, either overtly or through the creation of needless restrictions.

Ten years ago, who would have thought that one could walk into a shopping mall with a laptop to get free wireless Internet? Who would have thought that in hundreds of cities worldwide, one need only turn on a laptop to get free wireless Internet?

Neither should the telephone companies be complaining, and myopically attempting to “defend their turf.”

Ask yourselves: If we let the cable TV companies provide broadband Internet services to areas we cannot serve, couldn't we then offer virtual telephone lines over the Internet via their infrastructure?

Revenues without capital expenditure. As many businessman will tell you, this is a good thing.
Just ask AT&T Vonage and Broadvoice: These companies offer virtual US phone lines registered as local in any city in North America to anyone in the world with access to an Internet connection.

Now, reverse the situation and ask yourselves: How many Filipinos worldwide would love to have a virtual local phone number in Manila (or Bacolod, or Legaspi City, or Cebu, or Baguio, or Davao) that they can access over the Internet wherever they are, be it in the US, the Middle East, Europe, or Asia?

Wired Magazine calls Filipinos “The World's Largest Virtual Nation,” yet we don't have anything close to “The World's Largest Virtual Telephone Network.” We should. Think of the Dollar and Euro revenue. Bling! Bling!