THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
First Regular Session 
J 
S E N A T E  
1Q 
S. No. 
Introduced by Senator Madrigal 
EXPLANATORY NOTE 
There is no doubt whatsoever that drug prices have gone from bad to worse starting 
more than ten years ago. Studies conducted by the National Drug Policy Prograiiz Group of the 
Department of Health (NDPP-DOH) as well as exposes and researches by the media and non- 
governmental organizations show that the prices of drtigs in the Philippines are the highest now 
in the ASEAN Region which remains to be disproved by multinational companies and lobby 
groups who continue to discredit and campaign against exposes and government progiams 
aimed at reducing drug prices. 
The NDPP-DOH study have also established that drug prices, from manufachring to 
distribution and retail, have a high mark-up; that there is a significant difference of prices 
between generic drugs and branded drugs, and; that drugs prices are pegged to achieve 
maximal industry profits to the exclusion of the poor who cannot afford the high cost of 
medicines. 
According to experts, the unreasonable pricing of pharmaceutical firms and drug outlets 
which has persisted through the years is due to the following factors: 
1. Monopoly of patents and brand names by multinational drug companies (MNC's) 
2. Heavy dependence on imports 
Our country does not have the capability to produce the active substances or basic 
raw materials used in the manufacture of drug. Majority of the local players in the drug 
industry merely buys chemicals from abroad and reformulate, recompound and repack them 
into' finished products. This leaves local drug firms as mere drug importers and distributing 
arms. 
3. Transfer pricing 
Under this practice, a multinational company inflates the cost of raw materials and 
sells them to a drug company which may be a subsidiary at a higher price than that prevailing 
in the world market. This practice accounts for the large disparity between prices paid by 
subsidiaries of MNC's and those paid by the local subsidiaries. 
4. Ineffective and weak implementation of the Generics Act because of the following 
factors, among others: 
(a) Lack of cooperation of doctors as indicated by their decreased 'compliance with 
generic prescribing especially those belonging to the Philippine Medical Association who have 
continued to doubt the safety and efficacy of drugs; 
(b) Lack of capability of BFAD to exact compliance with standards of safety, efficacy 
and good quality; 


(c) Failure of the government to import raw materials tax-free as provided for in Sec. 
10 therein to develop the local drug industry and the absence of inadequate government 
support; 
(d) Absence of a pricing policy by the Department 'of Health to ensure the 
affordability of drugs and medicines and delimitations in the operating policy and strategy 
options of the DOH in implementing the National Drug Policy because of existing laws (e.g., 
Pharmacy Law); 
(e) Dominance of foreign multinationals in the drug industry. It is estimated that 
only Filipino-owned and controlled companies manufacturing and distributing mainly off- 
patent, generic drugs and medicines comprise a mere 12% to 15% of the total market; 
(f) Devolution of health services to the local government units; 
(g) Lack and weakness of technical and managerial and other components of the 
administrative machinery of the DOH as well as in the local government level in the 
implementation of the Generics Act, and; 
(h) Low level of awareness of the public concerning generic products arising from 
the absence of alternative information other than those given by the drug manufacturers whose 
expansive and vigorous advertising and promotion activities strongly influence the Filipino 
behavior on drug use. 
According to a study conducted by the Department of Trade and Industry (DTI), the 
cost. of drugs may be broken down as follows: (I) 45%-60% goes to importation of. raw 
materials; (2) 18%-25% goes to marketing; (3) 10%-15% to labor, and; (4) 0.4%-3% to licensing. 
The Department of Health and the local drug players, however, estimate that expenses incurred 
by pharmaceutical firms in marketing and other promotional activities which include the giving 
of gifts, rewards, fellowships, junkets and other incentives to medical practitioners is as high as 
40% to 60% of the total cost of medicine. 
Faced with the growing challenges of poverty, worsening health conditions of the 
populace, inadequacy of social services in many areas of the country, high unemployment rate, 
continuous price increases in fuel and basic commodities, and the exorbitant and inordinate 
pricing of life-saving drugs and other pharmaceuticals currently sold in the country certainly 
calls for a more vigorbus, complete and effective compliance with the constitutional mandate of 
protecting and promoting the health of the people. 
