Gov't must not encourage oligopolies in supply of medicines

LETTER | We refer to the Malaysiakini report Medicine price control proposal to be tabled soon, says Dzulkefly.

It is questionable if the ceiling price for pharmaceuticals will really lead to cheaper medicines. On the contrary, it can push healthcare providers to use the ceiling price for a product they could have sold cheaper.

Furthermore, simplistic price controls as suggested by the Health Ministry will also have unintended consequences on other stages of the supply chain especially on small clinics and pharmacies which are the lifeline of accessible and affordable primary medical care. It will ultimately benefit the big boys and result in monopolistic or oligopolistic supply chains in the private sector which in the long run is detrimental to the patient’s choice and access. The rakyat is already bearing the burden of this in the public sector.

It must be remembered that the government gets its medications at a much lower price than the private sector. In essence, it means that the private sector is subsidising for the cost of medicines supplied to the public sector. Thus for any medication, merely using the government base price (reference price be it national or international) and adding a maximum of 30 percent margin for retail is too simplistic and unrealistic.

The government base price for any single unit of medicine given to the patient does not take into account the many other cost like wages of staff, cost of maintaining the facilities, storage cost, dispensing cost etc. In the private sector, all these cost items do add up to the final retail cost of the medication. This is the logical explanation of why the cost of medicines in the private sector is generally higher than in the public sector as shown by a UKM study.

For ceiling pricing to be meaningful for both private and public sectors, the price for supply of any particular medication and the cost of its final dispensing to the patient must be the same for both sectors. This means that there should be no more subsidy for the cost in the public sector. All relevant activities cost must be added to the final cost of the medicine when given to the patient. In the end, the actual cost of the medication provided by the government will then be significantly higher.

The question, is the government willing to pay for the same medication at the same price as the private sector?

We are clearly not comparing an apple with an apple. Lots more research on long-term impact assessment and consultation with all stakeholders will be needed. We wonder how did the health minister end up making an important policy statement on this matter without consulting all the stakeholders.

What was the advice of the National Health Council?

This issue was already discussed and unanimously agreed at the “Reference Pricing and Reimbursement Workshop of the Dasar Ubat National (Dunas) in November 2013.

The agreed position was that the reference pricing should be for the public sector only and that private sector pricing should be left to market forces. The government may choose to set guidelines but the market must be allowed to function as a free market.

If the government’s aim is to make healthcare more affordable, accessible and to foster competitive prices and innovation, it can start with getting private hospitals to display a price list of their standard procedures and medications so that patients can compare and make informed choices. This should be easy enough given that major private hospitals which are already owned by government-linked corporations (GLCs).

Baseline cost in private medical care is not just due to medicine prices, but a whole list of other items which need to be paid for. Patients in the public hospitals get all these for minimal cost, if not free because they are subsidised by the taxpayers.

The writer is president of the Federation of Private Medical Practitioners Association Malaysia.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.