..I. 
THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
.'I 
c 
S. No. 
INTRODUCED BY HON. MANUEL B. VILLm JR. 
EXPLANATORY NOTE 
Medicines are vital to a patients' well-being. But if these medicines cost.~oo much for 
the ordinary Filipino, a graver illness or even death becomes imminent. 
Drug prices in the Philippines are among the highest in Asia - five (5) times higher 
than its Asian neighbors. This comes as a surprise, since we have over 300 pharmaceutical 
firms in the country, manufacturing and importing some 25,000 registered drugs. This only 
shows that competition does not translate to cheaper medicines in our country. 
This bill seeks to regulate drug prices in the Philippines and bring them to affordable 
levels. The creation of a Drug Prices Control Board will ensure an afforgable retail price of 
drugs from the different manufacturers, importers, distributors, or retailers. The Board also 
has the power to recover any overcharged amount in the prices of medicines, and deposit it to 
the Drug Prices Equalization Fund. 
The Fund shall be utilized to ensure equitable 
distribution and availability of drugs at fair prices, to subsidize the cost of medicines to make 
them affordable, and to promote higher education and research in pharmaceutical sciences 
and technology. 
Regulating drug prices will help save lives. 
The passage of this bill, therefore, is fervently called for 
n 
MANUEL B. 


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THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 
608 
INTRODUCED BY HON. MANUEL B. V E L m  JR. 
AN ACT 
REGULATING DRUG PRICES, CREATING FOR THE PURPOSE THE DRUG 
PRICES CONTROL BOARD, DEFINING ITS POWERS AND FUNCTIONS, 
AND PROVIDING FUNDS THEREFOR 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short TitZe - This Act shall be known as "Drug Prices Control Act of 
2004." 
SECTION 2. Policy Statement - It is hereby declared the policy of the State to 
protect and promote the right health of people and instill health consciousness among them. 
Pursuant thereto, the state shall control the prices of medicines in order to make them 
affordable to everyone. 
SECTION 3. Definition of Terms - As used in this Act, the following terms are 
hereby defined as follows: 
Board - means the Drug Prices Control Board 
Bulk drug - means any pharmaceutical, chemical, biological or plant product 
including its salts, esters, stereo-isomers and derivatives conforming to 
pharmacopeia1 or other standards arid used as such or as an ingredient in any 
formulation. 
Capital employed - means net fixed assets plus working capital of a manufacturer 
in relation to manufacture and pharmaceutical formulations 
Distributor - means any establishment that imports raw materials, active 
ingredients and/or finished products for its own use for wholesale distribution to 
other drug establishments or outlets. 
Drug - includes 
1. 
all medicines for internal or external use of human beings and all 
substances intended to be used for, in the diagnosis, treatment, mitigation, 
or prevention of any disease or disorder in human beings, including 


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preparations applied on the human body for the purpose of repelling 
insects like mosquitoes; 
such substances, intended to affect the structure or any function of the 
human body or intended to be used for the destruction or vermin or 
insects which cause disease in human beings, as may be specified from 
time to time by the Bureau of Food and Drugs and the Department of 
Health; and 
.. 
11. 
iii. 
bulk drugs and formulations. 
(0 Formulation - means a medicine processed our of, or containing one or more 
bulk drugs with or without the use of any pharmaceutical aids, for internal or 
external use for or in the diagnosis, treatment, mitigation or prevention of disease 
in human beings but shall not include - 
1. 
any medicine included or external the Homoeopathic system of medicine; 
and 
11. 
any substance to which the provisions of Republic Act No. 3720, as 
amended, do not apply. 
.. 
(g) Fund - means the Drug Prices Equalization Fund 
(h) Import - with its grammatical variations and cognate expressions means bringing 
to the Philippines, and “Importer”, in relation to goods at any time between their 
importation and consumption, includes any establishment/entity holding itself out 
to be the importer. 
