Towards a drug distributor price reference index: A 2023 survey of pricing discrepancies for region 02 medicines procured from NCR and local distributors, Philippines

Study design

This study utilized a cross-sectional survey design to assess distributor-level pricing of commonly procured essential and nonessential medicines intended for Region 02 public health facilities. The survey was conducted from June to December 2023, using 2022 commonly procured medicines collected from 18 public health facilities in Region 02.

Study population/setting

Phase 1: (determination of commonly procured medicines) was conducted in various healthcare facilities within Region 02, including DOH-retained hospitals (4), Local Government Unit (LGU) provincial hospitals (5), Center for Health Development—Cagayan Valley (1), Municipal Rural Health Unit (5), and CHO (4). These 18 facilities were deliberately chosen to ensure that the list of commonly procured medicines reflected procurement trends across the full spectrum of public health service levels in the region. Phase 2 (price inquiry) was conducted in both Region 02 and the NCR.

Phase 2: (recording availability and prices of commonly procured medicines) employed a systematic random sampling design targeting 50 drug distributors located in Region 02 and NCR. This sample size was guided by the principle of saturation, where further sampling was unlikely to yield significantly new pricing trends, based on pilot testing and prior knowledge of active supplier networks. Distributors that are included are those Food and Drug Administration (FDA)-registered as of 2023, were actively operating at the time of the survey, and carried at least one item from the 2022 commonly procured medicines list. Distributors not operational at the time of the survey or choosing not to participate were excluded from the study.

Study procedures

Ethical clearance was obtained from the Region 2 Trauma Medical Centre, and the study protocol was endorsed by the Cagayan Valley Health Research and Development Consortium Technical Review Board before starting the study (Ethical approval No: R2TMC-IRB/2023:016, Date: March 31, 2023).

Interviews or meetings were conducted with various healthcare facilities within Region 02 to gather necessary procurement information. Data on commonly procured medicines were collected online and through on-site visits at public health facilities (Phase 1). Information regarding the procurement price and method was recorded and merged using Microsoft Excel.

For Phase 2, enumerators underwent a two-day training program, which covered orientation on the WHO/HAI-based data collection (attached under Data Accessibility), standardized definitions, mock interviews, and ethical protocols for handling price-sensitive information. Emphasis was placed on verifying price data using physical documentation such as invoices, price catalogs, and delivery receipts, where available. Random back-checks, spot audits, and daily validation of completed survey forms were done to ensure data quality.

Data analysis plan

Unit prices in Philippine pesos (PHP) obtained from Phase 1 were entered into Microsoft Excel. The lowest unit prices of surveyed medicines were compared with the lowest price of the DPRI released as of August 2023. In addition to the p-values generated through the t test, the analysis computed the mean difference between the lowest DDPRI price and the lowest DPRI price for each of the top 15 medicines. The magnitude and direction of the price difference were assessed using 95% confidence intervals (CIs) for the mean difference. Effect sizes were also computed using Cohen’s d, providing insight into the practical significance of the price variations.

Procurement process of public health facilities in region 02

The procurement process in the Philippines, including for health entities such as the Center for Health Development (CVCHD), Department of Health (DOH)-retained hospitals, LGU Provincial hospitals, municipal rural health units, and city health offices, shown in Table 1, is governed by several policies and laws. The primary law is Republic Act No. 9184, which provides for the modernization, standardization, and regulation of government procurement activities. The procurement processes of these public facilities share similarities, such as the use of the Philippine National Formulary for drug selection, the DPRI for pricing, and the Philippine Government Electronic Procurement System (PHILGEPS) system for procurement. However, there are also differences, like distinct roles for different people and groups in the process, the particular ways of handling bids and granting contracts, and how often the procurement happens.

Table 1. Characteristics of public health facility and procurement process.

These buying processes are potential sources of nontransparency because the public cannot access information about the procurement process, there is not enough competition in bidding, and there might be favoritism in giving out contracts [5,6]. Areas that might need better governance include how bids are checked and picked, how buying records are managed, and how buying laws are followed. Making sure there is transparency and good governance in these areas can help make the buying process fair and competitive, and give good value for money.

