thirteenth congress of 1 *s 5.pdf · republic act no. 8203, “special law on counterfeit drugs”-...

THIRTEENTH CONGRESS OF THE REPUBLIC ) OF THE PHILIPPINES 1 *s a”jl$& ”“.2 p 5 :

Second Regular Session )

S E N A T E ~~~~~~~~ 8V : -+&izL-

COMMITTEE REPORT NO. %

Submitted b Finance on

on Health and Demography, Trade and Commerce, and

Re : Proposed Senate Resolution Nos. 40 and 122

Recommending the adoption of this Report and the implementation of its recommendations

Sponsors : Senators Cayetano, Ejercito Estrada (L.) and Revilla Jr.

Mr. President:

The Committees on Health and Demography, Trade and Commerce, and

Finance, to which were referred P. S. Res. No. 40, introduced by Sen. Ejercito-Estrada

(L.), entitled:

“RESOLUTION DIRECTING THE SENATE COMMITTEE ON ’HEALTH AND DEMOGRAPHY TO INVESTIGATE, IN AID OF LEGISLATION, THE ALLEGED PROLIFERATION OF COUNTERFEIT MEDICINE IN THE MARKET”

and P. S. Res. No. 122, introduced by Sen. Revilla Jr., entitled:

“RESOLUTION URGING THE APPROPRIATE SENATE COMMITTEE TO CONDUCT AN INVESTIGATION, IN AID OF LEGISLATION, INTO THE PROLIFERATION OF FAKE DRUGS IN THE COUNTRY IN ORDER TO COME UP WITH CORRECTIVE LEGISLATION IN RESPONSE TO THE SAID PROBLEM”

have considered the same and have the honor to submit this Report to the Senate wirh

the following findings and recommendations:

I. FINDINGS

A. PROLIFERATION OF COUNTERFEIT DRUGS

2 COMMITTEE REPORT on P.S. Res. Nos. 40 and 12;’

1. The proliferation of counterfeit medicines’ is a global problem. A World Health

Organization (WHO) survey (Jan. 1998 - Oct. 2000) on counterfeit drugs containing

reports from 20 countries showed that 60% of the reported cases of counterfeit drugs

came from developing countries and the remaining 40% from industrialized countries

The World Health Organization (WHO) noted that the actual extent of the problem on

counterfeit drugs may not be established because of the lack of surveillance mechanism

at the international and country level. Only a few countries report cases of counterfeit

drugs to WHO.

2. In the Philippines, the data provided by the Bureau of Food and Drugs, the

country’s drug regulatory agency, revealed that a total of 63 drug products they seized

in 2005 are medicines with less than 80% of active ingredients. The commonly

counterfeited drugs include among others paracetamol, mefenamic acid, antibiotics (Le.

cotrimoxazole, ciprofloxacin) and vitamins (Le. Enervon C and Ceelin).

The Pharmaceutical Healthcare Association of the Philippines (PHAP), an

umbrella organization of multinational drug companies in the Philippines cited higher

figures culled from various news reports:

Eight percent of drugs bought were fake based on recent survey of

pharmacies in the Philippines (Philippine Star, May 27, 2002)

The Bureau of Food and Drugs (BFAD) reported that 80% of counterfeit

drugs are actually imported drugs, which are not registered with BFAD.

These drugs are smuggled in Mindanao and North Luzon (Philippine Daily

Inquirer, January 26, 2002).

The former BFAD Director William Torres and legal officer Atty. lreneo

Galicia were quoted in newspapers and radio interviews stating the 30%

of the drug outlets visited by BFAD sold counterfeit drugs.

Counterfeit medicines, as used in this Committee Report, may refer to medicinal products which contain incorrect andlor substandard ingredients or unregistered imported drug products. The complete definition of counterfeit medicines, as stated in Section 3 (b) of Republic Act No. 8203, is enumerated on pages 4 and 5 of this report.

1

3 COMMITTEE REPORT on P.S. Res. Nos. 40 and 122

According to the Health Secretary Manuel Dayrit an estimated 10% of the

pharmaceutical market in the country are counterfeit drugs.

In 2004, twenty percent (20%) of the medicines confiscated by the Bureau

of Food and Drugs were substandard, the rest or 80% were unregistered

imported drug products (Manila Bulletin, February 6, 2002).

0

It must be noted however, that these news reports failed to distinguish whether

the alleged "fake" or "counterfeit" drugs were substandard or unregistered with BFAD,

based on the definition of "counterfeit drugs" under Republic Act No. 8203 (R.A. 8203)'

8. RELEVANT LAWS ON COUNTERFEIT DRUGS

There are four laws that aim to protect consumers and guarantee the safety and

efficacy of drugs:

1, Republic Act No. 3720, "Food, Drug and Cosmetics Act" - gives the mandate to

the Bureau of, Food and Drugs as the government's regulatory body to ensure the

safety, efficacy and quality of food, drugs and cosmetics. Chapter VI, Sections 11 and

12 prohibit the adulteration, mislabeling or misbranding of any drug, device, food and

cosmetic and prescribe corresponding penalties. Under Chapter VIII, Section 18, a drug

is deemed adulterated if its strength differs from or its quality falls below the standard

set by the BFAD.

