Should PhilHealth use the centrally negotiated price of drugs in the development of benefit packages?

Price negotiation will help determine the prices of drugs to be included in PhilHealth benefit packages. However, these prices, based on my understanding of the JAO, are applicable to providers under the jurisdiction of DOH. As such, providers who are either private or LGU-sponsored may not directly benefit from it.

A consolidated/pooled volume will drive prices down and will result in a more reasonable negotiated price. However, providers that are not under the DOH will have to negotiate using their individual volumes (as opposed to pooled volume). Such a mechanism will not give them the bargaining power to drive prices down. Hence, using the negotiated price in the design of the benefit package will be perceived, yet again, as an underestimation of the true cost.

Maybe it will be helpful if DOH will be able to produce a pooled volume (estimate) for all government-run providers and use this in price negotiation. However, pharmaceutical companies will not be inclined to enter into an agreement if the government cannot assures that all government-run providers (included in the pooled volume) will procure from the same supplier. This is not ideal because this could end up in a monopoly. Nonetheless, DOH, DTI, and PHIC should look into other mechanisms whereby all government-run providers (whether run by DOH, LGU) are able to do their price-setting using the centrally negotiated price (which is believed to be the lowest price).


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