Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL No._O178

Introduced by Honorable Randolph S. Ting

EXPLANATORY NOTE

Probably the most compelling reason for embarking on a medicinal plant
development program in the Philippines is the absence of truly Filipino research based drug
industry. Years of colonial and non colonial contral have distorted patterns of pharmaceutical
Production, distribution and consumption. The reasons are: first, the Pharmaceutical Drug
Industry (PDI) especially on basic ingredients or raw materials is import dependent limited only
to formulating and compounding and practically no basic raw material manufacturing; second,
education was oriented towards more application of technology rather than basic research and
third, despite the fact that the Philippines has plenty of medicinal plants about 7,000 plant
species with medicinal values were never scientifically validated before the 1970's thus interest
to stimulate research on tocal indigenous materials and independent science and technology
system that would form the foundation of economic progress in the country was not
encouraged.

The above scenario was then and is still is making the Philippines very dependent on
drugs manufactured by multinational companies {MNC). Statistics reveal that 75% of market
sales come from drugs manufactured by MNCs mostly from the US and Europe; 20% come only
from big “Filipino owned” laboratories (i.e.United Laboratories) and 5% come from small
Filipino firms (i.e. Pascual Laboratories, (a Croesus Pharmaceuticat Co,). it is therefore not
surprising that according to Kompass survey, a consumer group in Indonesia, among all ASEAN
countries, the Philippines has the highest retail prices for drugs Essential drugs have become
out of reach for the ayerage filipina drug consumer whose income has been falling
continuously way below the poverty line. In the Philippines, the annual health budget of the
government is approximately equivalent to the total cost of drug requirements alone. With 55%
of the population living below the poverty line, only a small proportion can afford the cost of
their health requirements. High prices even have far more reaching negative effects. It has
aggravated the matdistribution of drug consumption in the country so that lower income areas
get less and less drugs compared to high income areas. Statistics reveal that in 1975 Metro
Manila with 14% of the national population has 44.2% total consumption of drugs and 48.8% in
1985 as compared to the Visayas and Mindanao with combined 45% of the national population
have a 30.1% total consumption of drugs in 1975 and a lower 24.6% in 1985. The present
scenario has not changed considering that poverty was not yet appreciably alleviated and the
high costs of synthetic medicines is still a problem.

Thus, to solve the above problems on high prices of synthetic drugs made by MNCs
and maldistribution of drug consumption in the country, two national agencies favorably


responded. First, the Department of Science and Technology (DOST) through its department
Philippine Councit for Health Research and Development (PCHRD) in collaboration with the
National Integrated Research Program on Medicinal Plants (NIRPROMP) , a research program
with members from agencies with health research agenda as well as from the academe _ ted by
UP College of Medicine and College of Pharmacy, financed a multimillion pesos herbal
medicine research project in the ‘70s which resulted in the scientific validation of the Sampung
Halamang Gamot including Lagundi and Sambong. that were endorsed by the Department of
Heaith (DOH). The DOST further established the Davao Herbal Processing Plant to formulate the
‘Sampung Halamang Gamot raw materials into finished products syrups, tablets, capsules and
gintment forms). Second, the Department of Health under the then Secretary of Health in the
80s Sec. Jesus Azurin realized the impact of the DOH in putting up its own Herbal Processing
Plants (HPPs). The HPPs will be a way to lower the DOH budget since it will no longer buy the
exorbitantly priced synthetic drugs that will be given free to indigent patients. These HPPs witl
formutate and package its own herbal medicines which are pharmacologically equivalent to the
expensive synthetic drugs the DOH was previously buying from the MNCs and private Filipino
pharmaceutical firms. Besides, the OOH intended to make these HPPs centers for herbal
medicine research in the regions where they will be located. Henceforth, based on such noble
Purposes, in the late eighties, three (3) HPPs with not only manufacturing facilities but with
research facilities were established through World Bank loans by the DOH after assessing the
Cost Benefit Ratio of the DOH operating its own HPPs rather than 80 into Toll Manufacturing
with a private pharmaceutical company. Considering the existing problems on high prices and
maldistribution of drug consumption, the DOH decided to establish three (3) HPPs in the
country, one in Luzon which is the Cagayan Valley Herbal Processing Plant, one in the Visayas
which is the Tacloban Herbal Processing Plant and one in Mindanao which is the Cotabato
Herbal Processing Plant. Realizing the nobility of the objectives of the DOH in establishing the 3
HPPs, the DOST transferred the control and management of the Davao Herbal Processing Plant
to the DOH. With this set-up the savings incurred by DOH in not buying the synthetic drugs
which are pharmacologically equivalent to the herbal medicines the 4 HPPs were
manufacturing were used for other purposes like improvement of hospital facilities,
establishing more health centers ete.