2. Executive Order No. 775, Series of 1987 - amends Republic Act No. 3720 (R.A.

3720). Section 7 amends the definition of prohibited acts under Section 11 of R.A. 3720

to include importation, exportation and distribution of adulterated or misbranded food,

drug, device or cosmetic, while Section 8 further expands the list of prohibited acts to

include the manufacture, importation, exportation, sale, offering for sale, distribution or

transfer of any drug or device which is not registered or has no license from the BFAD,

and the sale of any drug beyond its expiry date. Furthermore, Section 15 provides that

no person shall manufacture, sell, offer for sale, import, export, distribute or transfer any

' . The complete definition of counterfeit medicines, as stated in Section 3 (b) of Republic Act No. 8203, is enumerated on pages 4 and 5 of this report


drug or device without first securing a license to operate from BFAD. It also specifies

that new drugs must be registered before it is manufactured, sold, imported, exported,

distributed or transferred.

3. Republic Act No. 7394, “Consumer Act of fhe Philippines” - provides the same

definition of adulterated drugs in R.A. 3720. Article 31 requires the registration of drugs

or devices with BFAD before these can be manufactured, sold, offered for sale,

imported, exported, distributed or transferred.

4.

drugs as:

Republic Act No. 8203, “Special Law on Counterfeit Drugs”- Defines counterfeit

e Medicinal products with the correct ingredients but not in the amounts as

provided, wrong ingredients, without active ingredients, with insufficient

quantity of active ingredient, which results in the reduction of the drug’s

safety, efficacy, quality, strength or purity.

A drug that is deliberately and fraudulently mislabeled with respect to

identity and lor source or with fake packaging and can apply to both

branded and generic products. ,

The drug itself, or the container or labeling thereof or any part of such

drug, container or labeling bearing without authorization the trademark,

trade name or other identification mark or imprint or any likeness to that

which is owned or registered in the Bureau of Patent, Trademark and

Technology Transfer (BPTT) in the name of another natural or juridical

person:

e

e A drug product refilled in containers by unauthorized persons if the

legitimate labels or marks are used;

. An unregistered imported drug product, except drugs brought in the

country for personal use as confirmed and justified by accompanying

medical records; ;


C.

I .

0 A drug which contains no amount of, or a different active ingredient, or

less than 80% of the active ingredient it purports to possess, as

distinguished from an adulterated drug including reduction or loss of

efficacy due to expiration.

Factors Encouraging the Proliferation of Counterfeit Drugs

Weak Regulatory Agencies

a. Bureau of Food and Drugs

BFAD does not have the necessary financial and human resources to

carry out its mandate effectively. In terms of manpower complement, BFAD has

only 393 personnel, less than half of which are doing technical work. There are

150 food and drug regulation officers, 40 in Metro Manila and 114 in 15 regions

(or about 7 per region) to inspect and monitor 39,000 establishments and 55,000

food, drug and cosmetic products. The ratio therefore of regulation officer to

establishments and products is 1 is to 39,367.

Moreover, its legal division, which is responsible for processing

administrative cases like counterfeit drugs, has only one lawyer. To address this

situation, a lawyer from the Department of Health central office was reassigned

to the Bureau to handle some of the cases. The legal division has actually six

plantilla positions, but only one is filled up probably because the low salary

offered does not entice lawyers to work in BFAD, as testified to by BFAD Dir.

Leticia Barbara Gutierrez. Currently, the lone lawyer of BFAD, who is the Officer

in Charge of the Legal Compliance and Information Division, occupies a position

with corresponding salary grade 23 (P20,020.00), which is lower compared to the

Officers in Charge of other government agencies who occupy positions with

corresponding salary grade 25. The other plantilla positions available for lawyers

in the BFAD have corresponding salary grades ranging from Attorney 111 - Salary

Grade 21 (P18,510.00) to Attorney V - Salary Grade 25 (P21,655.00)


Aside from monitoring food, drug and cosmetic products, BFAD js also

tasked to implement provisions of several laws on food fortification, salt

iodization, and tobacco regulation, among others. Despite the many tasks and

functions assigned to BFAD, there is no corresponding increase in its budget

appropriations to enable the agency to hire more personnel and offer competitive

salaries. The table below shows that the appropriations for BFAD have not

increased since 2002. In fact, the 2005 budget is lower than the budget in 2003.

Moreover, the budget for personnel services had significantly decreased from

P84.1 million in 2002 to P79.9 in 2005.