(i) Manufacture - in relation to any drug, includes any process or part of a process 
for making, altering, fishing, packing, labeling, breaking or otherwise treating or 
adapting any drug with a view to its sale and distribution, but does not include the 
compounding or dispensing of any drug or the packing of any drug in the ordinary 
course of retail business in the ordinary course of retail business, and “to 
manufacture” shall be construed accordingly. 
(j) Manufacturer - means any establishment which manufactures a bulk drug or 
formulation. 
(k) Publication - means publication once a week for three (3) consecutive weeks in a 
newspaper of general circulation 
(1) Retailer - means an establishment carryng on the retail business of sale of drugs 
to customers 
(m) Sales Turn Over - means the product of units of formulations sold by a 
manufacturer or importer in an accounting year multiplied by the retail price 
inclusive of sales tax, if any paid on direct taxes by the manufacturer or importer 
but does not include excise duty or local taxes, if any. 
(n) Wholesaler - means an establishment that procures raw materials, active 
ingredients and/or finished products from local establishments for local 
distribution on wholesale basis. 
SECTION 4. Creation and Composition of the Drug Prices Control Board - (a) In 
pursuance of the aforementioned policy , there is hereby created the Drug Prices Control 
Board, which shall be attached to the Department of Trade and Industry and composed of the 
following: 
1. Ex-ofJicio Chairman - Secretary of Trade and Industry 
2. Ex-ofJicio Vice-chairman - Secretary of Health 
3. Ex-ofJicio Member - Director, Bureau of Food and Drugs 
(b) The Board shall have as many members as maybe recommended by the Secretary 
of Trade and Industry and appointed by the President of the Philippines; Provided, That, 
consumers, pharmaceutical companies, pharmacists, physicians, and hospitals shall be duly 


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represented from among the reputable associations nationwide; Provided further, that the 
total membership of the Board, including the ex-ofjcio members, shall not exceed ten (10). 
SECTION 5. Secretariat of the Drug Prices Control Board - (a) The concerned 
Assistant Secretary for Domestic Trade or the officer occupying an equivalent rank and 
position in the Department of Trade and Industry shall be the Board’s ex-oficio secretary. 
(b) Within thirty (30) days fiom the effectivity of this Act, the Board’s ex-oflcio 
secretary shall prepare aplantilla of positions for the Secretariat of the Board for the approval 
of the Secretary of Trade and Industry. 
SECTION 6. Powers of the Board. - The Board shall have the following powers: 
(a) Power to Fzk the Maximum Retail Prices of Formulations Included in the List 
Controlled Drugs 
1. Upon application or motu propio when the public interest so requires, the 
Board shall have the power to control the retail prices of formulations 
included in the List of Controlled Drugs, including their dosage and packing, 
and in order that they shall be made publicly available a affordable retail price 
at which such formulations shall be sold; 
2. When fixing the maximum retail price of formulations, the Board shall take 
into consideration a post-tax return of fourteen percent (14%) on net worth or 
a return of twenty-two percent (22%) on capital employed or in respect of a 
new plant an internal rate of return to fourteen percent (14%) based on long 
term marginal costing depending upon the option for any of the specified rates 
of return that may be exercised by a manufacturer of a pharmaceutical 
formulation; Provided that, where the production is fiom the basic stage, the 
Board shall take into consideration a post-tax return of eighteen percent 
(18%) on net worth or a return of twenty-six percent (26%) on capital 
employed; Provided further, that the option with regard to the rate of return 
once exercised by a manufacturer shall be final and no change of rates shall be 
made prior approval of the Board; 
3. No retailer shall sell a formulation at a retail price exceeding the maximum 
retail price fixed by the Board; Provided that, until the maximum retail price 
of a formulation is fixed by the Board, the retail price thereof shall be the price 
which prevailed immediately before the effectivity of this Act; and 
4. For purposes hereof, formulations include single and multi-ingredient 
formulations included in the List of Controlled Drugs and sold under its 
generic and brand names. 
