Expensive medicines

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With the Philippine population growth rate now below replacement level, we are on the path to become an aging society. That means we will have an increasing number of old people with a greater demand for health services.

As it is, those who belong to the middle class already live in fear that they are just one serious hospital admission away from becoming poor. Our for-profit health care system that entails large out-of-pocket expenditures has been a problem for decades.

Outside of expensive hospital care, the high cost of prescription drugs is keeping Filipinos from getting proper medical attention. A 2019 Pulse Asia survey cited in House Bill 5956 found that 99 percent of Filipinos do not buy all their prescribed medicines because they simply cannot afford to.

For senior citizens, the long list of prescription drugs required to manage their health needs is an existential problem. This is something I am very familiar with.

The monthly pension from SSS is barely able to cover the costs of all the maintenance medications a senior citizen like myself must have. I envy relatives in North America, particularly in Canada, who can get their maintenance prescriptions relatively cheaper than here.

I am told by immigrant friends that their government (unlike ours) makes sure prices of prescription medicines are kept reasonable. This is particularly true in Canada but not so much in the US. Indeed, many Americans cross the border to Canada to get significant savings on their prescriptions.

The high cost of prescription drugs in the Philippines is often attributed to a health care system that historically relied on an illusory free-market model like the US. The Canadian and many European systems, on the other hand, involve a proactive government acting as a central negotiator and sets strict price ceilings.

The Philippine prescription drug market has long been dominated by private-sector pricing that is less transparent and overall worse than that of the despised deregulated oil industry.

How bad is our system?

There was a report on social media claiming that by the time a medicine reaches a Filipino patient, its price has been inflated by as many as five separate markups totaling as much as 273 percent above what the manufacturer originally charged – before a 12 percent value-added tax is added on top.

The finding was attributed by the social media post to the left-leaning Ibon Foundation. I cross checked this claim with friends in the pharmaceutical industry and they said the claim is more or less accurate.

They also told me that it will remain as such for so long as we have an out-of-pocket market. It is not a competitive market. It is a cartel, with the drug retail industry dictating the price.

Indeed, prescription drugs are significantly more expensive here than in our neighboring ASEAN countries. The multiple layers of markups across the supply chain, essentially middle men, make prescription drug prices here very expensive.

Bilyonaryo reported last week that “by the time drugs reach patients, prices can be inflated by more than 200 percent even before taxes are applied.

“Retailers capture the largest share of profits, while distributors and import-related costs further push prices higher… Distributors, in some cases, add markups exceeding 300 percent.”

A friend of mine, a former journalist who is now an entrepreneur, has seen this problem and he is determined to come up with a system that would make prescription drug prices affordable for ordinary Filipino workers.

This means going directly to the countries where these prescription drugs we commonly need are manufactured. That’s India, China, Pakistan and some other countries that manufacture the generic versions of those drugs that can cost five to thirty times more here.

Filipinos spent a total of P615 billion out-of-pocket on health care in 2024 – 42.7 percent of the country’s total health care costs – according to a House bill filed in 2025. Some 50 percent of out-of-pocket expenses went directly to medicines bought at pharmacies according to a study published by PubMed.

Rights Report Philippines, in a report last week, blames monopolistic behavior in the drug retail industry for the problem.

“The most direct answer is market power,” the report said.

The largest drugstore chain operates more than 1,200 stores. A 2008 Health Action International study found this chain accounted for roughly 80 percent of total drug retailer sales at the time, a dominance the market has never effectively challenged since.

It is the same with wholesale, with one company controlling roughly 80 to 85 percent of pharmaceutical wholesale distribution channels in the Philippines – a concentration that made them the dominant gatekeeper between manufacturers and the retail pharmacy market, RRP reports.

“The practical result: even when the government secures lower prices for medicines, those savings disappear as the drugs pass through this distribution network and then through the retail chain, each adding its own cut.”

Ibon claims that their data “shows a supply chain in which drug retailers – not manufacturers or distributors – pocket the biggest share.”

Worse, RRP claims, “40 to 60 percent of the cost of a drug in the Philippines goes into advertising and retailing, not manufacturing.”

RRP also cited a peer-reviewed study published in 2020 in the International Journal of Environmental Research and Public Health that “found things had gotten worse: branded medicines had climbed to more than 30 times the international reference price, and generics to about 10 times.

Where is the Philippine Competition Commission while all these are happening? Sleeping on their job!

My friends in the pharma industry say that bringing down prices involves some amount of bulk purchasing. This is a solution that requires political will to go against the drug distribution cartel that government bureaucrats are likely in cahoots with.

Where are our legislators who should be calling investigations and legislating reform measures? Busy collecting their commissions on pork barrel projects?

Can we expect relief from this madness? Not anytime soon.

Boo Chanco’s email address is [email protected]. Follow him in X @boochanco