Finally, after years of vigorous and continuous efforts to resolve the public concerns over costly medicines in the country, the Philippine Senate has approved a bill in January 2007, that will lower the price of medicines by allowing anyone to import patented medicines, which are sold cheaper in other countries. Briefly, parallel importation refers to cross-border trade in a particular product, through a route that the manufacturer may not have originally intended.

Currently, various studies and surveys conducted by the Department of Trade and Industry in Philippines have shown that drug spending in the country is overwhelming and among the highest in South East Asia. The price of drugs and medicines in Philippines is higher by 40 to 70 percent than in other Asian countries, which therefore amounts to annual sales of at least P80 to 100 billion. For example, in accordance to an article written for United Nations Populations Fund [UNFPA] in 2006, the medicines in Philippines are sold 18 times more than those of the same variety in Canada.

Senate Bill 2263

This bill, which was authored by Senator Mar Roxas, received unanimous approval from the Upper Chamber in the Philippines. Accordingly, high-quality medicines in Philippines will soon be more affordable, at which the costs will be similar to medicine prices in Thailand, India, Japan and other neighboring countries.

The main objectives of the bill as approved by the Senate include to adopt the “early working” doctrine. Basically, this “early working” doctrine would allow generic producers to prepare earlier, in order for them to commence production and sale of a generic drug as soon as the patent for the respective drug expires.

Further amendments include adopting the “International Exhaustion Regime”, which will allow generic companies to conduct parallel importation and thus sell patented medicines at a lower price without the risk of patent infringement. Generally, the doctrine of International Exhaustion provides that once a product has been placed on the market by the Intellectual Property owner, or with his consent, the Intellectual Property protection in that product is deemed to have been exhausted and cannot be used to prevent further distribution of that particular product.

The bill will also provide an exception to the application of trademarks and trade name restrictions when applied to parallel imports.

The most important proposition for the generic medicine companies upon the law being implemented is the disallowance of the issuance of another patent for new uses of an existing active ingredient that has been patented, and therefore allowing generic companies to manufacture their own versions of the medicines without fear of being threatened by owners of previously patented products.

Another significant amendment of the law would be the adoption of the “Use of Invention by Government”, and therefore removing the requirement for the government to undergo the long and tedious process of acquiring a compulsory license where immediate public health awareness is concerned. Currently, the Bureau of Foods And Drugs [BFAD] in the Philippines takes at least 18 months to evaluate an application for drug registration by a generic company.

The Pfizer Case – And What Happens Next?

In 2006, Pfizer filed a suit against the government of Philippines for allowing a parallel import and subsequently selling Pfizer’s antihypertensive amlopedine besylate (Norvasc) in the Philippines prior to the expiry of the said product’s patent. The allowance of parallel import prior to the product’s patent expiry was intended to expedite regulatory approval. However, the said product was later discovered being sold to the public in Philippine International Trading (PITC) outlets. Pfizer has been granted a temporary restraining order by Judge Ceasar Untalan of Regional Trial Court No. 149, ordering PITC to cease from importing patented medicines for whatever purpose. Since then, PITC has not marketed or sold a single amlopedine besylate product in Philippines, not until the product’s patent expires in June 2007. Comprehendingly, the judgment is not an act to prevent the government from providing access to cheaper generic product of Norvasc but to rightfully enforce Pfizer’s intellectual property rights.

Upon implementation of the law following the Senate Bill 2263, Pfizer and other huge retail outlets may need to adjust their medicine prices in the Philippines, if they wish to maintain their monopoly on the Philippine drug industry. At the same time, thousands of lives can be saved in the Philippines as they can soon afford to buy medicines for lethal illnesses. Apparently, one of the main factors which attributes to the large death toll number of in the Philippines, is the inability of a large section of the community to purchase medicines, despite the country’s advancement in pharmaceutical research and medical facilities. Consequently, the government of Philippines may implement an embargo to restrict large multinational drug companies from dictating the high pricing of medicines.

In terms of the intellectual property rights, the Intellectual Property Code [IPC] in the Philippines provides restrictive rules on compulsory licensing and excludes anyone from making, using, selling or importing patented products. Nevertheless, in accordance with the IPC, the exercise of the of the patentee’s exclusive rights must be correlated with the public interest, in which Section 74 of the IPC provides that any third person authorized by the government may exploit the invention without agreement of the patent owner, in the event that the public interest, in particular, national security, nutrition, health or the development of other sectors, as determined by the appropriate agency of the government is at stake.