Legal basis and linkage to RA 7581
- Republic Act No. 7581 authorizes State protection for consumers by stabilizing prices of basic necessities and prime commodities during emergency situations and by prescribing measures against undue price increases.
- Republic Act No. 7581 provides that, during a state of declared disaster or calamity, prices of basic necessities are placed under Automatic Price Control and frozen at the prevailing price level unless the President proclaims otherwise.
- Republic Act No. 7581 limits the price freeze duration to not more than sixty (60) days, unless sooner lifted by the President.
- Republic Act No. 7581 allows the President to impose a Mandated Price Ceiling upon the recommendation of the implementing agency or the Price Coordinating Council.
- DOH Administrative Order No. 2014-0001 treats the DOH as the implementing agency for essential medicines during emergencies and disasters.
Policy, purpose, and coverage targets
- The policy is to ensure availability of basic necessities and prime commodities at all times.
- The DOH must monitor and regulate prices of essential medicines and protect consumers from profiteering, hoarding, cartels, and like practices that compromise access to essential medicines.
- The order provides implementation guidance for consumers, hospitals, private and public drug outlets, other healthcare facilities, and other government entities regarding ethical medicine prices during national calamities and emergencies.
- The order is aimed at guiding consumers and government procuring entities to source medicines during emergencies.
- The order is aimed at ensuring affordability of essential medicines to national and local government agencies and public health facilities providing medical aid to calamity-stricken areas.
Definitions established for implementation
- Basic Necessities include: rice; corn; bread; fresh dried and canned fish and other marine products; fresh pork, beef, and poultry meat; fresh eggs; fresh and processed milk; fresh vegetables; root crops; coffee; sugar; cooking oil; salt; laundry soap; detergents; firewood; charcoal; candles; and drugs classified as essential by the Department of Health.
- Disaster means any emergency resulting to serious disruption of the functioning of a community or society involving widespread human, material, economic or environmental losses and impacts that exceeds the ability of the affected community or society to cope using its own resources.
- Drug Price Reference Index (DPRI) is the ceiling price for government bidding and procurement set by the DOH for all government agencies based on prevailing tender prices of essential medicines in government hospitals.
- Emergency means any actual threat to public safety, or an exceptional event of any magnitude producing damage and injury demanding immediate action.
- Prevailing Price means the average price at which any basic necessity has been sold in a given area within a month from occurrence of any of the conditions enumerated under Section 6 of Republic Act No. 7581.
- Price Ceiling means the maximum price at which any basic necessity or prime commodity may be sold to the general public.
- Price Coordinating Council is the authorized body composed of identified government agencies headed by the Department of Trade and Industry under Section 11 of Republic Act No. 7581, with functions under Section 12 of the Price Act.
- Prime Commodities include: fresh fruits; flour; dried, processed and canned pork; beef and poultry meat; dairy products not falling under basic necessities; noodles; onions; garlic; vinegar; patis; soy sauce; toilet soap; fertilizer; pesticides; herbicides; poultry; swine and cattle feeds; veterinary products for poultry; swine and cattle; paper; school supplies; nipa shingles; sawali; cement clinker; GI sheets; hollow blocks; plywood; plyboard; construction nails; batteries; electrical supplies; light bulbs; steel wire; and all drugs not classified as essential drugs by the Department of Health.
- Price Freeze means the situation in which prices or the price of a particular product are fixed at the prevailing level and no increase is allowed.
When and where price freeze applies
- All public and private drug retail outlets, including hospital pharmacies, nationwide must implement the price freeze or the maximum ceiling price set by the DOH for essential medicines during emergency upon declaration of a state of calamity by the President.
- Regulatory mechanisms to stabilize drug prices may be implemented nationally or in calamity-stricken areas, depending on the scale and severity of the disaster.
- The DOH consolidates and evaluates submitted prevailing market prices to determine a maximum price ceiling as deemed necessary.
Market submission, monitoring, and dissemination
- All public and private drug retail outlets must submit their prevailing market prices to the DOH for purposes of monitoring and setting reference prices of essential medicines.
- The DOH must develop a monitoring tool to facilitate implementation of the regulatory tool under law to stabilize drug prices.
- The DOH, in coordination with the Department of Trade and Industry (DTI) and other concerned government agencies, must monitor the prices of medicines throughout the duration of the state of calamity.
- The DOH must disseminate or publish the price lists of medicines during emergency through print, radio, TV, or web-based posting.
- The DOH must consolidate and evaluate prevailing market prices from different drug outlets and determine a maximum price ceiling.
Government procurement ceiling rules
- Government entities procuring essential medicines during emergency must not exceed the Drug Price Reference Index (DPRI) set by the DOH.
- During emergencies, government entities must follow the DPRI as the ceiling for all modes of procurement, including public bidding, direct contracting, negotiated procurement, and shopping.
Sanctions for non-compliance
- Non-compliance with this guideline results in sanctions and penalties stated in Section 16 of Republic Act No. 7581.