Commonly procured medicines in Region 02

The main goal of this study was to look at how drug distributors set their prices, but it also included gathering information on the most bought medicines from a random sample of public health centers. We collected data on 591 commonly procured medicines of Region 02 from Phase 1 of the study to create the DDPRI.

The list in Table 2 of commonly bought medicines in Region 02 shows a wide range of drugs that are typically used in various healthcare settings. These are available in many forms, such as tablets, capsules, liquid forms to drink, injections, eye and ear drops, creams, and more.

Table 2. List of commonly procured medicines in Region 02.

This list gives us an idea about common health issues in the area, as the demand for certain drugs often shows what diseases or health problems are frequent. This information can help guide public health plans and efforts to focus on the biggest health issues effectively [7,8]. It can also be used to improve how medicines are bought, making sure key medicines are always in stock. Efficient procurement processes are crucial to keep a steady supply of medicines in hospitals and other healthcare places, affecting how responsibly medicines are used, patient safety, and overall health results [9,10]. Furthermore, the list can help in financial planning and budget setting. Since a large part of health budgets in low and middle-income countries is spent on medicines, smart buying can lead to saving money and better use of resources [11].

Determining the commonly procured medicines in Region 02 can aid in the transparency and governance of procurement. This provides important data that can help manage various public health tasks, from controlling diseases to setting buying practices and planning budgets. This information can also help identify potential sources of nontransparency and areas that may need more governance, such as the evaluation and selection of bids, the management of procurement records, and the enforcement of procurement laws and regulations.

Comparison of the prices between DDPRI and DPRI

The pricing landscape of the top 15 medicines listed by DOH Region 2 in Table 3 revealed that six (40%) displayed lower prices from the 50 surveyed drug distributors compared to the lowest DPRI price. Independent sample t tests revealed that five of these six differences were not statistically significant at the 5% level (p > 0.05). Only Gliclazide 30 mg tablet exhibited a statistically significant lower price (p < 0.0001) and showed a very large negative effect size (d = −2.900), reflecting a substantial and meaningful price difference in favor of the DDPRI. Simvastatin 20 mg (d = −0.344) and Amlodipine 5 mg (d = −0.176) presented small to moderate effect sizes, suggesting mild but potentially actionable savings. Biphasic Isophane Human Insulin 70/30 showed an extremely large positive effect size (d = 748), indicating a disparity where the DDPRI price was significantly higher than the DPRI. These results affirm that while statistical tests showed mostly nonsignificant differences, the effect sizes suggest meaningful price variation that could impact procurement decisions. This supports the use of DDPRI as a tool for contextualized pricing benchmarks.

Table 3. Comparison of the lowest drug distributor price and lowest DPRI price of the top 15 medicines in Region 02.

*Lower than DPRI price.

**p < 0.05 with large effect size.

Price data were collected in PHP, standardized to 2022 values, and no inflation adjustment was applied as the comparison was against a contemporaneous benchmark (DPRI 2023 referencing 2022 prices). The results of these findings are important for those who are engaged in healthcare pricing and procurement strategies. Although the reported decreases in DDPRI pricing can seem encouraging for cost-cutting measures, it is important to take into account the statistical insignificance of most differences. To support better-informed decision-making processes, greater research into the variables causing pricing differences between DDPRI and DPRI is necessary.

The discovery of six medicines with prices lower than the lowest DPRI price suggests that certain drug distributors can provide essential medications at more cost-effective rates, potentially enhancing accessibility for patients in need. However, these lower prices come from stores not listed on the PhilGEPS, which means their prices are not tracked by the Electronic Drug Price Monitoring System. Also, not having a clear view of how prices are set can make it difficult to challenge high drug costs [12].

On the other hand, nine medicines fall within the price range set by the DPRI, but they are not cheaper than the lowest price in this range. This means that while these drugs are priced as expected, they may not be more affordable than others. Drugs that are priced within the DPRI range but not below it also bring up questions regarding the pricing tactics used. Things like the cost to operate, market pressures, or desired profit margins might play a role in how these prices are set. In the Philippines, drug manufacturers often say drug prices are high due to spending a lot on marketing and getting the drugs to market. These expenses, along with wanting high profit margins, make the final drug prices high [13,14].