The good health and well-being of the public should no longer be continuously 
sacrificed in our excessive obeisance to the tenets of globalization, liberalization and 
deregulation. The interests of the sovereign state especially its people should ever remain 
supreme. We must no longer continuously expand the already bloated coffers and extensive 
protection enjoyed by the multinationals at the expense of our people. 
The present situation, thus, requires the strengthening of the mandate and 
administrative machinery of the Department of Health and existing laws concerning drugs and 
pharmaceuticals notably the Generics Act of2988 and the National Dnrg Policy and Program. 
For its eventual realization, this measure seeks, among others, to introduce vital 
amendments to existing laws concerning drugs and pharmaceuticals not only (1) to pave the 
way for a greater state intervention through a more active and efficient regulatory system in the 
drug industry complemented by more vigorous and intrusive participation of the DOH in the 
purchase and distribution of drugs as to effectively influence the prevailing price schemes in the 
market but also (2) to extend the support long clamored by local drug firms. . 


It will also help ensure the prosecution of erring pharmaceutical firms who do not 
manufacture generic products and other stakeholders in the drug industry like medical 
practitioners, health care providers, hospitals and drug outlets who all collude with the 
multinationals in fleecing the Filipinos with the highest drug prices in the ASEAN Region. 
This humble representation is hopeful that with this two-pronged approach, a more 
effective and decisive implementation of the Generics Act and other related laws will be 
achieved and will finally result to lower, more affordable and reasonable prices of medicine. 
Because of the current trends of drug pricing in the country and of the continuously 
deteriorating state of public health, more drastic measures and interventions not only by 
Congress but also by the DOH and the BFAD are not only timely and essdntial but also of 
paramount interest. 
For these reasons, the immediate passage of this bill is earnestly requested. 
- 
.S. MADRIGAL 
redeii/drnfts 
driigsbill.doc 


THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
S E N A T E  
S. No. IQ 
AN ACT 
STRENGTHENING THE REGULATORY POWER OF THE STATE AND THE 
POSITION AND COMPETITIVENESS OF LOCAL DRUG FIRMS IN THE 
IMPORTATION, MANUFACTURE, PACKAGING, SALE AND DISTRIBUTION OF 
PHARMACEUTICAL DRUGS IN THE PHILIPPINES, AND INSTITUTING 
FURTHER MEASURES TO LOWER THE COST OF MEDICINES, AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
ARTICLE I 
General Provisions 
SECTION 1. Title. - This Act shall be known as the “Drugs Act ~$2004. 
‘I 
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to: 
(a) Establish and maintain an effective drug regulatory system 
responsive to the country’s health needs and problems; 
(b) Ensure the full implementation of the Generics Law particularly the 
compliance of key players in the pharmaceutical industry and in the 
health delivery system of the country; 
(c) Make drugs and pharmaceutical products available and affordable at 
all times; 
(d) Strengthen the local drug industry through the institutionalization of 
new policies in the drug and pharmaceutical industry and adequate 
government support; 
(e) Empower the Department of Health (DOH) to adopt and implement 
alternative policies that shall forestall any unreasonable and 
unconscionable pricing schemes of 
drug manufacturers and 
distributors; 
(f) Institute effective measures to further promote drug safety, efficacy 
and rationality of use; 


(8) Ensure that in the implementation of international agreements, 
humanitarian and societal interests will be paramount over all 
considerations that may include trade and economic concerns; 
Sec. 3. Definition of Terms. - For purposes of this Act, the term: 
(a) Pharmaceutical Drug means any pharmaceutical or biological product 
containing active ingredients responsible for its desired effect intended for use in the 
diagnosis, cure, mitigation, treatment or prevention of disease or to affect the structure 
or function of the body of man or animal or substances intended for use as a component 
of the same; 
(b) Essential Drugs mean selected drugs and medicines listed in the Essential 
Drugs List or National Drug Formulary prepared and periodically updated by the 
Department of Health on a basis of health conditions obtaining in the. Philippines, as 
well as an internationally accepted criteria. 