Table 1. BFAD Appropriations CY 2002-2005

Personnel

services

Maintenance

and Other

Operating

Expenses

Capital Outlay

Total

CY 2002

P84, 171 :OOO

P I 11, 765,000

P195, 936,000

CY 2003

P79,766,000

P40,455,000

P1,000,000

P121,221,000

CY 2004

P79,766,000

P40, 455,000

P120,221,000

-,

CY 2005

P79.983,OOO __

__ P40,455,000

-

PI 20,438,000

Source: Bureau of Food and Drugs

To solve the problem of inadequate funds and lack of personnel, BFAD

has submitted a proposal to the Department of Budget and Management (DBM)

increasing its budget to P237 million and creating 240 new positions. Under the

proposal, which is pursuant to Executive Order No. 366, "Directing a Strategic

Review of the Operations and Organization of the Executive Branch," there will

be an additional 135 food and drug regulation officer^.^

The budget allotted for BFAD in the 2006 Budget Proposal remains at P120M. According to the DOH Legislative Liaison Officer, new positions have yet to be created as the DOH and other agencies under the Executive are still undergoing re-organization pursuant to EO 366.

7 COMMITTEE REPORT on P.S. Res. Nos 40 and 122

To augment its insufficien,t budg,et, the BFAD had also requested the DBM

to allow a hundred percent utilization of their income from registration and other

fees. In the previous years, the DBM allowed BFAD to utilize only a portion of

their income. However, under the 2005 General Appropriations Act, BFAD has

finally been allowed to utilize 100% of its income,4 which however, cannot be

released without a special a l l~cat ion.~

b. Bureau of Customs , ,

R.A. 8203 classifies imported drugs which are not registered with BFAD

as counterfeit drugs except for medicines declared for personal use. As

mentioned earlier, BFAD acknowledged that 80% of the counterfeit drugs in the

country are unregistered imported drugs smuggled into the country. An importer

must have a license to operate and certificate of product registration.

The Bureau of Customs (BOC) is the government agency that is in-charge

of apprehending smuggled goods entering the Philippine ports. If the volume of

fake drugs that BFAD claims to be imported is accurate, then the BOC has not

been effective in curbing the entry of counterfeit imported drug products into the

country as evidenced by the insignificant number of apprehensions they made

last year. In 2004, the BOC only managed to seize several packages of

undeclared medicines usually brought in by airline passengers despite reports of

many large shipments of unregistered imported medicines that came in.

Part of the problem is the selective system used by the BOC in examining

the shipments passing through the ports of entry. To prevent congestion in the

pier, the BOC does not examine all the shipments that come in unless it is

marked red in the computer system, indicating that examination must be done. A

green mark indicates that the shipment can be released without examination and

Based on data from the Bureau’s finance department, in 2005, BFAD was able to generate an income of approximately PI26 M.

The Department of Health is currently negotiating with DBM for the inclusion of the income retention provision in succeeding GAAs until such time that a law granting BFAD income retention capacity has been passed.

4


a yellow mark means it only requires documentary check. Even for the shipments

marked red, it is not feasible. for the BOC to conduct a hundred percent

examination of a 20 or 40 feet container van. For instance, if the shipment has

four containers vans, they only examine about 10% of the contents of the two

container vans. On top of this constraint, the BOC personnel do not have the

necessary skills to identify whether a particular shipment of medicines is

counterfeit or not. At the time of the initial hearing, BFAD had not yet trained

BOC personnel on the proper procedure for the detection and confiscation of

counterfeit drugs.6

The BOC points out that there are other modes of entry for imported

medicines such as parcels sent through air express consignments like Federal

Express or United Postal Service, which oftentimes are not declared. Moreover,

there are no clear rules and regulations regarding shipments of medicines

consigned to the Subic Bay Metropolitan Authority which is outside of their

jurisdiction and those used for medical missions.

Weak Enforcement of the Law

Under R.A. 8203, any or all of the administrative sanctions can be imposed: (1)

permanent closure of the establishment concerned and the revocation of its business

license; (2) fine of not less than P100,OOO.OO but not more than P500,OOO.OO and; (3)

forfeiture, confiscation, and destruction of products found to be counterfeit and the

equipment, instruments, and other articles used upon order of the Court.

2.

However, since the passage of RA 8203 in 1996, no person has been convicted

and no business entity has been closed for selling counterfeit drugs.

Based on the BFAD report submitted to the Committees, 330 administrative

cases in violation of RA 8203 were docketed in BFAD from 2000-2005. Of this number,

96 cases have been resolved, 9 cases are with motions for reconsideration and 225 are

According to Atty. Emil Polig, Officer in Charge of the Legal, Information and Compliance Division of BFAD, they have drafted a MOA with the Bureau of Customs to coordinate their efforts in solving the problem of counterfeit drugs.' However, it has yet been finalized. Currently, the draft MOA is with the Bureau of Customs for review.

6


still pending resolution. The erring pharmacies found guilty of violating the law were

meted out with fines but were not ordered permanently closed by BFAD.

