Improving access to health care across the country is a priority not just for the government, but also increasingly for private sector providers. Given that spending on health care is low – just $129 per person in 2009, according to the World Health Organisation (WHO) – providers see a chance to tap into a wider population segment with cost-effective products and services.

INSURANCE: The introduction of the Philippines Health Insurance Corporation, commonly known as PhilHealth, along with the Universal Health Care Programme, brought several million families under the government-backed health insurance scheme, which now covers over two-thirds of the population. Although budget limitations mean coverage is weak and only a proportion of costs get defrayed, patients have been encouraged to think more long term about their health care needs as a result. This will, in turn, stimulate demand for services at the lower end of the market.

HIGH COSTS: While there is much investment in high-end facilities, certain private sector players also believe there are significant growth opportunities in the vast and largely untapped lower-income market. As part of this, providing cheaper medicine has long been a target for legislators and health professionals alarmed at the high cost of medication in the country.

A comparison of 2008 prices for some well-known drugs across regional markets highlights this rather starkly. Norvasc, a medicine for hypertension, was sold in the Philippines for $1 per 5-mg tablet, while in India and Pakistan the same drug manufactured by the same company retailed at around $0.14. Plendil, also for hypertension, was priced in the Philippines at $0.54 per tablet, while retailing at only $0.07 in India. A Ventolin inhaler for asthma patients was sold for nearly $8 in the local market, while in India it cost only $3.

MORE AFFORDABLE MEDICINES: After much wrangling among legislators and lobbyists, the Cheaper Medicines Act was passed in 2008. This has helped reduce prices by allowing the parallel import of branded drugs and the greater domestic manufacturing of generics through a weakening of intellectual property rights. Still, the domination of branded products has only just started to be challenged by the growth in the retailing of generic drugs. According to Benjamin Liuson, the president of The Generics Pharmacy, more widespread use of generics would enable more Filipinos to access the medicine. “Due to misrepresentation and misunderstanding, many in the Philippines continue to believe that name-brand drugs are more effective than generics,” he told OBG. “However, through both education and advertising campaigns, people are starting to understand the only difference between name-brand pharmaceuticals and generics is the price.”

GENERICS: The Generics Pharmacy is one of many pharmacies that offer Filipinos affordable medication. Beginning with one store in 2001, it now has over 1200 franchises throughout the Philippines, mostly in urban centres. Stocking only generics, the pharmacies are typically around 15 sq metres in size and dispense key medicines at prices far lower than their branded equivalents. For instance, paracetamol retails for P3 ($0.07) per tablet for branded varieties, but the pharmacy sells its generic equivalent for just P0.6 ($0.014) per tablet.

Liuson believes bringing generics to the market through a low-cost model did more than the Cheaper Medicines Act to reduce prices. Although the act allowed for the parallel importation of branded drugs, the process was monopolised by the Philippine International Trading Corporation. Free of importer competition, costs were reduced, but not by as much as critics believe they could have been. A weakening of the ability of pharmaceuticals companies to defend drugs patents has led to a rise in domestic production of generics, making retailers less reliant on costly imports. The Generics Pharmacy, for example, sources 80% of its products from local manufacturers.

An increased number of rival generic pharmacies are opening, and this competition is healthy for the sector and for continued growth, Liuson told OBG. “While generic drugs currently only comprise about 30% of the market, the industry forecast in the medium term is for 10-15% growth per year as more people become aware of the benefits of generics,” he said. “Growth in the market for generics will also be supported by wider and more diverse product offerings.”

BREAKING BRANDS: Challenges for generics persist, however. Their key disadvantage is that manufacturers can only start producing them once intellectual property rights have expired. The 2008 act sought to change the Philippine Intellectual Property Code, giving the government more muscle in challenging the patent privileges of drug companies. Crucially, the act narrowed the definition of what medicines can be patented by disallowing the practice of “evergreening”, or effectively applying for protection of drugs with “new uses” when existing patents are set to expire.

In response, the leading pharmaceuticals giants, many with a significant presence in the Philippines, have established lower-price sub-brands. Novartis led the way with Sandoz, and Pfizer and Sanofi-Aventis were quick to follow suit with brands Pfizer Parke-Davis and Winthrop. While prices are lower, these companies still trade on being associated brands and are more expensive than generics. The companies are able to charge higher prices, relying on the trust basis they have built with customers through their parent brands.

LIMITED ACCESS: Access to low-cost drugs may be improving, but providing affordable care for those with low incomes is a challenge. A 2010 study by the University of Philippines National Health Institute found that six out of every 10 Filipinos who succumb to sickness die without having seen a doctor. Limited access to doctors and hospitals also explains the high infant mortality rate among the poor – 42 per 1000 births compared with 19 per 1000 for the upper class.

There is a severe shortage of tertiary health care facilities in rural areas. This is particular problem for Filipinos working in agricultural jobs, who have a higher risk of exposure to treatable infectious diseases. Public support is necessary for these patients, as labourers’ incomes are so low that private provision is not viable.

PERSONNEL SHORTAGES: The government has begun to respond to underserved rural areas by confronting the chronic shortage of nurses. Initiating the Registered Nurses for Health Enhancement and Local Services (RN HEALS) programme in early 2011, the Department of Health offered nurses a total salary of P10,000 ($227) per month for deployment to rural locations. The need for health care workers has become even more critical since the rapid expansion of a cash distribution programme for poverty relief championed by President Benigno Aquino III, which requires pregnant mothers and young children to undergo regular medical checkups as a condition for receiving welfare payments.

The programme is also intended to address the needs of the country’s estimated 287,000 unemployed or under-employed nurses. Nursing is a popular career choice in the Philippines, but changes in overseas markets, particularly in the US (where immigration laws have been tightened), mean many can not find work. Critics of the programme worry most nurses will not find the scheme attractive, with its relatively low pay, assignment to a remote location and poor working conditions.

OTHER STATE SPENDING: Family planning and responsible parenting is another area the government is supporting with increased spending. Allocations rose from $17m in 2011 to $58m for 2012, an increase largely attributable to the purchase of condoms and contraceptives, but also vaccines for senior citizens, maternal-child nutrition, newborn screening and rural units with birthing facilities. Pro-life advocates in the heavily Catholic country objected to the concentration on contraception, but the budget was nevertheless passed.

Overall, while access is increasing for those who can afford it, the bottom line is that government expenditure remains limited, amounting to just under 3% of the country’s GDP, well below the 5% standard encouraged by the WHO. While the private sector is working hard to expand its reach, the priority for the public sector is to reallocate resources towards investment in facilities and encourage health care workers to accept positions in rural areas by means like more attractive salaries.