The price of pharmaceutical products in the Philippines appears to be on the high side compared to that in other Asian countries and countries of similar economic status (, 2012). The cost of research, presence of competition in the market and patent protection are among the significant factors influencing the price movement of these products.Medicines with existing patents in the Philippines are likely to be more expensive due to the ability of pharmaceutical companies to dictate their prices.

Patent protection grants exclusive rights to exploit invention for 20 years (Rep. Act No. 8293, 1997). While it gives inventors and pharmaceutical companies incentive to invest in the research and development of medicine, it may also result in arbitrary pricing of medicine.

The drug Soliris, for example, costs half a million dollars per year for each patient despite a production cost of less than one percent of the selling price (, 2015). It is considered one of the world’s single most expensive drugs and is produced by a relatively new player in the pharmaceutical industry: Alexion Pharmaceuticals (, 2010).

Compulsory licensing

Compulsory licensing is one way to bring down medicine prices by introducing competition in the market. The Intellectual Property Code allows, under certain circumstances, the grant of licence to exploit another’s patented invention even without the patent owner’s agreement. Once a compulsory licence is granted, the grantee may manufacture the patented medicine subject to the payment of reasonable royalties.

Based on jurisprudence, the amount of royalties is typically 2.5 percent of the wholesale price of the patented product (G.R. No. 12187, 1997; G.R. No. 82542, 1988; G.R. No. 121267, 2001). This amount is enough to establish effective competition in the market.

International agreements
Under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, member countries may provide certain exceptions to the exclusive rights conferred by a patent. Such exceptions, however, must neither unreasonably conflict with a normal exploitation of the patent nor unreasonably prejudice the patent owner’s legitimate interests (TRIPS Agreement, 1994).

Common illnesses such as hypertension are not circumstances that allow the grant of compulsory licence. When Thailand granted a compulsory licence for Plavix, a drug to prevent heart disease, it was considered to have violated the TRIPS Agreement (, 2007).

The 2001 Doha Declaration on the TRIPS Agreement and Public Health relaxed the condition imposed by the TRIPS agreement and allowed countries to determine what constitutes a national emergency or other circumstance of extreme urgency. National emergency is understood as a situation which involves public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics. This gives the government ample leeway to determine which medicines are necessary to address health crisis and, thus, make medicine affordable.

Interplay of domestic law and international agreements
Under the IP Code, public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy are sufficient grounds to grant compulsory licence. However, the TRIPS Agreement limits such scope (Rep. Act No. 8293, 1997). Even with the 2001 Doha Declaration, it is still doubtful whether the Philippines can grant compulsory licence on medicines for hypertension – one of the leading causes of death of Filipinos (, 2016). Hypertension may not squarely fall under a situation involving public health crisis or be considered an epidemic. In fact, Thailand was heavily criticised for granting a licence for Plavix: an anti-hypertension drug.

How can the Philippines address the rising toll of hypertension cases if its hands are tied by its limited budget on health and its commitment to the TRIPS Agreement?

The state has the duty to protect and promote the right to health of its people. Countries such as India (, 2013), Brazil (, 2013), and Thailand went as far as violating the TRIPS Agreement in order to protect the health of their citizens.

Intellectual property protection is indeed vital to the growth and development of civilised society. Likewise, compliance with international agreements is imperative. However, at a certain point, an individual’s right to life should be considered paramount.

(First published in Business World Online on September 15, 2015)

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