Such were the noble reasons for the establishment of the HPPs of the country by the
DOH and DOST, however , events unfolded one after the other since the nineties (90's) that will
deprive the Filipina Drug Consumers of these four(4) very important assets, the four HPPs of
the country. First, the RA 8423 sponsored by former Sen. Juan Flavier otherwise known as the
Traditional and Medicine Act (TAMA) of 1997 was passed. Sec. 17 Article V of this law
transferred the control and management of the 4 HPPs from the DOH to a GOCC that was
created by RA 8423 named the Philippine Institute of Traditional and Altemative Health Care
(PITAHC}. Barely two years from the transfer of the HPPs from DOH to PITAHC, the Board of
Trustees of PITAHC already attempted to clase and privatize the four HPPs of the country but
this move was effectively blocked by the then Representative of the Second District of Cagayan
and Vice-Chair of the Committee on Health , the Hon. Congresswoman Celia T. Layus when she
delivered a Privilege Speech entitied “ A Betrayal of a Public Health Program” dated August 21,
2002 after which she initiated a series of Congressional Hearings. It was just unfortunate that
while immediate closure and privatization of the HPPs was forestailed, she was not able to
sponsor a Housebil! that will amend Sec. 17 Article V of RA 8423 so that the HPPs will be
transferred back to the DOH. Such a legislative move if it was successfully accomplished would
have permanently saved the HPPs from future attempts to close and privatize them making
them carry out freely thé original nobie purposes for which they were created (as herbal
medicine provider to indigent patients and herbal medicine research facilities to discover more
herbat medicines indigenous in the areas where the HPP were located and also for utilization as
research facilities to students both public and private schools)) wilt be fulfilled. The attempt to
close and privatize 3 of the 4 HPPs (Cagayan Valley HPP, Tacloban HPP and Cotabato HPP) did
not push through however at present the HPPs are facing again another new threat of closure


and privatization through legislative fiat {HB 2867 sponsored by the Hon.Cong Rufus Rodriguez
Closing 36 GOCCs including PITAHC and RA 10249 sponsored by the Hon. Sen. Franklin Drilon
and the Hon.Congressman Joseph Abaya which will create a committee , the GOCC Governance
Committee or GCG, to evaluate alt losing GOCCs for recommendation to the President for
Possible closure and privatization. it is fortunate that PITAHC with its HPPs will be exempted
from the coverage of RA 10149 since it is a Research Institution thus it is only HB 2867 that
remains to be a threat.

't is therefore very apparent based on the past history of attempts to close and
Privatize the HPPs that under a GOCC the HPPs will always be under threat of closure and
Privatization depriving Filipino Drug Consumers especially the poor and the indigent majority,
Of faur very important herbal manufacturing and herbal medicine research facilities acquired
through World Bank Loans which they have paid including interest for the past years.

For a more comprehensive information and knowledge as to the very important
reasons for saving the fopir HPPs from closure and privatization now and in the future through
the passage of a law that will transfer the control and management of the four HPPs from a
GOCC named PITAHC to a national agency, the DOH, their former owner, consider the
following:

MOST URGENT REASONS TO SAVE THE FOUR HPPs AS GOVERNMENT ASSETS: What are the
Most pressing considerations for the amendment of Sec. 17 Article V of RA 8423? Corollary to
this question is why are the HPPs worth fighting for? The following are the major
considerations in amending RA 8423:

FIRST, onsider th x and
manage the CVHPP and other HPPs. The only law sponsored by former Secretary of
Health and Senator Juan Flavier which is RA 8423 the law that created the
Philippine institute of Traditional and Alternative Health Care {PITAHC) a supposed
to be social service agency with the main objective to deliver health care the
traditional and alternative way but perplexingly was made a PROFIT ORIENTED
GOCC and again strangely transferred the control and management of the four
HPPs from a national agency fike DOH to a GOCC like PITAHC will be made LEGALLY
RIGHT when the CVHPP and the other HPPs will be transferred back to the DOH.
Why? This is because of the present situation in PITAHC in which CONFLICT OF
INTEREST is being condoned and tolerated RA 8423 contains provisions that are in
Lowi with ope £ Herb Proc ng Plant that mai

ual _and_mar the same organic and natural products that it
Fequlates, These are Article § Sec. 3 {d), Article ill Sec. 6 and Article IV Sec 13 of RA
8423 which all refer to the regulatory function of PITAHC on organic and natural
products which include herbal medicines like Lagundi and Sambone, the products
of the 4 HPPs. The issue on Conflict of Interest will be removed if DOH and no
longer PITAHC will assume contro! and management of the HPPs — that is if Cong.
Jack Enrile and Cong. Randy Ting and/or Sen. Juan Ponce Enrile Sr, will sponsor a
House Bill and or Senate Bill that will amend Sec.17 Article V of RA 8423 that will
cause the transfer of the HPPs from PITAHC to DOH.

