Legal basis and referenced statutes
- The Order implements Republic Act No. 9994, known as “The Expanded Senior Citizens Act of 2010,” specifically supporting Section 4(1) on the twenty percent (20%) Senior Citizens discount on medicines, medical equipment and other health-related provisions.
- The Order also implements mechanisms consistent with the Implementing Rules and Regulations of Republic Act No. 9994.
- The Order is issued with reference to Republic Act No. 9257.
- The Order identifies its penalty framework as tied to Section 7 of Republic Act No. 9994, which amended Section 10 of Republic Act No. 9257.
- The Order’s VAT rules and compliance context are tied to implementing guidance under Republic Act No. 9711 and the Implementing Rules and Regulations of Republic Act No. 9994.
Policy rationale and objectives
- The Order is issued to uphold the rights of the elderly consistent with the 1987 Philippine Constitution.
- The Order establishes guidelines and mechanisms for compulsory rebates in the sharing of the burden of the Senior Citizens discount among retailers, manufacturers, and distributors.
- The Order requires a just and transparent system that preserves the economic viability of companies and drug retail outlets.
- The Order aims to establish procedures and a formula for discount sharing based on participants’ respective margins.
- The Order creates a system of monitoring compliance of drug companies, distributors, and retailers with the 20% discount.
Covered persons, facilities, and products
- The Order applies to all private and government hospitals, health related facilities, and health care professionals.
- The Order applies to the Philippine Health Insurance Corporation (PhilHealth).
- The Order applies to all related health-care establishments, including pharmacies and other retail outlets dispensing medicines.
- The Order covers sales made to all Senior Citizens.
- The discount includes medicines and is implemented alongside coverage of related health-related benefits under the 20% Senior Citizens discount framework in Republic Act No. 9994.
Key definitions for compliance
- A Senior Citizen or Elderly refers to any Filipino citizen who is a resident of the Philippines, sixty (60) years old or above, and may apply to senior citizens with “dual citizenship” if they prove Filipino citizenship and have been residents for at least six (6) months in the Philippines.
- An Indigent Senior Citizen is a senior citizen who is frail, sickly, or with disability and without pension or regular source of income, compensation or financial assistance from relatives to support basic needs, as determined by DSWD in consultation with the National Coordinating and Monitoring Board (NCMB).
- Medicines cover chemical compounds or biological substances (other than food) intended for treatment, prevention, or diagnosis, including enumerated articles recognized in official pharmacopoeias and formulated categories of herbal and/or traditional drugs under specified criteria.
- Medical Devices are instruments, apparatus, implement, machine, appliance, implant, in-vitro reagent or calibrator, software, material, or related article intended for specified purposes including diagnosis, prevention, monitoring, treatment, supporting life, preventing infection, disinfection, conception control, and in-vitro diagnostic information.
- Medical Services cover public and private hospital services, professional services of physicians and other health care professionals, and diagnostic and laboratory tests requested by a physician for diagnosis and/or treatment.
- Dental Services cover specified oral examinations, treatments, restoration/replacement/repositioning of teeth, and alterations of alveolar/periodontium processes necessary for diagnosis and/or treatment.
- A Diagnostic and Laboratory Test includes diagnostic examinations necessary for diagnosis and/or treatment, including X-ray, CT scans, ECG, 2D echo, and specified lab/serology and pathology categories.
- A Distributor / Wholesaler is an establishment that procures raw materials, active ingredients and/or finished products for local distribution on wholesale basis.
- A Manufacturer is an establishment engaged in operations involved in production of health products, including preparation, processing, compounding, formulating, filling, packing, repacking, altering, ornamenting, finishing, and labeling for storage, sale, or distribution, excluding compounding and filling of prescriptions in drugstores and hospital pharmacies.
- A Retailer is a licensed establishment carrying on retail business of sale of drugs and medicines to customers.
- A Wholesaler-Retailer is an establishment that transacts either wholesale or retail at a given time.
- Non-Traditional Outlets include supermarkets, convenience stores, and other retail establishments duly licensed by the FDA to sell non-prescription/over-the-counter medicines to the public.
20% discount, VAT exemption, and calculation
- A 20% discount and exemption from Value Added Tax (VAT) are granted to Senior Citizens subject to the Order’s rules.
- The 20% discount is computed by first deducting VAT from the Retail Price to obtain the Net Retail Price, then deducting 20% from the Net Retail Price to obtain the Senior Citizens’ Price.
- The VAT deduction method treats the Retail Price inclusive of VAT as Retail Price (inc. of VAT) and deducts VAT using (P100/1.12) for the illustration, reflecting the VAT component in the computation.
- The 20% discount is non-transferable and applies exclusively to drugs and medicines for Senior Citizens.
- Drugs in formulation, such as pediatric formulations medically prescribed for use of Senior Citizens, are granted a 20% discount.
- The Order provides for government to give free seasonal flu and pneumococcal vaccines to indigent Senior Citizens through additional appropriation under the General Appropriations Act on top of the DOH regular budget or through a preventive benefit package of PhilHealth.
Double-discount limits and priority rules
- Double discounts are not allowed for medicines subject to the Senior Citizens discount.
- Senior Citizens must choose either promotional campaigns and other forms of discounts on certain medicines or the Senior Citizens discount, with only the Senior Citizens discount exempt from VAT.
- Where Senior Citizens are also Persons with Disability (PWD), the Senior Citizen may opt to use either the Senior Citizens discount or the PWD discount, with only the Senior Citizens discount exempt from VAT.