(c) Brand Name refers to the proprietary/trade name assigned to the prdduct by 
the drug establishment; 
(d) Generic Name refers to the identification of drugs and medicines by their 
scientifically and internationally recognized active ingredient as determined by the 
Bureau of Food and Drugs (BFAD); 
(e) Generic Drugs are drugs not covered by patent protection and which are 
labeled solely by their international nonproprietary or generic name. 
(f) Drug Establishment means any organization or company involved in the 
manufacture, importation, repacking and/ or distribution of drugs or ,medicines. The 
different types are the following: 
f.1) Drug Manufacturer means any establishment engaged in the 
production of a drug, including propagation, processing, compounding, 
finishing, filling, packing, repacking, altering, ornamenting and labeling 
with the end in view of storage, distribution or sale of the product; 
f.2) Drug Trader means any estabIishment which is a registered 
owner of the drug product, procures the materials and packing 
components and provides the production monographs, quality control 
standards and procedures, but sub-contracts the manufacture of such 
product to a licensed manufacturer. In addition, a trader may also engage 
in distribution and/ or marketing of its products. 
f.3) Drug Distributor/lmporter means any establishment that imports 
raw materials, active ingredients and/or finished products for its own use 
or for wholesale distribution to other drug establishments or outlets. 
f .4) Drug Distributor/Exporter means any drug establishment that 
exports raw. materials, active ingredients and/or finished products to 
another country. 


f.5) Drug Distributor/l/\/holesaZer means any drug establishment that 
procures raw materials, active ingredients and/ or finished products from 
local establishments for local distribution on wholesome basis. 
(8) Drug Outlets: 
g.1) Drugstore, Pharmacy or Botica, including Hospital Pharrnacy/Dispensrzry 
means a drug outlet where registered drugs, chemical products, active 
principles, proprietary medicines or pharmaceutical specialties and dental 
medicines, galenical or veterinary preparations are compounded and/ or 
dispensed. 
g.2) Retail Outlet for non-prescription drugs including non-traditional 
outlets such as supermarkets and stores, means a drug outlet where registered 
non-prescription or over-the-counter drugs (OTC) are sold in their original 
packages, bottles or containers or in smaller quantities not in their original 
containers. 
(h) Philippine National Drug Formulary or Essential Drugs List is a list of drugs 
prepared and periodically updated by the DOH on the basis of health conditions 
obtaining in the Philippines as well as on an internationally accepted criteria.’ It shall 
consist of: 
h.1) Core List is a list of drugs that meets the health care needs of the 
majority of the population; 
h.2) Complementary List is a list of alternative drugs used when there is 
no response to the core essential drug or when there is a hypersensitivity 
reaction to the core essential drug or when, for one reason or another, the 
core essential drug cannot be given. 
(i) Tax Credit shall mean any other credits against taxes and/or duties equal to 
those actually paid or would have been paid to evidence which tax c’redit certificate 
shall be issued by the Secretary of Finance or his representative, or the Board of 
Investments, if so delegated by the Secretary of Finance., Such certificate shall be, used to 
pay taxes, duties, charges and fees due to the National Government but shall be valid 
only for a period of ten (10) years from date of issuance. 
(i) Proprietary Drug or Medicine is an ”over-the counter” drug or medicine 
dispensed without the physician’s prescription. It may be advertised by print, radio, 
television, outdoor advertisement or other medium for the purpose of inducing or 
which is likely to induce directly or indirectly the purchase of a drug or medicine. 
(k) Ethical Drug or Medicine is a prescription drug or medicine that is not allowed 
to be advertised by print, radio, television, outdoor advertisement or other medium for 
the purpose of inducing or which is likely to induce directly or indirectly the purchase 
of a drug or medicine. An ethical drug or medicine may be promoted oply through the 
endorsement of a sales representative, a physician or through a scientific journal. 
(1) Price Ceiling means the maximum price at which any basic necessity ‘or price 
commodity may be sold to the general public. 


ARTICLE I1 
Regulatory Measures 
Section 1. (a) Pricing Policies. - All drugs and pharmaceutical products classified 
as essential by the Department of Health shall be considered basic necessities that shall 
be subject to mandatory price ceiling and controls and other prize stabilization 
measures that may be imposed by the Secretary of the Department 6f Health. The 
provisions dealing with these matters stated in R.A. 7581 otherwise known as the "Price 
Act'' shall apply suppletorily with the said measures. 