SECOND,
itrary closure _and_privativation_under_a GOCC ai closure

privatization of the HPPs the Filipino people will be deprived of the following:
L CVHPP_and i

Research and Facility assets of the ri severe,
they are located_particularly in the field of herbal medicines of the


HPPs which is unique in the regions where the HPPs are located.
Here in Region 02, there are so many students from both public and
private schools mainly secondary and college levels wha come to
the CVHPP to do their researches on herbal medicines (Please refer
to DOCUMENT A which provides a list of schools with students who
availed of the services of CVHPP as an R & D Facility},

Losing CVHPP and other HPPs means losing apotential economic
assets in the future. Region 02 will be deprived of a Region 02
based Herbal Pharmaceutical industry (Please refer to DOCUMENT
8 — “Scheme for New Herbal Drug Development in Region 02 — A
Herbal Pharmaceutical Industry in Region 02") that will benefit
farmers and business entrepreneurs in Region 02.. The CVHPP is the
nucleus for a Herbal Pharmaceutical Industry in Region 02 because
this is where basic laboratory testings of the safety and effectivity
of a potential herbal medicine for commercial production will be
done. Without the CVHPP, a Herbal Pharmaceutical industry will
never be possible in Region 02. What applies to CVHPP also applies
to the other regions where the other HPPs are located.

‘ Losing CVHPP and other HPPs means losing another potential

to ulate generic drugs from powder form i i:
products in the future. The CVHPP has the facilities and manpower
to formulate raw materials (powdered form} of synthetic drugs
bought from other countries into tablet and capsule forms thus the
HPPs can even be utilized to formulate not only herbal drugs but
also generic drugs. The DOH will no jonger buy generic and herbal
drugs from private companies so that the savings incurred will be
used to buy more antibiatics or build more hospitals and other
health facilities.

the CVHPP._ anc PPs means Ye professiona
mpertise of the HPP Personnel in delivering lectures, seminars

and symposiums on the healing effects of herbal medicines and
hands on training on herbal drug decoction making, akapulco
ointment making and herbal soap making for the benefit of
communities with so many suffering indigent families. Such
trainings provide the communities with the means to heal
themselves through home remedies and they can even use this
primary health care (PHC) drug making capability provided to them
by the HPP personnel as a means to eam extra income for
themselves and their families. In fact the CVHPP will become a very
valuable asset to teach indigents in Region 02 to have the ability to
feed themselves by teaching them the means to feed themselves so
that they will not be forever dependent on “dole-outs'. This role of
the CVHPP makes it a very valuable partner of DSWD and other
agencies in a future OSWD Project proposed by RD Amet B. Garcia
entitled” Strategy on Convergence of the OSWD Core Social
Protection Programs”

Losing the CVHPP and other HPPs means losing a showcase for
. ists fi " P facilit

icin and i asa T 1o.


{a TOUT SITE) and fe of . There are so
many schools even outside of Region 02 which send their students
to the HPPs on educational trips. {Again refer to DOCUMENT A for
the list of schools which frequently send their students to the
CVHPP on educational field trips).

THIRD, i CVHPP and IPPs” i
ge ot only fie in the ash that remit to the Bur of
but to the quantifiable am: of sayings to be enja Filiy