Under the law, the process of apprehending suspected Counterfeit drugs and

filing of administrative cases is as follows:

A duly authorized BFAD officer can seize the drug product and take them

into custody, 1) only upon verified information on the existence of

suspected counterfeit drugs, and 2) after obtaining a search warrant.

If the drug is determined to be counterfeit after appropriate examination of

the samples, BFAD shall issue within 15 days from their seizure an order

of preventive closure of the business establishment for a period not

exceeding 30 days.

Administrative proceedings shall be initiated by the Bureau against the

offending parties to give them the opportunity to present evidence on their

behalf.

*

The implication of the abovementioned provisions is as follows: (i) despite strong

suspicion that a drug is counterfeit, an inspector still has to secure a search warrant to

seize this counterfeit drug as he has no power to immediately confiscate without prior

authentication and without the said warrant.; (ii) that pharmacies where the counterfeit

drugs were found may reopen their business while the administrative proceeding is on-

going, after the order of a 30-day preventive closure has lapsed. Because of the lack of

personnel in the legal department of BFAD, it takes several months to one year to

resolve the cases.

The law also expressly provides that administrative and criminal cases can be

filed separately provided that dismissal of the criminal case shall not lift the closure

order, except when it is a dismissal for lack of basis and that the withdrawal of the

criminal case shall not be a ground for the dismissal of the administrative proceedings.

The penalties include imprisonment ranging from 6 months to 10 years and a fine PIOO,

000 to P500, 000 for manufacturing and selling fake drugs. If the counterfeit drugs result

10 - COMMITTEE REPORT on P.S. Res. Nos. 40 and 122

in death of a person, the penalty of life imprisonment and a fine of P500,OOO to P5

million shall be imposed.

BFAD has filed 13 cases in Court for violation of RA 8203, all of which have not

been decided. Two of these cases are subject to the Supreme Court's determination on

the constitutionality of RA 82037. However, an indefinite number of cases have been

filed by the different pharmaceutical companies for violations of both RA 8203 and the

Intellectual Property Code. BFAD entrusts these companies to pursue their own cases

because admittedly, they have the resources and technical knowledge io prosecute

counterfeiters. An example is the recently reported conviction of two individuals by

Branch 41 of the Regional Trial Court of San Fernando, Pampanga for selling

counterfeit versions of medicines manufactured by Glaxo Smith-Kline, Pfizer and Roche

and Wyeth.

3. High Cost of Medicines

The high cost of medicines in the country is one of the major problems affecting

the health sector. The World Health Organization (WHO) and the Drugstores

Association of the Philippines have acknowledged thaf the high price of medicines is a

contributory factor to the proliferation'of fake drugs.

Medicines are distributed to drugstores nationwide through a network of accredited

distributors, wholesalers and suppliers. Small drugstores have resorted to buying

medicines outside of the legitimate supply system (e.g. peddlers) because of the high

cost of drugs and the small margin of profit they get from purchasing from the

accredited distributors and suppliers. Unsuspecting consumers opt to buy the cheap

medicines sold in small drugstores, which may turn out to be counterfeit.

In 2000, under Administrative Order No. 85, the government undertook a parallel

importation program in an effort to make essential drugs accessible and affordable to

Filipinos and to bring down the prices of drugs in the market. The Philippine

According to Atty. Glenda Baysa, DOH Legal Officer who has temporarily been assigned to BFAD, these cases question Section 3 (b) of RA 8203 which declares unregistered imported drug products as counterfeit.

7


International Trading Corporation (PITC), the government's tralding arm, imports cheap

but quality medicines from other countries such as India and sell these in government

outlets at a much lower price than the medicines of the same brand sold in commercial

drugstores.

The PlTC is required to get a special license to operate and a certificate of product

registration from BFAD. To safeguard the quality of drugs under the program, PlTC

testified that the medicines it purchases'are of acceptable and good quality before these

are shipped into the country. Currently, BFAD conducts sampling of PITC products prior

to registration. After registration and before PlTC can start importing such drugs, BFAD

conducts another test of the samples. Upon arrival in the Philippines, BFAD randomly

tests some of the drugs before distribution to authorized and accredited outlets, such as

government hospital pharmacies, Botika ng Bayan outlets of PITC, and Botika ng

Barangay outlets of DOH. Furthermore, the field inspectors of BFAD conducts another

random sampling of the drugs which are being sold by the accredited retailers. In

addition, special label stickers are also placed on the boxes of medicines before these

are released.8

The parallel importation program is laudable, provided that the quality of imported

drugs is assured. However, its reach is limited as there are only a few Botika ng Bayan

outlets nationwide. Furthermore, the quantity of the imported medicines has gone down

from PI20 million in 2002 to about P40 million in 2005. The government needs to import

medicines equivalent to five or ten percent of the market or about P8 billion to make a

dent in the P80 billion local pharmaceutical industry and bring down the prices of drugs.