Documentary requirements for availing discount
- Hospitals and drug retail outlets must require Senior Citizens (or their representative) to present an identification card (ID) issued by the city or municipal mayor or OSCA or Barangay captain where the Senior Citizen resides, and that ID must be recognized nationwide.
- Except for over-the-counter (OTC) drugs, the establishment must require a doctor’s prescription.
- A prescription must contain: name, age, sex, and address of the Senior Citizen; date; generic name of the medicine; dosage form, dosage strength, quantity; name and signature; address of the prescribing physician; professional license number; and narcotic license or S2 number, if applicable.
- For OTC medicines, establishments must use purchase slip booklets to record the kind of OTC medicine purchased, how many, when, and where purchased.
- Purchase slip booklets support monitoring of the last purchase made for a certain medicine.
Retailer and facility dispensing duties
- Any single dispensing must comply with the prescription issued by a physician and must not cover more than one (1) month supply of medicines for the Senior Citizens.
- For partial filling, pharmacists must indicate the quantity partially filled in the purchase slip booklet and the unfilled balance on the prescription.
- Senior Citizens must retain the partially filled prescription and present it later to complete the prescribed quantity.
- Drugstores may limit OTC dispensing to a supply of one (1) day, but not exceeding a maximum of seven (7) days supply.
- During operating hours, licensed establishments are strictly prohibited from scheduling or limiting the time for availment of the Senior Citizens discount.
- Official receipts must be issued for every transaction and must contain the Retail Price and the Senior Citizens Discount Price.
- Drugstores must provide a priority lane for elderly and display a generic menu card.
- Drug retail stores and health facilities must post the Order in conspicuous places accessible to Senior Citizens to inform them of the 20% discount on medicines.
PhilHealth reimbursement limitations
- Only medicines included in the Philippine National Drug Formulary (PNDF) are reimbursed by PhilHealth.
- If the Senior Citizen is a PhilHealth member or dependent, the VAT exemption and the 20% discount are not charged to Senior Citizens’ PhilHealth benefits coverage.
- In that PhilHealth scenario, only 80% of the fees or charges that the Senior Citizen is expected to shoulder may be charged to the Senior Citizen.
Exemptions, specific government arrangements
- All government projects/programs that sell medicines to Senior Citizens and already offer substantial discount to consumers or are partially subsidized by the government are exempted from the Senior Citizens discount.
- Examples of such exempt arrangements include Botika ng Barangay, P100.
Complaints and enforcement channel
- Complaints on non-compliance with the 20% discount on medicines must be lodged with the respective LGU OSCA Office where the purchase was made or where the Senior Citizen resides, whichever is convenient to the latter.
- All establishments are enjoined to comply with the Order’s guidelines.
- Non-compliance triggers penalties and sanctions under the penalty clause referenced in the Order.
Burden sharing and compulsory rebates
- Retailers, manufacturers/distributors, wholesalers-retailers, and wholesalers may apply terms and conditions for sharing the burden of the Senior Citizens discount, including rebate mechanisms, but these undertaking(s) must be formalized and furnished to the DOH through the National Center for Disease Prevention and Control (NCDPC) and the National Center for Pharmaceutical Access and Management (NCPAM).
- The sharing rules must consider participants’ respective margins and follow Annex A mechanics.
- Retailer share (tax deduction): 30% of the 20% Senior Citizens discount is the share of the Retailers and can be claimed as a tax deduction.
- Retailer no rebates threshold: If the retailer is granted a sales discount of sixteen percent (16) or more for a specific product by the manufacturer/distributor, wholesalers-retailers, and wholesalers, no rebates are due to the retailer; this is construed as the share of the manufacturer/distributor, wholesalers-retailers, and wholesalers.
- Retailer rebate-sharing for under-16%: If the retailer is granted a sales discount of less than sixteen percent (16) for a specific product, the manufacturer/distributor, wholesalers-retailers, and wholesalers share the entire 70% of the 20% payable to retailers.
- Manufacturer/distributor vs wholesaler/wholesaler-retailer rules:
- If the wholesaler or wholesaler-retailer passes a discount of 16% or more to a retailer, no rebates are due to the retailer.
- If a manufacturer/distributor gives a discount of 16% or more to a wholesaler or wholesaler-retailer, but the wholesaler or wholesaler-retailer gives a discount of less than 16% to a retailer, the wholesaler or wholesaler-retailer must rebate the whole 70% of the Senior Citizens discount to the retailer.
- If a manufacturer/distributor gives a discount of less than 16% to a wholesaler or wholesaler-retailer, the manufacturer/distributor must burden 70% of the 70% of the Senior Citizens discount, while the wholesaler-retailer additionally burdens 30% of the 70% of the Senior Citizens discount (in addition to the 30% share described for retailers under the earlier rule).
- Rebate claimers (manufacturers, distributors, wholesalers, and wholesalers-retailers) may require documentary evidence of actual discounts granted to Senior Citizens, such as audited financial statements, official receipts and records, and BIR submissions, as a condition for claiming rebates.
- Rebates may be claimed either in the form of money or medicines.
Sanctions, separability, and revocations
- Non-compliance with the guidelines and mechanisms results in sanctions and penalties stated in Section 7 of Republic Act No. 9994, which amends Section 10 of Republic Act No. 9257.
- If any part, term, or provision of the Order is declared invalid or unenforceable, the remaining portions remain valid and the invalid part is treated as if the Order did not contain it.
- All administrative issuance, bureau circulars, and memoranda inconsistent with this Order are withdrawn, repealed, and/or revoked accordingly.