(b) Power to Include Formulations in the List of Controlled Drugs - Upon 
application or motu propio when the public interest so requires and after proper 
determination, the Board may order the inclusion in the List of Controlled Drugs 
of any formulation excluded therefrom. 
(c) Power to Direct Manufacturers of Bulk Drugs of Formulations Included in the 
List of Controlled Drugs to Sell Such Bulks to Other Manufacturers of 
Formulation - Upon application or motu propio when the public interest so 
requires, the Board may direct any manufacturer or any bulk drug of formulations 
included in the List of Controlled Drugs to sell such bulk drugs to such other 
manufacturer of formulations; Provided that, any or all of the following shall be 
considered: 


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1. 
11. 
the requirement for captive consumption of such manufacturer; and 
the requirement of other manufacturers. 
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(d) Power to Recover Overcharged Amount and Establishment of Drug Prices 
Equalization Fund - 
1. Upon application or motu propio when the public interest so requires, the 
Board may order manufacturers, importers, distributors, wholesalers and 
retailers, as the case may be, to deposit the amount accrued due to the charging 
of retail of prices of formulations included in the List of Controlled Drugs 
higher than the maximum retail prices fixed by the Board, including any 
imposable penalty, to the Drug Prices Equalization Fund, which is hereby 
established under the supervision of the Board. 
2. Every retailer shall remit to the Board two percent 
inclusive of the fixed retail price, which shall be deposited in the Fund. 
(2%) of every sale 
3. The Fund shall be utilized for : 
1. 
11. 
111. 
iv. 
Securing the equitable distribution and availability at fair prices, of 
drugs or subsidizing the cost in order to make them affordable; 
Meeting the expenses incurred in the Board in discharging its 
functions; 
Promoting higher education and research in Pharmaceutical sciences 
and technology; and 
Any similar or analogous uses in consonance with the purpose of this 
Act. 
.. 
... 
SECTION 7. Display of Prices Fixed by the Board of Formulations Included in 
the List of Controlled Drugs - (a) Within a reasonable period as may be determined by the 
Board, every manufacture, importer, distributor, wholesaler or retailer of a formulation 
intended for sale shall display the retail price of a formulation included in the List of 
Controlled Drugs which shall not exceed the maximum retail price fixed by the Board. The 
maximum retail price shall be printed on the label of the container or the formulation and the 
minimum pack thereof offered for a retail sale with the words “retail price not to exceed” 
preceding it, and “Under Drug Prices Control Board” on a red strip; Provided that, in the case 
of container consisting of smaller saleable packs, the retail price of such smaller pack shall 
also be displayed on the label of each smaller pack and such price shall not be more than the 
pro-rata retail price of the main pack rounded off to the nearest centavo. 
(b) Within the period as may be determined by the Board from time to time, every 
manufacturer or importer shall issue a price list to distributors, wholesalers, retailers and the 
Board, indicating the retail prices and’the maximum retail price and such other information as 
may be required by the Board. 
SECTION 8. Prices of Formulations Included in the List of Controlled Drugs and 
Sold to the Retailer - (a) No manufacturer, importer, distributor or wholesaler shall sell a 
formulation included in the List of Controlled Drugs to a retailer at a retail price exceeding 
the maximum retail price fixed by the Board, minus twelve percent (12%). 
(b) Upon application or motu propio when the public interest so requires and after 
proper determination, including the conduct of public hearings whenever necessary, the 
Board may allow a higher or lower retailer’s margin than the twelve percent (12%) provided 
above. 
SECTION 9. The List of Controlled Drgus - The List of Controlled Drugs shall be 
as follows: 


LIST OF CONTROLLED DRUGS 
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1. ALIMENTARY SYSTEM 
a. Antacids, Antiulcerants 
b. GIT Regulators, Antiflatulents and Anti-inflammatories 
c. Antispasmodics 
d. Antidiarrheals 
e. Laxatives, Purgatives 
f. Digestives 
g. Chlolagogues, Chlolelitholytics and Hepatic Protectors 
2. CARDIOVASCULAR & HEMATOPEOITIC SYSTEM 
a. 
b. 
d. 
e. 
f. 
g. 
h. 