This means that the current importation is only one-half percent (1/2%) of the total

importation needed to make an impact and bring the prices of drugs lower.

, ,

Moreover, the Botika ng Barangay program of the Office of the President, through

the Department of Health, which is likewise aimed at bringing cheap but quality drugs to

the grassroots level sell only limited drugs and are subject to the limitation of having one

Per Atty. Emil Polig of BFAD, 8

12 ~ _ _ _ _ _ _ _ _ COMMITTEE REPORT on P.S. Res. Nos. 40 and 122

pharmacist supervise several outlets. As such, these outlets, which are spread to the

barangay level, sell only over-the-counter drugs and eight kinds of prescription drugs,

i.e. 2 kinds each of hypertension, diabetes, asthma, and first-line antibiotics drugs, all of

which are sourced from PITC.

D. Multisectoral Cooperation

I . BFAD's efforts

Pursuant to its mandate under different laws and realizing the need to work with

other agencies, BFAD has pursued the following actions to stop the counterfeiting of

drugs in the market:

a. During all these years, BFAD has failed to conduct training for BOC

personnel for the proper determination and confiscation of counterfeit medicines.

As a result of the first hearing conducted by the Committees on October 6, 2004

however, the BFAD and the Bureau of Customs have agreed to draft a

memorandum of agreement (MOA) to coordinate their efforts in effectively

enforcing Section 30 of RA 3720, which mandates the BOC to randomly select

samples of incoming shipment of food, drugs and cosmetics for testing by BFAD.

Towards this end, the two agencies will issue rules and regulations on matters

relating to every incoming 'shipment of drugs, devices, foods, cosmetics and

household hazardous substances. Moreover, plans of conducting fora for

importers of drug, food, cosmetics, and household hazardous substances are in

the pipeline.

b. As a member of the Intellectual Property Rights Enforcement Action Panel

(IPREAP), organized by the Intellectual Property Office, BFAD has actively

participated in the formulation of a template ordinance that will punish the buying

and selling of counterfeit drugs.g BFAD has entered into an agreement with some

local government units such as Makati, Quezon City and Baguio City, so that

Based on data from the Intellectual Property Office, which serves as the IPREAP secretariat, the following cities and municipalities have passed ordinances on counterfeit drugs: Quezon City, Cebu City, Muntinlupa City, lloilo City, Naga City, Municipality of Tuba, and Baguio City.

9


they can implement such mecasure. The help of provincial governors have

already been sought in monito,ring the possible presence of counterfeit drugs in

their respective areas.

c. Being a member of the National Law Enforcement Coordinating

Committee (NALECC), BFAD, in April 2005, forged a MOA with the National

Bureau of Investigation and the Philippine National Police, which was recently

signed. The MOA mandates the assistance of the NBI and PNP to BFAD food

and drug regulation officers in the conduct of invesfigafion, surveillance,

application and execution of search and seizure warrants, and the apprehension

of manufacturers and other persons found dealing with counterfeit drugs and

other drugs regulated by BFAD, as well as the preparation and filing of

appropriate criminal actions against the perpetrators.

d. The formation of a BFAD and Philippine Pharmaceutical Association of the

Philippines (PHAP) Technical Working Group for counterfeit drugs. The Group

provides necessary information, such as suspected retail outlets selling

counterfeit drugs, to aid BFAD in effectively conducting its surveillance and

monitoring activities and in the execution of search and seizure warrants. Just

recently, counterfeit drugs were seized from a drugstore because of the tip

provided by PHAP to BFAD.

e. BFAD has started training its field inspectors to employ thin-layer

chromatography, which b a process of determining whether the samples

collected in the field contain the active ingredients they purport to possess. This

helps minimize the clogging of samples for laboratory analysis at the Laboratory

Services Division at the BFAD main office.

2. Coalition Against Fake Medicines

To show a concerted effort in dealing with the problem, the Coalition Against

Fake Medicines was formed in November 2004. It aims to address general concerns


about the proliferation of counterfeit medicines in the market, which pose a great danger

to the health and safety of Filipino consumers.

The Coalition has the following objectives:

a. To develop a public awareness campaign to help consumers to be vigilant

against counterfeit medicines;

To encourage drugstores to sell legitimate medicines;

To encourage government agencies to enforce the laws; and

To propose and assist legislators in causing amendments to existing laws

on counterfeit drugs

b.

c.

d.

The members of the coalition are the Department of Health (which includes

BFAD), Department of Trade and Industry, Department of Justice, Pfizer, Philippine

Medical Association, GMA 7, Philippine Daily Inquirer, Zuellig Pharma Corporation,

Drugstores Association of the Philippines and Mercury Drug Corporation. The Coalition

has started a public awareness program on counterfeit drugs and distributed information

and education materials in drugstores and other outlets. In addition, the member

organizations have pledged to undertake their respective organization’s commitment to

the Coalition. For instance, Zuellig Pharma has set-up the hotline 1-800-10-FAKEMED

where consumers can report Counterfeit drugs, GMA 7 and the Philippine Daily Inquirer

has provided the necessary media publicity, and the Department of Trade and Industry

has allowed the use of Consumer Welfare Desks for reporting counterfeit drugs.

