Date: 1 February 2011
Source: keionline.org
When the price of medicines for treating cancer soared by up to 64 percent in
2010, the Peruvian government set up a watchdog commission that will also
monitor prices of drugs for diabetes and
HIV/AIDS.*
The Directorate General of Medicines, Supplies and Drugs (DIGEMID) told IPS
that the commission`s functions would be extended to other products that also
enjoy tariff- and tax-free status, but are still priced beyond the reach of the
general population.
"The medicines market is imperfect by nature, since pharmaceutical companies
with products protected by patents have a virtual monopoly, thanks to the
protection of intellectual property, and can set whatever
price they want," Alejandra Alayza, coordinator of the Peruvian Network for
Globalisation with Equity (RedGe) complained to IPS.
"The government commission should keep a constant watch on the costs of all
tax-exempt medicines," she said.
According to a recent study by the Health Ministry, in 2009 and 2010 the Peruvian
state lost potential revenues of 16.5 million dollars because of the tax breaks
awarded to cancer medicines, in effect since 2001.
Results from another study to be presented shortly by Health Action International
(HAI) and RedGe indicate that revenue losses amount to 40.8 million dollars if
imports of these medicines between 2005 and September 2010 are taken into
account.
The same applies to medicines for treating diabetes. Between 2006, the year tax exemptions were approved, and September 2010, the
state missed out on 6.2 million dollars in forgone taxes on imports of these
products
totalling 25.3 million dollars, said Edson Meza, head of research for HAI Peru.
The commission will be made up of three key institutions:
the Health Ministry, the Economy and Finance Ministry
and the national competition and patents agency, INDECOPI.
The Health Ministry study looked at 86
cancer medicines and their sales tax and customs tariff exemptions. Complete information
before and after the introduction of the tax exemptions was found for five
products sold
through private sector pharmacies and eight medicines sold to the state.
Pedro Yarasca, executive director for drug access and use at DIGEMID, told IPS
that retail prices were expected to fall by 23 percent when the tax breaks were
introduced, but what actually occurred was that the
profits of the large corporations engaging in monopolistic practices had risen.
Last year, in the case of the eight medicines for cancer treatment bought by
the state for which complete information was available, prices rose by between
30 and 64 percent.
The cost of these three drugs alone accounted for 56 percent of the 27.6 million
dollars spent by all state agencies in 2009 on medicines to treat cancer.
Significantly, the public sector bought 93 percent of all cancer medicines in
2009, while only 6.94 percent of these drugs were purchased by individual
patients from retail pharmacies.
"Patients can hardly ever afford these expensive medicines, so the state must
provide them," Yarasca told IPS.
However, Meza told IPS that the health sector can drive prices down by means of
parallel imports of medicines -- importing a
patented medicine from a country where it is legally available at a lower price
-- and can also demand that reference prices for state purchases must include
the discount corresponding to the value of tax exemption.
"The Health Ministry has done well in showing up the scandalous behaviour
of pharmaceutical companies, but the newly-created commission can establish
mechanisms to ensure that tax breaks benefit consumers,"
Meza said.
Generic drugs, the unbranded equivalents of patented medicines, can save patients
and state health services considerable sums, experts say, but their
availability is restricted by the 20-year patent protection and five-year test
data confidentiality for medicines under the free trade
agreement with the United States.
Keywords: Cost / Medicines / HIV/AIDS / HAI
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