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k. 
1. 
m. 
n. 
P. 
C. 
j. 
0. 
Cardiac Drugs 
Anti-Anginal Drugs 
ACE-Inhibitors/Other Antihypertensives 
Beta blockers 
Calcium Antagonists 
Diuretics 
Antidiuretics 
Peripheral Vasodilators and Cerebral Activators 
Vasoconstrictors 
Migraine Drugs 
Haemo s t atic s 
Anticoagulants, Antithrombotics, and Fibrinolytics 
Haemorrhoidal, Phlebbitis and Varicose Preparations 
Haemorrheologicals 
Hematopoeitic Agents 
Other Cardiovascular Drugs 
3. RESPIRATORY SYSTEM 
a. Respiratory Stimulants 
b. Antiasthmatic Preparations 
c. Cough and Cold Remedies 
d. Decongestants and Other Nasal Preparations 
e. Other Drugs Acting on Respiratory System 
4. NEURO-MUSCULAR SYSTEM 
a. 
b. 
d. 
e. 
f. 
g. 
h. 
C. 
1. 
j. 
k. 
1. 
Anti-inflammatory Enzymes 
Analgesics and Antipyretics 
Anti-rheumatic, Anti-inflammatory Analgesics 
Gout Preparations 
Minor Tranquilizers 
Major Tranquilizers 
Hypnotics and Sedatives 
Anticonvulsants 
Antidepressants 
CNS Stimulants 
Nootropics and Neurotics 
Antiemetics and Antivertigo Drugs 
m. Neurodegenerative Disease Drugs 
n. Antiparknisonism Preparation 
0. Neuromuscular Disorder Drugs 
p. Muscle Relaxants 
a. Androgens and Related Synthetic Drugs 
b. Oestrogens and Progesterones and Related Synthetic Drugs 
5. HORMONES 


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c. Combined Sex Hormones 
d. Corticosteroid Hormones 
e. Trophic Hormones and Related Synthetic Drugs 
f. Anabolic Agents 
g. Other Hormone Related Drugs 
6. CONTRACEPTIVES AGENTS 
a. Depot Contraceptives 
b. Oral Contraceptive 
c. Other Contraceptives 
a. Aminoglycosides 
b. Cephalosporins 
c. Chlorampenicols 
d. Macrolides 
e. Penicillins 
f. Quinolones 
g. Tetracyclines 
h. Antibacterial Combinations 
i. Other Antibiotics 
a. Antituberculous Agents 
b. Sulphonamides 
c. Antiamoebics 
d. Antihelmintics 
e. Antileprotics 
f. Antivirals 
g. Antineoplastics 
h. Antimalarials 
i. Antifungals 
j . Leishmaniacides, Trypanocides 
k. Filaricides 
a. Preparations for Vaginal Conditions 
b. Urinary Antiseptics 
c. Drug Acting on Uterus 
d. Other Drugs Acting Genito-Urinary System 
a. Insulin 
b. Oral Hypoglycaemic Agents 
c. Thyroid Preparations 
d. Antithyroids 
e. Antihyperlipidaemic Agents 
f Other Agents Affecting Metabolism 
a. Parental Nutrition 
a. Eye Anti-infectives and Antiseptics 
b. Eye Corticosteroids 
c. Eye Antiseptics with Corticosteroids 
d. Mydriatics Drugs 
e. Myotic Drugs 
f. Glaucoma Preparations 
g. Other Eye Preparations 
h. Ear Anti-infectives 'and Antiseptics 
i. Ear Corticosteroids 
7. ANTIBIOTICS 
8. OTHER CHEMOTHERAPEUTICS 
9. GENITO-URINARY SYSTEM 
10. METABOLISM 
11. NUTRITION 
12. EYE AND EAR PREPARATIONS 


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j. Ear Antiseptics and Corticosteroids 
k, Other Ear Preparations 
13. DERMATOLOGICALS 
a. Anti-infectives 
b, Anti-infectives with Corticosteroids 
c. Topical Corticosteroids 
d. Acne Treatment Preparations 
e. Antiseptics and disinfectants 
f. Melcated Surgical Dressings 
g. Fungicides and Antiparasites 
h. Psoriasis, Seborrhea and Ichthyosis 
i. Topical Antivirals 
j. Keratolytics 
k. Skin Protectives 
1. AntihistamineslAntipruritics 
m. Analgesics and Anti-inflammatories 
n. Other Dermatologicals 
14. ANAESTHETICS 
15. ALLERGY AND IMMUNE SYSTEM 
a. Antihistamines and Antiallergics 