(b) Price Advisory Board. - The Department of Health shall appoint and convene a 
Price Advisory Board, hereinafter referred to as the Board, in coordination with the 
Department of Trade and Industry, which shall be primarily tasked to formulate and 
recommend to the Government relevant and efficacious strategies to stabilize the prices 
of essential drugs and pharmaceuticals. It shall be composed of the following members: 
1) Deputy Director of the Bureau of Food and Drugs who shall act as Chairman 
2) One (1) representative of the Office of the Secretary who shall act as the Board 
3) One (1) representative from the local manufacturing *sector of 
the 
4) Two (2) representatives from the consumer's sector; 
5) One (1) representative from the drugstore's association of the country; 
6) One (1) representative from the NGO's with health concerns; 
7) One (1) representative from healthcare service providers; 
8) One (1) representative from the hospital association of the country. 
of the Board; 
Secretary; 
pharmaceutical industry and one (1) from the multinational drug companies; 
The Board shall convene every quarter of the year and whenever the Chairman 
of the Board deems necessary. Each member shall not be entitled to any emolument 
except reimbursements for transportation and printing expenses. 
(c) Price Monitoring Officers. - The Department of Health (DOH) shall appoint two 
(2) Price Monitoring Oflcers (PMO) for every administrative region of the country except 
in the National Capital region which shall have four (4) PMOS. They shall be primarily 
charged with the monitoring of prices of drugs and pharmaceuticals and in the filing of 
appropriate action against erring drug firms and distributors. 
(d) Reportsfrom LGUs and DTI. - All local government units (LGUs) through its 
Local Health Boards and the Department of Trade and Industry (DTI) shall help ensure 
the implementation of pricing policies of the Department of Health by submitting 
quarterly reports to the latter to effectively monitor and forestall any sudden or 
unreasonable increase in the prices of medicine and all necessary support sanctioned by 
their agency's authority and jurisdiction. 
Sec. 2. Moratorium of Entry of Nero Branded Drugs and Medicine. - 
(a) Period of Moratorium. - A moratorium of entry of new branded drugs shall be 
observed within a period of five (5) years to start upon the effectivity of this Act. This 
shall not be applied, however, to pioneer or innovator drugs, to be determined by the 
Bureau of Food & Drugs and those that are included in the parallel importation 
program of the Department of Trade & Industry, 


(b) Reziiezii of Moratorium. - Said moratorium is subject to a review every year by 
the congressional committee on health which can only recommend its lifting two (2) 
years after such moratorium took effect. 
After the moratorium is lifted by the BFAD, such products may be allowed for 
commercial distribution but only when said products are entered under their generic 
names and have complied with all the requirements of BFAD and the Generics Act of 
1988 as hereby amended. 
Sec. 3. Drug Distributorship. - Parallel importation shall be allowed by granting 
more than one (1) Philippine importer to enter into a Foreign Agency Agreemeqt with a 
foreign supplier. The importer must be a locally owned drug establishment accredited 
and chosen by the DOH. 
Sec. 4. Good Manufacturing Practice Standards. - All manufacturers shall follow 
the Good Manufacturing Practice guidelines set by the Bureau of Food and Drugs taking 
into account the standards set by the World Health Organization. The BFAD shall 
publish an annual list of drug manufacturers who abide with GMP standards that shall 
be conspicuously posted in all drug outlets. 
Sec. 5. Transparency of Promotional and Marketing Expenses of Drug Manufactwers 
and Distributors. - All drug companies and distributors shall submit to the DOH a 
detailed list of the advertising, promotional and marketing expenses of ,pharmaceutical 
companies which shall include but not limited to literature and documentation, 
samples, scientific seminars, advertisements and entertainment and representation and 
the recipients, financial incentives and other persons therein involved. The Professional 
Regulations Commission (PRC) shall also require the submission of annual reports from 
doctors of such sponsorships and related activities for their individual and professional 
advancement made possible through the cooperation and involvement of drug 
establishments. 
. 
Sec. 6. 
