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. 1

     The DOH-Central Office Bids and Awards Committee (DOH-COBAC) and DOH hospitals were shown to have more efficient procurement prices compared to provincial and municipal health facilities, thus leading to variability in access to essential medicines across the Philippines.

     Republic Act (RA) 9502 or the Universally Accessible Cheaper and Quality Medicines Act of 2008 gave the DOH instruments to monitor and regulate the prices of drugs and medicines to protect consumers and the public procuring entities from excessive mark-ups applied to prices of medicines resulting from information asymmetry and the lack of effective market competition.

     To address these issues, the DOH Pharmaceutical Division (formerly NCPAM) established a Drug Price Reference Index (DPRI) for all essential medicines to guide all national and local government health facilities in the efficient sourcing of pharmaceutical products in the public sector.

What is the Drug Price Reference Index (DPRI)?

     The DPRI lists the ceiling prices of essential medicines for government bidding and procurement set by the DOH for all National and Local Government Health Facilities and Government Agencies. Winning bid prices of essential medicines within the DPRI ceiling reflect efficient and effective procurement in the government. Their transparencies and enforcement ensure consumer access to medicines and protection from excessive price mark-ups on medicines.

     The DPRI only reflects the acquisition costs including landed cost, packaging, drug content, quality assurance, manufacturing overheads and Food and Drug Administration (FDA) fees. The DPRI excludes other costs such as pharmacy services, preparation and storage fees, and other reasonable pharmacy mark-ups, which are now being evaluated by the DOH.

     The DPRI aims to improve the efficiency and good governance in the pricing and procurement of medicines in the public sector through establishing a transparent and publicly available reference price for affordable and quality medicines. It also aims to guide the Philippine Health Insurance Corporation (PHIC) in setting reimbursement caps for medicines both for inpatient and outpatient services.

Who should use the DPRI?

     To ensure that the government achieves the best value for money in sourcing essential medicines.consignment and emergency procurement, negotiated procurement, shopping, direct contracting, public biddingAll government entities should be guided by the DPRI when procuring medicines. It shall be applied to all forms of procurement such as

What are the sources of the Price Data?

     The DPRI is computed based on the prevailing public tender prices of the previous year (2015) reflected in the actual Purchase Orders (POs) submitted by the DOH Retained Hospitals, ROs, Central Office Bids and Awards Committee (COBAC) and Philippine Pharma Procurement Inc. (PPPI) to the DOH.
     Only data coming from reputable suppliers are considered in the database which means that they should be licensed by the Philippine Food and Drug Administration (FDA) and have a certificate of Good Manufacturing Practice issued by the FDA.

How is the Drug Price Reference (DPR) determined?

     In general, the drug price reference is set at the Median or the 50th percentile across the range of prevailing tender prices of essential medicines for each preparation and strength. However, for drugs and medicines with only 1 participating manufacturer, the DPR is set at the lowest winning bid from a reputable supplier. Projected inflationary cost (3% per annum) and testing for interchangeability (bioavailability and bioequivalence) for certain drugs based on the latest data provided by FDA have already been considered in the calculation of the DPR.

     For innovator drugs approved for inclusion in the Philippine National Formulary, the price may be set by referencing with relevant international markets particularly those with similar income status (i.e. Thailand, India) and through international reference price (MSH). It may also be informed by economic evaluations conducted in the Philippines used by the DOH to value their claimed clinical benefits and negotiate tender prices where an innovative pharmaceutical product has only one supplier.

How often is the DPRI updated?

     The DPRI is being updated annually. All DOH hospitals and ROs submits a copy of their latest purchase orders to the DOH Pharmaceutical Division for annual collection and analyzation of price data. The updated DPRI is based on the procurement price data of medicines from the previous year.