OBJECTIVES: This study determined the factors associated with the variation in drug pricing among national public hospitals by looking at key indicators in the drug management cycle and compliance to the WHO Operational Principles on Good Pharmaceutical Procurement (GPP).

METHODS: A mixed-methods, case-control study was done in 57 national public hospitals all over the Philippines. Using a data abstraction tool, the Median Price Ratio (MPR) was computed for each hospital using the mean annual procurement prices of a basket of 26 essential drugs compared to their reference prices listed in the Philippine Drug Price Reference Index (DPRI). Cases (MPR>1) and controls (MPR≤1) were then compared vis-à-vis performance indicators in the selection, procurement and distribution of drugs as well as compliance to the WHO GPP Principles. Key informant interviews were also conducted to map out the drug management cycle in national public hospitals and to determine issues and challenges in the implementation of the DPRI.

RESULTS: Factors significantly associated with higher drug prices (MPR>1) include lack of proper procurement planning, propensity towards alternative modes of procurement (over public bidding or competitive tender), and location in a Geographically Isolated and Disadvantaged Area (GIDA). Higher retail price mark-ups of drugs were associated with a lower level of hospital operations, preference for branded over generic drugs, limitations in storage and uncoordinated distribution of drugs.

CONCLUSIONS: Issues towards a ‘restrictive’ DPRI, compounded by inefficiencies in the selection, procurement and distribution of drugs, drive national public hospitals toward alternative modes of procurement (e.g. shopping, consignment), consequently preventing them from maximizing the benefits of volume purchasing through competitive tender. Reforms on existing policies on drug procurement, on drug price referencing, and on the use of generics must be complemented by multi-stakeholder action and public-private partnerships to effectively improve the public’s access to essential medicines.