Marketing, Advertising and Promotions (MAP) Code for Drugs and 
Pharmaceuticals. - A MAP Code for Drugs and Pharmaceuticals shall be drawn by the 
DOH and BFAD in coordination with resource persons from the advertising industry, 
pharmaceutical groups, mass media and the Department of Education sixty (60) days 
after the passage of this Act. 
ARTICLE I11 
Related Regulatory Measures 
To ensure the adequate supply of quality drugs with generic names at the lowest 
possible cost, promote generic use and strengthen the Generics Act of 1988, the 
following measures are instituted: 
Section 1. Amendments to the Generics Act. - 
LA. Paragraphs (b), (c) and (d) of Section 6 of R.A. 6675 are hereby 
amended to read as follows: 
"(b) 
xxx 


THE PRESCRIPTION MUST NOT CARRY A ”NO SUBSTITUTION” 
OR A SIMILAR PHRASE OR NOTICE EXCEPT IN THE FOLLOWING 
INSTANCES: 
1. IF THE PRESCRIBED DRUG OR MEDICINE IS AN INNOVATOR 
OR PIONEER DRUG; 
2. IF THE PRESCRIBED DRUG OR MEDICINE IS ETHICAL AND 
HAS NO KNOWN GENERIC COUNTERPART OR SUBSTITUTE; 
3. IF THE PRESCRIBED DRUG OR MEDICINE IS LISTED IN THE 
ESSENTIAL DRUG LIST/PHILIPPINE NATIONAL DRUG FOkMULARY OF 
THE DEPARTMENT OF HEALTH. 
”(c) Any organization or company involved in the manufacture, 
importation, repacking, marketing and/ or distribution of drugs and medicines 
shall indicate prominently the generic name of the product. In the case of brand 
name products, the generic name shall appear prominently and immediately 
above 
the 
[brand] 
MANUFACTURER’S 
name 
FOLLOWED 
BY 
DISTRIBUTOR’S NAME in all product labels as well as in advertising and 
other promotional materials. THE BRAND NAME SHALL BE THE LEAST 
CONSPICUOUS IN THE PRODUCT LABEL. THE EXPIRY DATE OF THE 
DRUG 
OR 
MEDICINE 
SHALL 
BE 
AS 
PROMINENT 
AS 
THE 
DISTRIBUTOR’S NAME. ONLY PIONEER OR INNOVATOR DRUGS 
SHALL BE EXEMPTED FROM THIS LABELING REQUIREMENT UNTIL ITS 
PATENT LIFE EXPIRES”. 
”(a) Drug outlets, including drugstores, hospital and non-hospital 
pharmacies and non-traditional outlets such as supermarkets and storks, shall 
inform any buyer about any and all other drug products having the same generic 
name, together with their corresponding prices so that the buyer may adequately 
exercise his option. Within one (1) year after approval of this Act, the drug 
outlets referred to herein shall post in [conspicuous places] THEIR WALLS 
AND COUNTERS a list of ESSENTIAL drug products with the same generic 
name and their corresponding prices.” 
1.B. Sub-paragraphs (a), (b), (c) and (d) of par. A of Sec. 12 of R.A. 6675 
are hereby amended to read as follows: 
”A. Any person who shall violate Sec. 6(a) or 6(b) of this Act shall suffer the 
penalty graduated hereunder, viz: 
”(a) for the first conviction, he shall suffer the penalty of [reprimand] SIX 
(6) MONTHS SUSPENSION IN THE PRACTICE OF HIS PROFESSION 
which shall be officially recorded in the appropriate books of the Professional 
Regulation Commission if he or she is registered therein.” 
“(b) for the second conviction, the penalty of fine in the amount of not less 
than [two thousand pesos (P2,000.00)] THIRTY THOUSAND PESOS 
(P30,OOO.OO) but not exceeding [five thousand pesos (PS,OOO.OO)] FIFTY 
THOUSAND PESOS (P50,OOO.OO) at the discretion of the court and another six 
(6) month suspension as provided for in the preceding article.” 


"(c) for the third conviction, the penalty of fine in the amount of not less 
than [five thousand pesos (PS,OOO.OO)] FIFTY THOUSAND PESOS (P 50,000.00) 
but not exceeding [ten thousand pesos 
(PlO,OOO.OO)] 
SEVENTY-FIVE 
THOUSAND PESOS (P75,OOO.OO) and ONE (1) YEAR suspension [of his license] 
to practice his profession [for thirty (30) days at the discretion of the court.]. 
