The Health Minister said that there would be no more concessionaire for logistics and distribution services for medical supplies and an open tender system would be introduced instead.
Pharmaniaga has been the sole concessionaire providing these services and its concession will end on Nov 30.
However, to ensure that medical supplies and health services are not disrupted, Pharmaniaga's services will be extended until the Cabinet decides on the mechanism to manage the open tender.
"There will be no concessionaires anymore," he said after launching the SNOMED Expo 2019 on Thursday (Oct 31) here.
Dzulkefly said that it would be presenting the matter to the Cabinet for it to decide on the mechanism for open tender, which is hoped to be ready by the first quarter of next year.
In August, former Pharmaceutical Services Programme senior director Dr Salmah Bahri expressed concern that the government delay in making a decision on the logistics and distribution concession for drugs and medical supplies could lead to a drug shortage in public hospitals and clinics.
In a letter to The Star, she said that any untimely decision on the concession may disrupt the supply chain service and adversely affect the patients directly and the rakyat as a whole.
The existence of a concession company was the result of the privatisation initiative undertaken by Tun Dr Mahathir Mohamad in 1994. The privatisation involved the concessionaire taking over all the assets and manpower of the Government Medical Stores then under the Health Ministry, said Dr Salmah.
At that time, there were a lot of problems because the terms and conditions of the concession were quite loose and did not require enforcement of key performance indicators (KPIs) or impose penalties for non-compliance.
Since 2009, the Health Ministry has placed very strict new terms and KPIs, resulting in substantial improvements.
For example, Pharmaniaga successfully reduced the delivery period of pharmaceutical supplies from 60 working days to within seven working days in Peninsular Malaysia and 10 working days for Sabah and Sarawak.
The KPIs also required Pharmaniaga to provide door-to-door service delivery even to the remotest areas in the country.
It was also required to develop pharmaceutical manufacturers and other companies within the ecosystem under the Vendor Development Programme (VDP), through which vendors are able to increase their economy, job opportunities, development of employees, R&D capabilities, technology transfer and other downstream effects.
Pharmaniaga, in collaboration with the Health Ministry, was also tasked to develop, implement and maintain the Pharmacy Information System (PhIS), a homegrown system for all government hospitals and health facilities. Completed in 2016, the system reduces wastage through optimal inventory management, lowers the risk of products being expired and minimises medication errors.