Consumers. Return of investment in Health cannot just be measured in terms of
cash or income or profit generated out of their operations but in terms of external
benefits. Health Expenditures carry with them what can be called “external
benefits’ that is the benefits of expenditures accrue not only to the individual who
makes them but to the community as a whole. The HPPs Return of Investment
through the years is a different kind from that of a ‘profit enterprise’ in which the
governing Board of Trustees is single minded in the applications of the criterion for
measuring success-the profitability of the firm or corporation.As far as the HPPs are
concemed the measure of the Return of Investment (ROI) is not on how much the
HPPs remitted cash to the Bureau of Treasury but on how much savings the Filipino
Drug Consumer (FDC) has obtained or benefitted by using the herbal medicine
tablets produced by the HPPs instead of using the branded synthetic
therapeutically equivalent drugs manufactured by the multinational pharmaceutical
companies (MPC). The positive Cost Benefit Ratio af the goverment (DOH)
operating the 4 HPPs is 1:17 which means the benefits derived by the Filipino Drug
Consumers (FDC) in the form of savings is 17 times greater than the cost of
Production of both Lagundi and Sambong incurred by the CVHPP. The quantifiable
amount of savings the FDC derived out of the government produced HPP herbal
medicines sold at cost is the ROI the DOH will have if it will resume the control and
management of the HPPs, instead of allowing its attached GOCC agency, PITAHC
arbitrarily close and divest them for the benefit of interested parties with vested
interests on the four HPPs and with an intense desire to attain MONOPOLY of the
Herbal Pharmaceutical Industry in the Philippines. It is hard to fathom why an
agency which has the three main functions of social responsibility in promating
health care and development just like DOH but only through the traditional and
alternative way , Research & Development and Regulatory functions was given
the nature of a GOCC instead of the more appropriate national agency . Another
benefit is that the continued existence of the 4 HPPs as a government operated
manufacturer ;of herbal medicines will discourage the private pharmaceutical
companies making the same organic and natural products like Lagundi and
Sambong to raise their prices of will. Once the CVHPP and other HPPs will be closed
these private pharmaceutical companies will enjoy the benefits of MONOPOLY
hence they can now raise their prices AT WILL. If that happens, the average Filipino
Orug Consumer can no longer avail of an affordable but safe and effective herbal
medicine.

Again, the R & D value of the HPPs will redaund to the good of both the academic
and business communities. Without these HPPs, for the Academe, there wilt be no
Herbal R & D Facility in Region 02 focally accessible to students unless they want to
go to Manifa to do their herbal medicine researches and for the business
community, there will be no more opportunity for Region 02 to establish a Herbal
Pharmaceutical Industry (HP!) depriving local farmers and business entrepreneurs
of the opportunity to be benefitted from the project that will establish a HPt right at
our doorstep.


It is significant to note that it is at the Cagayan Vailey Herbal Processing Plant that
the medicinal values of the Young indian Mango leaves as a bronchodilator or ant
asthma by the SPUP second year high schoo! students and the Siniguelas leaves by
the University of St. Louis (USL) high school students as an antiseptic/antimicrobial
agent for the treatment of minor wounds were discovered. These two researches
were able to put Tuguegarao City, Cagayan Province and Region 2 on the map.
SPUP in 2009 won in the Dep-£d sponsored national health research competition
Participated by all public and private high schools nationwide held in Calapan City
Mindoro and USL won in 2010 the BOST sponsored health research competition at
the Luzon Cluster competition participated by Regions 1, 23 and CAR.

FOURTH, when we consider the scarcity of - Every government has only a
fimited amount of resources to spend in social services. tt faces the challenge of
getting the most in terms of goods and services for the least amount of money. The
decision as to which goods and services to Purchase with limited amount of money
available rest on balancing value against cost and this involves first, determining the
Quantifiabte Amount of Savings by Filipino Drug Consumers (FDCs) if they buy the
Lagundi and Sambong products made by the HPPs in which as per computation, for
all the accumulated costs involved in operating the CVHPP alone in a year { P 10 M
more or less) , the FDCs derived a grand total accumulated modestly estimated
savings of P176.6 M in a year by not buying the pharmacologically equivalent
synthetic drugs made by the Multinational Companies (MNCs) and second, by using
Cost Benefit Analysis, in which the computed Cost to Benefit Ratio i 1:17,
interpreted as_ for every unit cost of operating the CVHPP, there are 17 units of
benefits derived by FOCs or stated in another way , the benefits in the form of
savings by FDCs is 17 times greater than the cost of operating the CVHPP. The same
is true for assessing the economic values of the other HPPs — what is true for CVHPP
is true for the other HPs.

THUS, THE VALUES OF THE HPPs LIE NOT ON THE PROFITS THAT THEY WILL MAKE
FOR PITAHC BUT ON THE QUANTIFIABLE AMOUNT OF SAVINGS BY. FILIPINO DRUG
CONSUMERS JF THEY BUY THE LAGUNDI AND SAMBONG PRODUCTS
MANUFACTURED BY THE HPPs RATHER THAN BUY THE PHARMACOLOGICALLY
EQUIVALENT SYNTHETIC DRUGS MANUFACTURED BY MULTINATIONAL COMPANIES
AND HERBAL DRUGS MADE BY PRIVATE COMPANIES . THIS IS THE SAME SITUATION
OF THE OOH OPERATING PRIMARY, SECONDARY AND TERTIARY GOVERNMENT
HOSPITALS IN WHICH THE HOSPITALS ARE EARNING INCOME BUT NOT FOR PROFIT
BUT RATHER FOR SERVICE BECAUSE OF A SOCIAL RESPONSIBILITY THAT THEY HAVE
TO FULFILL HENCE, THE SITUATION OF THE HPPs MUST BE TREATED IN THE SAME
WAY AS GOVERNMENT HOSPITALS — NOT AS PROFIT MAKING ASSETS OF THE
GOVERNMENT BUT MAINLY FOR SERVICE — TO PROVIDE INDIGENTS WITH FREE OR
GOVERNMENT SUBSIDIZED HERBAL DRUGS AND AS ONE OF THE MEANS FOR DOH
TO REDUCE ITS BILLIONS OF PESOS BUDGET ON MEDICINES.