"(d) for the fourth conviction and subsequent convictions, the penalty of 
fine of not less than [ten thousand pesos (PlO,OOO.OO)] ONE HUNDRED 
THOUSAND PESOS (P100,OOO.OO) and [suspension] REVOCATION of his 
license to practice his profession [for one (1) year or longer at the discretion of the 
court] OR DISMISSAL FROM GOVERNMENT SERVICE, OR BOTH, IF 
APPLICABLE'' 
l.C. Paragraph B of Section 12 of R.A. 6675 is hereby amended to read as 
follows: 
"B. Any juridical person who violates Section 6(c), 6(d), 7 or 8 shall suffer 
the penalty of a fine of not less than [five thousand pesos (P 5,000.00)] FIFTY 
THOUSAND PESOS (P50,OOO.OO) nor more than [ten tlzousand pesos 
(PlO,OOO.OO)] THREE HUNDRED THOUSAND PESOS (P300,OOO.OO) and 
suspension of at least one ( I )  year or revocation of license to operate such drug 
establishment or drug outlet at the discretion of the Court: Proz)ided, That its 
officers directly responsible for the violation shall suffer the penalty of fine and 
suspension or revocation of license to practice profession, if applicable, and by 
imprisonment of not Iess than six (6) months nor more than one (1) year or both 
fine and imprisonment at the discretion of the court, and: Provided, fiirther, That if 
the guilty party is an alien, he shall be ipsofacfo deported after service of sentence 
without need of further proceedings." 
Sec. 2. Manzqacturing and Distribution Standard. - All drug establishments 
shall manufacture and distribute at least 70% generic products for each branded 
product for market distribution and consumption except in the case of pioneer or 
innovator drugs and of others whose patent life have not yet expired in the 
country where it originated or where it was first applied. 
Sec. 3. Report of Manufactured Generic Products. - An official copy of the 
monthly volume of generic products manufactured and sold in the markets shall 
be submitted within ten (10) days for every quarter of the year by all drug 
companies. 
Sec. 4. 
Report of Manufacturing and Distribution Cost. - All drug 
establishments shall also furnish the Bureau of Food and Drugs a detailed listing 
of their manufacturing and distribution cost that shall include, aflong others, the 
cost and source of raw materials and pricing schemes in wholesale and retail 
distribution. 
Sec. 5. Report of Research and Dezdoprnent Cost. - All drug companies shall 
furnish the DOH and BFAD a detailed report concerning its research and 
development cost annually. 
Sec. 6. Disclosure of Selling Prices. - All drug companies operating in the 
Philippines shall disclose their drug selling prices in the country vis-a-vis prices 
they apply or follow in other countries. 


Sec. 7. Sales Report ofDrug Outlets. - All drug outlets shall also submit its 
monthly volume sales to DOH and BFAD that shall contain a detailed listing of 
the drugs sold as well as a record of drugs prescribed by medical, dental or 
veterinary practitioners. 
Sec. 8. Record of Drugs Prescribed. - All medical, dental and veterinary 
practitioners shall submit to the Bureau of Food and Drugs a report that that 
shall include, among others, a record of all the drugs ,and medicines they 
prescribed every six (6) months to help the State effectively monitor the use and 
promotion of generic products and which shall be duly recorded by any drug 
outlet upon presentation. 
All drugstores or pharmacies, including hospital pharmacies/ dispensaries 
shall also furnish BFAD inspectors a copy of all the prescriptions every three (3) 
months presented thereat which are recorded in a prescription book that can be 
inspected at anytime during the business hours of the outlet. 
Sec. 9. Distribution of Drug Samples. - 
(a) No person may sell, purchase, or trade or offer to sell, purchase, or 
trade any drug sample which is a unit of a drug not intended to be sold but is 
solely intended to promote its sale. 
(b) Drug manufacturers or distributors shall store drug samples under 
conditions that will maintain their stability, integrity, and effectiveness and will 
assure that the drug samples will be free from contamination, deterioration, and 
adulteration. 