b. Vaccines, Antisera and Immunoligicals 
c. Immunosuppressants 
16. ANTIDOTES & DETOXIFYING AGENTS 
17. INTRAVENOUS & OTHER STERILE SOLUTIONS 
SECTION 10. Calculation of the Maximum Retail price of Formulations Included 
in the List of ControZZed Drugs - (a) The maximum retail price of a locally-manufactured 
formulation included in the List of Controlled Drugs shall be calculated by the Board in 
accordance with the following formula: 
M.R.P.=(M.C.+C.C+P.M.+P.C.) 
x (l+MAPE/200)+VAT 
Where: 
M.R.P. - means maximum retail price; 
M.C. - means material cost and includes the cost of drugs and other 
pharmaceutical aids used including overages, generally accepted process loss as 
determined by the Board from time to time, input VAT, and import duty, if any; 
C. C. - means conversion cost worked out in accordance with established 
procedures of costing and shall be fixed as a norm by the Board; 
P.M. - means cost of the packing material used in the packing of concerned 
formulation including process lost, and shall be fixed as a norm by the Board; 
P.C. - means packing charges worked out in accordance with established 
procedures of costing and shall be fixed as a norm every year by the Board; 
MAPE (Maximum Allowable Post-Manufacturing Expenses) - means all costs 
incurred by a manufacturer from the stage of ex-factory cost to retailing includes trade 
margin and margin for the manufacturer and shall not exceed two hundred percent 
(200%) for manufactured formulations included in the List of Controlled Drugs; and 
VAT- means output value added tax. 
(b) In the case of an imported formulation, the maximum retail price thereof shall be 
calculated as follows: 
M.R.P. = L.C. x (l+MAPE/l OO)+VAT 
Where: 


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L.C. - means landed cost consisting of FOB cost, insurance, freight and other 
miscellaneous expenses multiplied by the applicable duty and input VAT, if payable, 
as follows: 
L.C. = (FOB+Insurance cost+Freight cost+Misc.expenses) x D x Input VAT 
MAPE (Maximum Allowable Post-Manufacturing Expenses) - means all costs 
incurred by a manufacturer from the stage of ex-landed cost to retailing and includes 
trade margin and margin for the importer and shall not exceed one hundred percent 
(100%) for imported formulations included in the List of Controlled Drugs. 
SECTION 11. Information to be Furnished by Manufacturers or Importers of 
Formulations Included in and Excluded from the List of Controlled Drugs - Within thirty 
(30) days after the effectivity of this Act and every December 31” of every year thereafter, 
every manufacturer or importer of a formulation whether included in or excluded from the 
List of Controlled Drugs shall furnish the Board of a list of all formulations it produces or 
imports, indicating the details of the cost of each, including any necessary information that 
the Board may require. 
SECTION 12. Display of Prices and Price List of Formulation Excluded from the 
List of Controlled Drugs - Every manufacturer, importer, distributor, wholesaler or retailer 
of a formulation excluded from the List of Controlled Drugs shall display in indelible print 
mark on the label of the container of the formulation and minimum pack thereof offered for 
retail sale, the words “Not Under Price Control” on a green strip. 