I I . RECOMMENDATIONS

Based on the foregoing facts, the Committees recommend the following:

1. Strengthen BFAD by:

a. Increasing its budget to enable it to augment its manpower complement,

to upgrade its facilities and increase the number of testing laboratories all

over the country, and to purchase samples of drugs from different

pharmacies for random testing of suspected counterfeit drugs. The BFAD


budget has been pegged at P120M since 2003 and has thus affected the

operations of the Bureau and its various regional offices;

6. Allowing retention of the Bureau's income to be constituted as a Trust

Fund which the Bureau can utilize without need of a special allocation;

c. Increasing its personnel, particularly its prosecution arm, the legal

department, and the food and drug regulation officers. In order to attract

lawyers and other personnel to work with BFAD, an increase in the

compensation must be considered. The BFAD should also explore

alternative ways of complementing its personnel such as deputizing local

governments through their health units and the Philippine Drug

Enforcement Agency to conduct monitoring and surveillance. On the other

hand, DOH must support BFAD's initiative in addressing the problem. The

Regional Centers for Health and Development should assist BFAD

Regional Offices in its campaign against fake drugs.

d. Considering two measures referred to the Committee on Health: SB No.

1394 and SB No. 1093 both of 'which seek to establish BFAD testing

laboratories and field offices in all provinces and cities, which shall have

state-of-the-art testing equipment and adequate personnel complement.

e. Increasing the registration fee of a product to augment BFAD's income

and to do away with fly-by-night generics companies. At present,

registration fee is only P5,OOO for all products, which is ridiculously low

considering the tedious process involved and the income generated by the

pharmaceutical companies for each product.

2. For BFAD to pursue an agreement with various law schools for them to provide

assistance to BFAD's legal department in the resolution of administrative cases and

prosecution of criminal cases through their legal aid clinic.

3. Pursue the agreements reached under the Intellectual Property Rights

Enforcement Action Panel, particularly the passage of the template ordinance by local


government units (LGUs) accepting authority to execute BFAD powers against

counterfeit drugs. It is also suggested that a provision to permanently revoke the

licenses issued to establishments caught producing and selling counterfeit medicines be

included in the said ordinance.

4. For W A D and the BOG to tighten the procedures for the entry and release of

drugs from other countries in order to abate smuggling. Moreover, appropriate training

must be given to BOC personnel for the proper inspection and detection of counterfeit

medicines. Section 30 of RA 3720 as amended by EO 175 must be strictly enforced by

the BOC, especially on cases of suspected counterfeit drugs.

5. The enforcement of the full strength of the law, RA 8203, by meting out the

maximum penalties of fines, permanent closure of business and imprisonment to

violators to discourage drugstores from selling counterfeit medicines. This implies faster

resolution of both administrative and criminal cases, which is dependent upon the

strengthening of BFAD's capability.

6. The amendment of R.A. 8203 to:

a. Amend the definition of counterfeit to exclude unregistered imported

drugs to provide a distinction between unregistered imported drugs but are not

counterfeit and drugs which are counterfeit, i.e. containing less than 80% of the

active ingredients.

The abovementioned definition has also muddled the issue on the extent

of the problem of counterfeit drugs in the country. It is difficult to know the

magnitude of the problem because as reported in news articles, 80% of the

counterfeit medicines coming into the country are actually imported medicines

without the proper BFAD registration. To clarify the issue, it will be better to label

the said products as "smuggled drugs." Moreover, distinction must be made if the

smuggled drug is counterfeit or not imposing a stricter penalty for counterfeit

smuggled drugs. Under Articles 31 ad 40 of RA 7394, "The Consumer Act of the

I / COMMITTEE REPORT on P.S. Res. Nos. 40 and 122

Philippines,” the importation of medicines without BFAD registration is a

prohibited act with correspondirig penalties.

Clarifying the definition of counterfeit drugs is also in line with the World

Health Organization’s (WHO) recommendation to adopt a universal definition of

counterfeit drugs to facilitate the exchange of information between countries, to

be able to establish the extent of the problem at the global level and to formulate

global strategies to address it. The WHO encourages countries to adopt the

following definition of counterfeit drugs:

“A medicine which is deliberately and fraudulently mislabeled with

respect to the identity and/or source. Counferfeifing can apply to

both branded and generic products and counterfeit products may

include products with fhe correct ingredients or with the wrong

ingredients, without active ingredients, with insufficient active

ingredients or with fake packaging.”

b. Allow the outright confiscation of drugs found to be counterfeit upon

the determination of probable cause by any authorized officer of the Bureau,

pending administrative investigation where the persons concerned are given

the opportunity to be heard.