(c) Drug manufacturers or distributors shall conduct, at least annually, a 
complete and accurate inventory of all drug samples in the possession of 
representatives of the manufacturer or distributor. Drug manufacturers or 
distributors shall maintain lists of the names and addresses of each of their 
representatives who distribute drug samples and of the sites where drug samples 
are stored. Drug manufacturers or distributors shall maintain records for' at least 
three (3) years of all drug samples distributed, destroyed, or returned to the drug 
manufacturer or distributor, of all inventories maintained under this paragraph, 
of all thefts or significant losses of drug samples, and of all requests made by 
practitioners in the medical profession and allied sciences. 
(d) Records and lists mentioned in the preceding paragraph shall be made 
available by the drug manufacturer or distributor to the DOH and BFAD. 
(e) Drug manufacturers or distributors shall notify the DOH and BFAD of 
any significant loss of drug samples and any known theft of drug samples. 
(f) Drug manufacturers or distributors shall report to the DOH and BFAD 
any conviction of their representatives for violations of this section or a law 
because of the sale, purchase, or trade of a drug sample or the offer. to sell, 
purchase or trade a drug sample. 


ARTICLE IV 
Incentives to Drug Companies and Drug Establishments 
Section 1. Tax Incentives to Locally-O.roned Drug Establishments. - The State shall 
adopt and implement economic, trade and fiscal policies that shall .strengthen, the 
position and enhance the competitiveness of locally-owned drug establishments. In line 
with this policy, Section 10 of R.A. 6675, otherwise known as the Generics Act of 1988, is 
hereby amended to read as follows: 
"Sec. 10. Authoritzl to Import. - xxx. THE IMPORTATION OF RAW 
MATERIALS, EQUIPMENT AND OTHER NECESSARY COMPONENTS IN 
THE COMPANY'S 
SALE, PROCESSING, MANUFACTURING AND 
CONTINUING 
RESEARCH 
AND 
DEVELOPMENTAL 
ACTIVITIES 
CONCERNING ESSENTIAL DRUGS INCLUDED IN THE CORE LIST OF 
THE PHILIPPINE NATIONAL FORMULARY OF THE DEPARTMENT OF 
HEALTH WITHIN TEN (10) YEARS FROM THE PASSAGE OF THIS ACT 
SUBJECT TO ANOTHER EXTENSION THAT MAY BE GRANTED BY 
CONGRESS FOR ANOTHER FIVE (5) YEARS. The Secretary of Health shall 
ensure that the imported raw materials are allocated fairly and efficiently among 
Filipino-owned or controlled drug establishments. He shall submit to the Office 
of the President and to Congress a quarterly report on the quantity, kind and 
value of the raw materials imported. 
MATERIALS SHALL BE TAX AND DUTY-FREE INCLUDING AUXILIARY 
Sec. 2. Other Incentives f o ~  
Local Drug Companies. - The following incentives shall 
be enjoyed by local drug companies who will be able to manufacture pioneer and 
innovator drugs, maintain a good standing with BFAD especially in its conformity with 
current good manufacturing practice (CGMP) concerning off-patent drugs and a good 
track record of distribution of affordable and quality generic drugs and other notable 
achievements in the drugs and pharmaceutical industry that supports the overall 
national health policy of the government: 
tax credits as may be determined by the Department of Finance; 
priority grant in the importation of drug products in accordance with the 
policy of the government governing parallel importation; 
a guaranteed access to a fair share of government contracts and related 
incentives and preferences; 
technical assistance in the following areas: 
1. 
2. 
3. 
re-packing of drugs and pharmaceutical products and other operational 
processes if available and within the expertise of any government agency 
or corporation; 
loan applications and credit assistance and stronger linkages with the 
government banks and financing institutions agencies; 
research, training and deveIopmenta1 skilIs to be provided by reputable 
state universities and government experts at reasonable and discounted 
rates; 


4. mergers and consolidations of two or more locally-owned drug 
companies; 
5. information dissemination campaigns and entrepreneurship education; 
6. establishment of regional branches or centers. 
