Every year, Malaysia procures nearly RM4.5bil worth of drugs, medical equipment and services. Of that number, RM3.8bil is spent on drugs. Around 40% of this amount comes from Pharmaniaga’s position as sole concessionaire to supply items on the Health Ministry’s Approved Product Purchase List.
Reforms in the procurement mechanism of medical supplies have been hotly debated in the Malaysian press for the last several years, and issues of transparency, monopolistic behaviour, the presence of intermediaries, corruption and value-for-money continuously plague the Malaysia’s “peacetime” procurement processes.
During crises, such as the raging Covid-19 pandemic now, such issues are only magnified and must be assertively managed. This requires much greater transparency in the procurement process, the active removal of unnecessary intermediaries, and disruptions in the “business-as-usual” way of operations.
Procurement during crisis have added factors of speed and urgency, against a backdrop of extreme spikes in demand and low global supply.
Under these circumstances, Malaysia needs to implement an emergency procurement process that is more flexible and agile, to be accomplished within much shorter time frames and thus, enable a much more rapid response. We cannot have a second situation of shortages of masks and personal protective equipment, or other essential health and non-health supplies for our nation!
We suggest several ways to improve crisis procurement. Firstly, we strongly advocate for a conscious policy to reduce the number of middlemen involved in the procurement process. A significant finding in the 2018 Malaysian Competition Commission report was the use and presence of multiple agents in the procurement process.
These agents could be arguably necessary during “peacetime” but must be actively reduced during an emergency. Speed and value-for-money must be prioritised in a crisis, and any possibility of rent-seeking behaviour should be eliminated.Secondly, we recommend pooled procurement in which willing donors cooperate and combine funds. Malaysia is a small country in population terms, and a crowded landscape of multiple donor and funds means that singular purchasing power is much smaller compared to countries such as Indonesia, Brazil or the United States.
Pooling our resources increases purchasing power, reduces prices due to bulk purchases and reduces administrative cost and complexity. This requires Malaysian donors and funds to give up their personal egos for the national good.
Thirdly, we recommend more government-to-government interactions. This is not to deprioritise private sector and pooled funds procurement, but to augment it. It is possible that many countries will increasingly designate test kits or ventilators as “essential to national security” and reduce exports accordingly. G2G would be very useful to break these deadlocks, especially when the private sector and citizens cannot procure.
During crisis situations, we must carefully consider the balance between speed, transparency and value for money. Malaysia’s “peacetime” procurement is not functioning well, and its inefficiencies are only be magnified in times of emergency.
We urge the government to do more and do better during outbreaks. In a time of confusion and chaos such as this, we need procurement of critical medical supplies to be quicker, more efficient and more transparent to ensure that the rakyat get what they need.
Dr Khor Swee Kheng has a weekly column on The Star Online called Vital Signs. He recently founded the Malaysian Health Coalition. The views expressed here are entirely the writers own.
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