FIFTH, when we consider the tangible value of CVHPP in contributing to the over-
all national economic development. The enormous quantifiable savings per year

can be chanelled by the poor indigent FDCs to buy other basic necessities like food;
clothing, shelter, education, etc.

‘SIXTH, wheniwe consider the over-riding goal of the CVHPP and other HPPs

which will justify their continued existence as a government owned asset managed
by a national agency {ike the DOH so that in this way, the CVHPP and other HPPs
will not be accused of “bleeding” the DOH budget in operating them again. The



riding goal
it - How? It is by attaining Break-Even. Without
raising its government subsidized price of P1.50 Per tablet, the CVHPP can attain
break even which means the income generated is equal to the cost of operating the
CVHPP,

‘SEVENTH, when we consider CVHPP and the other HPPs

Sut of World Bank Loans which we, taxpayers paid for so many years including the
interests and we will just let those with vested interests especially the private
company purchase these assets of the Fifipino people at a very cheap Divisoria price
through the Asset Privatization Scheme of the government.

EIGHTH, when we fact that for ten yea: up to the
35) the buijdings and equil of the CVHPP deteriora! were

2ppreciably improved by PITAHC. All that one sees at the CVHPP are still

considered improvements made by the DOH in the ‘80s and 90's.

(NINTH, wi consider a just in case the PP be
and privatized, the Regi ment Center Site will area



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5178

Introduced by Honorable Randolph $, Ting

ANACT
‘AMENDING SECTION 17 ARTICLE V OF RA 8423 OTHERWISE KNOWN AS THE TRADITIONAL AND
MEDICINE {TAMA) ACT OF 1997 CREATING THE PHILIPPINE INSTITUTE OF TRADITIONAL AND
AUTERNATIVE HEALTH CARE (PITAHC) THAT WILL CAUSE THE TRANSFER OF THE FOUR HERBAL
PROCESSING PLANTS OF THE COUNTRY FROM PITAHC, A GOCC TO THE DEPARTMENT OF HEALTH a
NATIONAL AGENCY AND APPROPRATING FUNDS THEREOF

Be it enacted by the Senate and the House of Representatives of the Congress of the Republic of
the Philippines in session assembled:

SECTION 1. Amendment of Sec, 17 Article V of RA B423

ORIGINAL TEXT OF SEC.17 ARTICLE V of RA 8423:

Sec.17 Transfer of Functions of the Traditional Medicine Unit and Other Retated Units.

Upon the establishment of the Institute, the functions, personnel and assets of
the Traditional Medicine Unit and all the pharmaceutical and herbal processing plants of
the Department of Health shall be transferred to the institute without need of
conveyance, transfer or assignment

“PROPOSED AMENDMENT OF SEC. 17 ART. V OF RA 8423

Proposed Text {Section 17) : Transfer of Functions of the Traditionat Medicine Unit and Other
Related Units.

Upon the establishment of the institute, the functions, personnel and assets of the
Traditional Medicine Unit of the Department of Health shall be transferred to the Institute
without need of conveyance, transfer or assignment
™ The function, personnel and assets of all the pharmaceutical and herbal processing

Plants of the Department of Health Regional Health Offices being coordinated by the
Traditional Medicine Unit previously transferred to the Institute, shall be reverted back
to the Department of Heaith under the administrative supervision of the Department of
Health Centers for Health Development.


SECTION 2. Implementation. The amount necessary for the transfer of the four Herbal
Processing Plants {HPPs) of the country to the Department of Health and the necessary
maintenance and improvements of the HPPs as manufacturing and research facilities under the
Department of Health shall be included in the Annual General Appropriations Act.

SECTION 3. _Effectivity. This act shall take effect fifteen (15) days after its publication in the
Official Gazette or in two (2) newspaper of general circulation.

RANDAPH S. TING
Repifsentative
Cagayan 3 | egislative District