RP should crack down on monopolies, cartels

Posted November 01, 2009 23:22:00

Neal Cruz opinion@inquirer.com.ph

Philippine Daily Inquirer

The new Cheaper Medicines Act (CMA) will be put to a test for the first time in the court suits filed against each other by Filipino-owned United Laboratories and foreign-owned Pfizer Inc., the biggest pharmaceutical company in the Philippines, over the anti-cholesterol drug Atorvastatin, marketed by Pfizer as “Lipitor” and by Unilab as “Avamax.” The fight is being watched closely not only by the pharmaceutical industry, local and foreign, but by the whole Filipino nation.

The Philippines, a poor Third World country, has long been burdened by very, very, very high prices of medicines, the highest in the region. The reason is that a cartel of multinational pharmaceutical companies is dictating the prices through the patent system. Patients, doctors and pharmacies feel that the cartel’s pricing is unfair. The head offices of the multinationals have instructed their Philippine branches to price their medicines “as high as the market will bear.” Proof is that when local companies marketed cheaper generic versions of medicines manufactured by multinationals, the latter cut their prices by half (e.g. Unilab’s “Amvasc” against Pfizer’s “Norvasc,” both anti-hypertensives). And when the CMA was passed and the government decreed price caps on some life-saving medicines, the multinationals also cut prices (e.g. Pfizer’s “Lipitor” cut by half but still higher than Unilab’s “Avamax”). It showed that the multinationals could already earn reasonable profits at lower prices but still doubled the prices of their medicines because they possess the patents.

The CMA was passed precisely to prevent this patent abuse by confirming the stringent requirements for patentability and prohibiting abuse of the patent system.

A patent is given to a company for a medicine it has developed to reward it for its investments and efforts for research and development of the drug. The patent gives it a monopoly in selling the medicine for 20 years (it was originally only for 17 years but extended to 20), so that the company can dictate any price it wants. After its expiration, however, any other company can manufacture and market generic versions of the drug.

To perpetuate their monopoly, companies resort to trickery. They make minor changes in the chemical composition of the medicine and then apply for a new patent, good for another 20 years. The industry calls this “evergreening” but I think the correct term should be “cheating”—because the medicine given a new patent is not new but the same old medicine given a new ingredient. It can be compared to adding more vegetables to the “sinigang” dish and then calling it by another name. “Evergreening,” as with other monopolistic strategies, inevitably leads to skyrocketing prices because it prevents competition, and its continued monopoly is contrary to public interest.

This is what Pfizer has done to “Atorvastatin,” according to Unilab.

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