7. For DOH and PlTC to implement strategies to lower the prices of medicines.

There is a need to look into expanding the parallel importation program of PlTC to

develop a bigger market for cheap but quality medicines. However, given concerns

raised on the efficacy and authenticity of the drugs, both PlTC and DOH, through BFAD,

should ensure the quality of the drugs brought in through parallel importation. PlTC

should ascertain that the sources of its products abroad are legitimate manufacturers.

BFAD, as the testing and screening arm of the government, should likewise guarantee

that the quality of the drugs brought in through parallel importation are at par with

international standards. Thorough testing and sampling of all batches of drugs imported

by PlTC should be conducted. Both PlTC and DOH must adhere to the strictest


compliance of the laws and rules in the implementation of the parallel importation

program.

Considering that the importation of raw materials make up the bulk of the cost of

production of drugs, DOH or PlTC should consider importing raw materials and reselling

them to local manufacturers at a lower price to be able to bring down the cost of

production. Together with the Research Institute for Tropical Medicine (RITM), they

should also look into the possibility of bulk importation of finished products, the quality of

which have been assured. These finished products may be repacked locally and sold in

Botika ng Bayan and Botika ng Barangay outlets.

To make an impact on the market, PITC and DOH must also warrant the steady

supply of its products and exert efforts to make the public aware of the availability of

cheap but good quality drugs through the Botika ng Bayan of PITC and Botika ng

Barangay of DOH.

8 . Consider other measures aimed at lowering the prices of medicines to dissuade

consumers from buying counterfeit drugs, often sold at cheap prices and to abate the

smuggling of drugs from other countries.

Anent to this, Republic Act No. 6675 or the Genetics Act of 1988, should be

strengthened to encourage the establishment of local generic companies. The local

market should be developed to establish an environment where local pharmaceutical

companies can thrive. Currently, the Generics Act requires the DOH to publish annually

the generic names and corresponding brand names of all drugs and medicines

available in the Philippines.lo An amendment of this provision to allow the private sector

to publish price comparison of drugs in accordance with Republic Act No. 7394 or the

Consumer Act of the Philippines, 11 . ’ IS in order.

Io SECTION 5. Posting and Publication - The Department of Health shall publish annually in at least two (2) newspapers of general circulation in the Philippines the generic names, and the corresponding brand names under which they are marketed, of all drugs and medicines available in the Philippines. ” ARTICLE 11 1. Price Comparisons - Comparative price advertising by sellers of consumer products or services shall conform to the following conditions:

19 COMMITTEE REPORT on P.S. Res. Nos. 40 and 122 ~ ~ _ _ _ _

Currently, generic drugs are not being patronized much by Filipinos, Part of the

problem stems from lack of proper information such that the public's perceived notion is

that branded medicines are of higher quality than their generic counterparts. This may

also be due to the fact that multinational pharmaceutical companies have a greater

advantage over local generic manufacturers due to their aggressive marketing

campaigns. Section 11, which requires the conduct of an information/educational

campaign on the use of generic names not only for the public, but more so for the health

professionals, should be fully implemented."

a) Where the comparison relates to a former price of the seller, the item compared shall either have been sold at that price within the ninety (90) days immediately preceding the date of the advertisement, or it shall have been offered for sale at least four (4) weeks during such ninety day period, If the comparison does not relate to an item sold or offered for sale during the ninety-day period, the date, time or seasonal period of such sale or offer shall be disclosed in the advertisement.

b) Where the comparison relates to the seller's future price, the future price shall take effect on the date disclosed in the advertisement or within ninety (90) days after the price comparison is stated in the advertisement. The stated future price shall be maintain ed by the seller for a period of at least four (4) weeks after its effective date: Provided, That compliance thereof may be dispensed with in case of circumstances beyond the seller's control.

c) Where the comparison relates to a competitor's price, the competitor's price shall relate to the consumer products or services advertised or sold in the ninety-day period and shall be representative of the prices similar consumer products or services are sold or advertised in the locality where the price comparison was made.

Section 11. Education Drive - The Department of Health jointly with t he Department of Education, Culture and Sports, Philippine Information Agency and the Department of Local Government shall conduct a continuous information campaign for the public and a continuing education and training for the medical and allied medical professions on drugs with generic names as an alternative of equal efficacy to the more expensive brand name drugs. Such educational campaign shall include information on the illnesses or symptoms which each generically named drug is supposed to cure or alleviate, as well as its contraindications. The Department of Health with the assistance of the Department of Local Government and the Philippine Information Agency shall monitor the progress of the education drive, and shall ubmit regular reports to Congress.