Also, there are three medicines, specifically human insulin (Biphasic Isophane 70/30) and two anti-TB kits (Category 1 and Continuation phase) are hard to come by in the drug distributors we checked. This lack of availability is worrying as it affects treatments for serious health problems like diabetes and tuberculosis, urging a need to look into where and why these shortages happen. The trouble in getting human insulin and anti Tuberculosis (TB) kits shows possible problems in the distribution chain that supplies these important drugs. Further study is needed to find out why these drugs are hard to get and to work on solutions. Future studies should incorporate interviews with drug distributors, cold-chain suppliers, and procurement officers. Mapping the supply chain for critical medicines, especially those with specific storage requirements, will help identify logistical constrictions and guide targeted interventions.

Our study sheds light on the different pricing tactics drug sellers use. This information is key for those in charge of policy and regulations to check how well current rules are working and how they affect the market. While some sellers offer better prices that can make the market more efficient and drugs more affordable, the presence of drugs priced within, but not below, the lowest DPRI price shows the limits of current regulations. The unorganized nature of the Philippine health system, along with supply issues, leads to varied drug prices. Often, the private and public sectors do not work together, causing differences in drug prices and avails. Also, a weak system for managing these supplies can result in some areas having shortages and higher prices [15,16].

Insights into price variation

Prices were primarily self-reported by drug distributors using a structured data collection tool modeled after the WHO/HAI template. Where available, these prices were validated through supporting documents such as invoices or official price catalogs. While self-reporting carries inherent limitations, it reflects the prevailing market conditions at the time of data collection.

Several factors may account for the observed price variations. Geographic proximity plays a role since distributors based in Region 02 may benefit from reduced transportation and logistics costs compared to those in the NCR, particularly when the procuring facilities are also located in Region 02. Supplier characteristics, including brand reputation, volume capacity, and economies of scale, can also influence pricing. For medicines requiring specialized handling, such as insulin, cold-chain logistics may introduce additional cost burdens. Moreover, in the Philippine pharmaceutical sector, substantial marketing expenses and aggressive profit strategies have been identified as major contributors to elevated drug prices [17,18].

The unavailability of life-saving medicines, human insulin, and anti-TB kits, points to deeper systemic issues within the supply chain. Potential causes include production shortfalls, logistical bottlenecks, or the absence of key distributors in government procurement processes. These findings highlight the importance of continuous monitoring and responsive policy interventions to ensure equitable access to essential medicines.

Policy implications

The identification of drug distributor prices that fall below the national DPRI highlights the potential value of establishing a DDPRI tailored to regional procurement contexts. A DDPRI could serve as a strategic tool to support local cost-saving initiatives, enhance transparency in pricing decisions, and provide an evidence base for future updates of the national DPRI. Integrating such a regional index into the broader pharmaceutical procurement framework may help address the limitations of centralized pricing oversight, particularly in decentralized and underserved regions such as Region 02.

Moreover, the fragmented nature of procurement across public and private sector channels contributes to disparities in both medicine prices and availability. This lack of coordination, combined with uneven enforcement of pricing regulations, fosters inefficiencies that disproportionately affect marginalized populations. Prior research underscores how the Philippine health system’s segmentation exacerbates these challenges, limiting the effectiveness of government price control mechanisms and perpetuating inequitable access to essential medicines [17,18].

Limitations

While the study offers valuable insights into regional pricing patterns, several limitations must be acknowledged. First, the moderate sample size of 50 FDA-registered distributors may not fully capture the diversity of pricing practices across the broader national pharmaceutical supply chain. Additionally, although the analysis utilized 2022 price data and compared it with contemporaneous DPRI figures, no inflation adjustment was applied. This was considered acceptable given the temporal alignment of the datasets, but it may limit comparability over longer periods.

Another limitation is the reliance on self-reported pricing data collected through standardized forms. While these figures were verified where possible using catalogs and invoices, the possibility of recall bias or selective reporting remains. The study also did not account for qualitative procurement factors such as product quality, delivery timelines, or supplier responsiveness, elements that often influence procurement decisions. Moreover, detailed data on sales volumes and transaction quantities were not available, restricting the analysis of affordability, mark-up structures, and economies of scale.

Future research would benefit from tracking multiyear procurement data, incorporating supply chain logistics assessments, and benchmarking local prices against international standards. These enhancements could support a more comprehensive evidence base for shaping pharmaceutical pricing policies and procurement reforms.