I welcome the Federal Cabinet’s decision to introduce a drug price regulations in order to address the increasing cost of medicine and to ensure access to medicine at appropriate prices for people, on top of encouraging innovation and healthy competition for industry growth. This is an important step in ensuring better access to affordable healthcare services for our all our people especially with our increasing aging community.
The 2019 Global Medical Trend Rates Report that was published by AON, an international professional services consulting firm, forecasted a net growth of 13.6 % of medicine inflation rate in Malaysia, which is almost 5.7 times of the median inflation rate in our country.
According to the Medicine Prices Monitoring 2017 report, the median mark-up for originators and lowest-priced generics retail price in private hospitals is about 51% and 167% respectively while in pharmacies, the numbers is lower, at about 22.4% and 94.7% respectively.
This shows that the mark-up range can be rather high, and in private hospital, it is estimated that it can hit up to 117.4% or even 900%. Due to lower cost of these generic drugs, it allows the private hospitals, clinics or even pharmacy to mark-up the final selling price and this may affect an increase of prices across the board.
This was an issue that I personally debated in the last parliament session especially on the government’s intention to introduce a price control mechanism on medical drugs or a ceiling price to keep the cost of healthcare at a reasonable and competitive level. While in principal I am supportive of the move to introduce a price control mechanism, but it is also important to understand the complexity of the issue and that such policy implementation will not cause any unintended consequential effects, especially to the smaller clinic and pharmacies.
That is why it is important that the government is transparent on the mechanism it intends to use especially in determining the ceiling price for these medications. The mechanism has to be transparent to make sure the ‘ceiling price’ properly reflects the changing economy on top of other factors such as the cost that goes into manufacturer, cost of registration, cost of bioequivalent studies for generic drugs, inflation, budget impact analysis from manufacturer, cost effectiveness analysis from the government per item, and also the GDP and income level of the people.
On top of that, transparency actually need to works both ways between the manufacturer and the regulators which is this case in the government. Besides a transparent price-control mechanism by the regulators, there has to be better accountability in terms how profits are derived by the manufacturers on the drugs produced so that a proper ceiling price can be established after considering all the different factors.
That is why I welcome the Health Ministry’s decision to seek further feedback and consultations with the pharmaceutical industry to discuss the price control mechanism. We must ensure the readiness of the industry, and whether all stakeholders have been engaged and their concerns have been properly listened to.
So the intentions by the Ministry is a good step forward, although a holistic understanding of the issue is also important so that the issue at hand can be properly addressed without unintended consequences.