SECTION 13. Manufacturers, Importers, Distributors and Retailers Not to Refuse 
Sale of Drug - (a) No manufacturer, importer or distributor shall withhold from sale or 
refhe to sell to a wholesaler or retailer any drug without good and sufficient reasons. 
SECTION 14. Maintenance of Records and Production Thereof for Inspection of 
Formulations Included in and Excluded from the List of Controlled Drugs. - Every 
manufacturer, importer, distributor, wholesaler or retailer shall maintain records containing 
information on sales of formulations included in or excluded form the List of Controlled 
Drugs and such other information as may be required by the Board from time to time. 
Whenever public interest so requires, the Board shall have the power to call for and inspect 
such records at the premises of any manufacturer, importer, distributor, wholesaIer or retailer. 
SECTION 15. Power to Exempt - (a) Notwithstanding any other provisions of this 
Act, and taking into consideration the factors enumerated in sub-paragraph (b) below, subject 
to such conditions as it may specify by an order duly published and upon application or motu 
propio when public interest so requires, the Board may exempt any manufacturer from the 
coverage of any or all the provisions of this Act. 
(b) In the grant of exemptions under the sub-paragraph (a) above, the Board shall 
consider any or all of the following factors: 
i. 
level of technology utilized 
11. 
numbers of workers employed; 
111. 
amount of capital invested; 
iv. 
V. 
sales turn-over 
vi. 
.. 
... 
range/group and type of products manufactured; 
production of bulk drugs from basic stage by a process developed through 
indigenous research and development, and which is significantly different 
from known processes and results in cost reduction; and 


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production of a new h g ,  which has not been produced elsewhere, if 
developed through indigenous research and development 
SECTION 16. Power to Review - (a) Any person aggrieved by any order, resolution 
or decision made by the Board may file a motion for reconsideration or review of such order, 
resolution or decision within fifteen (15) days from the date of publication or receipt thereof; 
Provided that, pending a resolution or decision by the Board on such motion for 
reconsideration or review, no manufacturer, importer, distributor, wholesaler or retailer shall 
sell a formulation included in the List of Controlled Drugs, at a price exceeding the 
maximum retail price fixed by the Board. 
(b) The resolution of the foregoing motion for reconsideration or review may not be 
further reviewed by the President of the Philippines with finality. 
SECTION 17. Penalties - in addition to the penalties that may be imposed by 
Republic Act No. 3720, as amended, and other laws, decrees, rules and regulations and other 
issuances, the penalty of reclusion temporal in it is maximum period to reclusion perpetua, 
and a fine not less One hundred thousand pesos (100,000.00) but shall not exceed Ten 
million pesos (10,000,000.00), shall be imposed upon the owner, president, manager, 
director, or other responsible officer of any public or private firm, company, corporation, or 
entity, who shall willfully or knowingly violate any of the provisions of this Act. 
SECTION 18. Rules and Regulations - The Board shall issue the rules and 
regulations necessary for the effective implementation of this Act. 
SECTION 19. 
Appropriations - Any amount necessary for the 
initial 
implementation of this Act shall be taken from the current appropriations of the Department 
of Trade and Industry. 
Thereafter, such sums as may be necessary for its continued 
implementation shall be included in the Annual General Appropriations Act. 
SECTION 20. Saving Clause - in case any provision of this Act shall be declared 
invalid or unconstitutional, the other provisions not affected thereby shall remain in full force 
and effect. 
SECTION 21. Repealing CZause - Executive Order NO. 776 dated February 24, 
1982, Letter of Instructions No. 1225 dated July 14, 1982 and all laws, decrees, orders, rules, 
and regulations and other issuances or parts thereof, inconsistent with this Act, are hereby 
repealed or modified. 
SECTION 22. Effectivity - This Act takes effect after fifteen (15) days following its 
publication in the least two (2) national newspapers of national circulation. 
Approved,