L U COMMITTEE REPORT on P.S. Res. Nos. 40 and 122 ________

Respectfully submitted:

C Chairperson, Commi Chairperson, Committee on Trade

Member, Committees on Health an Member, Committee on Trade and Commerce and Finance

MA R Chairperson, Committee bn Finance

MAF(I.6EL “LITO” M. LAPlD Committees on Health and Demography; and

Finance

Comi tt& on Health and Demography; Trade ? and Commerce; and Finance

LUISA iiLoi” P. ~JERCITO ESTRADA Committees on Health and Demography; and

Finance

Committees on Health and Demography; and Finance

Commitfees on Health and Demography; and Finance

EDGARDO 3. ANGARA Committees on Health and Demography; Trade

and Commerce; and Finance

Commitfees on Health and Demography; Trade and Commerce; and Finance

G REVlLLA JR. and Commerce; and Finance

21 COMMITTEE REPORT on P.S. Res Nos. 40 and 122

Finance Committees Commerce; and Finance

+d&$%RROVO Committee on Finance U Co&ittee on Finance

EX-OFFICIO MEMBERS:

r

Minority Leader

The Honorable FRANKLIN M. DRILON Senate President

THIRTEENTH CONGRESS OF TI% IlEPUBLIC ) OF THE PHILPPINES 1 ’OW iiijf7 ‘i 1 ;,, ;i &:

First Regular Session 1

P.S. Resolution No. -

Introduced by Senator LUISA “LOI” P. EJERCITO ESTRADA

RESOLUTION DIRECTING THE SENATE COMMITTEE ON HEALTI3 AND DEMOGRAPHY TO INVESTIGATE, IN AID OF LEGISLATION, THE ALLEGED PROLIFERATION OF

COUNTERFEIT MEDICINE IN THE MARKET

WHEREAS, the Constitution, Article 2, Section 15 expressly mandates the State to

“protect and promote the right to health of the people and instill health consciousness among

them.”

WHEREAS, various newspapers recently reported the alarming proliferation of

counterfeit medicine in the market, as part of an illegal trade which allegedly generates an

average profit of P7.2 billion a year;

W E R E A S , the Bureau of Food and Drugs (BFAD) has a very limited power and even

resources to go after those responsible for said illegal acts because of the inadequacy of

appi-opriate laws;

WHEREAS, the proliferation of fake drugs will remain unabated, unless stricter

measures are imposed and the government takes necessary actions, since not a single supplier or

manufacturer of fake medicines has ever been apprehended, let alone imprisoned, while most

cases involving these fake products have more often than not been dismissed for lack of

evidence;

WHEREAS, there is a need to criticcally address this problem since the poor are the ones

most vulnerable to offer of fake drugs at a. lower price; heme, prejudicing their health and safety;

WHEREFORE, BE IT RESOL'VED AS IT IS HEREBY RESOLED, by the Senate to

direct the Senate Committee oil Health and Demography to investigate, in aid of legislation, the

alleged proliferation of counterfeit medicines in the market.

Adopted

ESTFUDA Senator

THIRTEENTH CONGRESS OF THE WKJBLIC ) OF THE PHILPPINES )

First Regular Session 1

S E N A T E

Resolution No ___ * q I"& 6

Introduced by Senator Ramon Bong Revilla, Jr

RESOLUTION URGING THE APPROPRIATE SENATE COMMITTEE TO CONDUCT AN INVESTIGATION, IN AID OF LEGISLATION, INTO THE PROLEERATION OF FAKE DRUGS IN THE COUNTRY W ORDER TO COME UP WITH CORRECTIVE: LEGISLATION IN RESPONSE TO THE S A D PROBLEM

WHEREAS, the proliferation of counterfeit and fake drugs is becoming a huge threat to the drug manufacturing industry in the country and pose unexplainable dangers to the health of all Filipinos;

, .

WHEREAS, the government considers the proliferation of fake and counterfeit drugs a major concern and must be urgently addressed, as reports revealed that at least P7 billion is lost from the government coffers every year due to smuggling and unabated selling by unscrupulous traders and distributors;

WHEREAS, poor Filipinos are most likely to purchase fake medicines considering their cheap prices without being mindful that fake drugs can cause their untimely death, which places these consumers in harms way because one cannot easily distinguish real medicines from the counterfeits;

WHEREAS, existing laws must be strongly implemented to protect the health of the public and the local pharmaceutical industry as well, while several government agencies particularly the Bureau of Customs (BOC) and the Bureau of Food and Drugs @FAD) have failed to adopt strong counter-measures to contain, counteract and eventually stop the propagation of fake medicines in the country;

WHEREAS, there is a need to strengthen the powers and functions of the BFAD and increase the penalties against individuals, groups, drug establishments and manufacturers engaged in the production, sale and distribution of fake drugs in the country. Now, therefore he it

Resolved by the Senate of the Philippines, To Urge The Appropriate Senate Conmiittee

To Conduct An Investigation, In Aid of Legislation, Into The Proliferation of Fake Drugs In The

Country In Order To Come Up With Corrective Legislation In Response To The Said Problem.

Adopted,

, JR.

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