Access to bonded manufacturing/ trading warehouse syste.m in all areas 
required by the project subject that shall be maintained by the government for 
their exclusive use; 
discounts and exemptions in the payment of registration and accreditation 
fees and similar impositions by the BFAD; 
exemptions from wharfage dues and any export tax, duty, impost and fee; 
use of government-owned laboratories and facilities in the testing of their 
products and for other product research and developmental activities at 
reasonable and discounted rates; 
Employment of foreign nationals in technical and advisory positions for a 
period not exceeding ten (10) years from the passage of this Act, extendible 
for limited periods by the Board of Investments upon recommendations by 
the BFAD; 
Such other incentives and assistance that the DOH and BFAD may establish 
to promote investments in the drug and pharmaceutical industry and to 
strengthen the position and enhance the competitiveness of local drug 
establishments upon prior consultation with I the Department of Finance, 
Department of Trade and Industry and Department of the Interior and Local 
Government. 
ARTICLE V 
State Support for Drug Distribution 
Section 1. Full Expansion of "Gamut sa Presyong DOH". 
- The .Department of 
Health shall immediately undertake a full expansion of ''Garnot sa Presyong DOH" as 
provided for in DOH A.O. No. 223-A s. 2992 and A.O. No. 47 s. 2999 so as to cover all 
government hospitals and medical centers: Provided, That participating hospitals shall 
procure their drugs and pharmaceutical products from drug establishments accredited 
by the D,OH where local drug companies shall be given the first preference and that 
their initial purchase shall cover those drugs listed in the Essential Drugs List/Philippine 
National Drug Fornzulary, current edition: Provided, further, That the existing Rezwluing 
Trust Fund within such program for indigent patients be increased to fifty percent 
(50%). 
Sec. 2. Conznzunity Managed Drug Financing Program. - The DOH shall help 
establish the formation and operation of community managed drug financing programs 
(CMDFP) in remote and poor barangays and coastal areas that shall ensure the 
availability and affordability of essential drugs in its generic form. 


ARTICLE VI 
Prohibited Practices 
Section 1. 
Dispensing Prohibition. - It shall be unlawful for any medical 
practitioner, including medical interns and other members of the medical staff, to 
dispense and distribute any brand or type of drugs to the public. 
Sec. 2. Compulsion of Patients. - It shall be unlawful for any medical staff of a 
hospital to require, obligate, direct or request patients to purchase drug and 
pharmaceutical products from the pharmacy therein if these are highly or unreasonably 
priced compared to prevailing market prices. 
The doctors, medical consultants and other medical staff of a hospital assigned to 
patients admitted either for treatment or confinement are jointly responsible at all times 
in advising the patients in obtaining or procuring cheaper drug alternatives for drug 
medication. Failure to do so will constitute negligence and will give rise to 
administrative and civil liabilities. 
Sec. 3. Adziertising Violations. - It shall be unlawful to post unethical, unscientific, 
manipulative and inappropriate advertisements in any medium of advertisement, 
including those that do not have any prior clearance from BFAD. These shall be 
summarily pulled out after reasonable notice and compliance with the requirements of 
the law. 
ARTICLE VII 
Penalties 
Section 1. Penalties. - Any person, natural or juridical, violating any provision 
hereof shall be subject to the same penalties as may be applicable provided for in 
Section 1, Article I11 of this Act. 
ARTICLE VIII 
Miscellaneous Provisions 
Section 1. Appropriations. - The amount necessary for the implementation of this 
shall be included in the General Appropriations Act for the year following its enactment 
and every year thereafter. 
Sec. 2. Implementing Rules. - The Department of Health, in coordination hith the 
Bureau of Food and Drugs, Department of Trade & Industry, Department of the Interior 
and Local Government, Department of Finance and Professional Regulations 
Commission shall draw the implementing rules and guidelines of this Act sixty (60) 
days after the passage of this Act. 
Sec. 3. Repealing Clause. - Laws or part of laws, executive orders, circulars, 
regulations and memoranda inconsistent or incompatible with this Act are hereby 
repealed or amended accordingly. 


Sec. 4. Separability Clause. - If any part, section or provision of this Act shall be 
held invalid or unconstitutional, no other part, section or provision shall be affected 
thereby. 
Sec. 5. Effectivity. This Act shall take effect upon its approval. 
Approved,