Fair and transparent medicine pricing for patients in Malaysia

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MEDICINE is essential for the sick or injured, and can be a matter of life and death. It is not an ordinary commodity but a necessity for survival or recovery. However, access to life-saving medicines can face the barrier of affordability because, unfortunately, medicine pricing in Malaysia is currently totally unregulated.

A 2019 study by Universiti Malaya revealed that 72% of cancer patients experienced financial catastrophe during the first year of treatment in private hospitals, while one-third of households became impoverished. Cancer medicines are very well known to have exorbitant price tags, and mark-ups by private hospitals on originator drugs (median = 51%) and generic drugs (median = 166.9%) are also well-studied. Affordable medicines are challenging if we leave it entirely to the market.

In April 2019, the Cabinet of the government of the day in Malaysia approved the Medicines Price Mechanism policy proposal presented by the Health Ministry in collaboration with the Domestic Trade and Consumer Affairs Ministry. Under the first phase of the policy implementation, the government will impose an upper limit of mark-ups at the wholesale and retail levels in a regressive manner (ie, higher priced items will have a smaller mark-up upper limit), for about 600 single-sourced prescription medicines. But almost three years later, the policy has still not been implemented.

Recently, I was shocked to discover that the International Trade and Industry Ministry conducted a cost-benefit assessment (CBA) on the impact the medicines pricing policy could have on the private healthcare sector.

On Nov 29, 2021, the preliminary findings of the study were uploaded to the UPC (unified public consultation) website of the Malaysian Productivity Corporation. The presentation of the findings was conducted via Zoom on Dec 1, with participants restricted to typing questions in the Q&A box without being able to see each other’s questions or find out who was present at the meeting. This "public" consultation lasted about one hour, with many questions left unanswered or not adequately addressed. Some participants resorted to the Zoom chat box to share their comments.

One of the most pertinent questions was the identities of the “third party independent consultant” and the funder(s) behind the study. These were not revealed during the meeting or in the document despite the question being repeatedly asked by a number of participants.

What I found most troubling is the direct involvement of major private sector players in the steering committee and technical committee for this CBA study, including associations comprising multinational pharmaceutical companies and private hospitals and even the Pharmaceutical Research & Manufacturers of America. All these entities have a direct interest in stopping or reversing the new pricing policy. Isn’t this a conflict of interest?

Not surprisingly, eventually the CBA’s preliminary findings indicated big negative impacts to the Malaysian economy, especially to the private sector. However, the preliminary findings are just numbers presented without showing the supporting data and calculation processes. In my opinion, the methodology of the study is also sketchy in its details. The interview questionnaire used by the consultant is not known. Among the “expert interviews” groups, no one represented consumer interest; and in response to which patient advocacy groups were interviewed, the answer was patients under patient-assisted programmes sponsored by pharmaceutical companies (ie, patients who already have access to the medicines concerned at some reduced cost).

What is of concern is that I believe the CBA might have misrepresented the Health Ministry’s original proposed mechanism, such as reducing the regressive mark-up, which is 10%-35% in four categories, to just two categories, hence exaggerating the price impact. The study also showed the impact of “discount on cost of therapy” on B40, M40, T20 (lower, middle and top income tier) households – this is misleading because the proposed mechanism is a regulation of the mark-up upper limit, not giving a “discount”. In fact, the medicine prices could also go up in some cases in the beginning, a possibility that the Health Ministry presented in its own extensive consultations in 2019/2020.

There also seems to be an intent to divide the income groups, to pit B40 households against M40 and T20 to show the benefits will go most to the T20. But even M40 and T20 households do not deserve to be overcharged or exploited. The CBA might also have missed the point that when medicine prices become more affordable and accessible to the B40 group, the utilisation volume will go up. In any event, the B40 group relies on the public healthcare system while the price regulation mechanism seeks to particularly reduce out-of-pocket expenses of the rakyat.

Probably the two most controversial and bold claims in the CBA's preliminary findings attributed to the Medicines Price Mechanism policy are as follows:

> First it is said that there will be a 35% to 40% total drop in private hospital revenue. According to Malaysia National Health Accounts 2020 preliminary data, private hospitals contributed RM14.553bil in health expenditure in 2020. If the claim of 35% of hospital revenue drop is true, this means RM5bil per year is forgone. Is this the admission of private hospitals that RM5bil is the amount they would have overcharged their patients following implementation of the Health Ministry’s new policy?

> Secondly, it is claimed that 33% of private clinics, amounting to 2,600, will close. How does the study arrive at this number?

Hence it is in the best interest of the public to examine the full study, especially to validate the numbers, methodology and the interview questionnaire involved.

The preliminary findings in the study also tells us that many healthcare travellers will not come to Malaysia hence causing economic loss. This is contrary to our general expectation that the lowering of medicine prices should give Malaysia an even more competitive edge vis-à-vis Thailand in the region.

The basic assumption of the study is that Malaysia will lose 10% to 35% of new drug launch/access resulting in 54% of healthcare travellers who will stop coming here. Is the assumption plausible? Given the Health Ministry’s new policy is to regulate the mark-up upper limit only for wholesalers and retailers, the fact remains that medicines manufacturers can still declare their preferred price for sale in Malaysia, so why wouldn’t they come to a market known for its demand?

Lastly, the Medicines Price Mechanism policy is a matter of public health and consumer price, hence under the policy purview and jurisdiction of the Health Ministry and the Domestic Trade and Consumer Affairs Ministry. The International Trade and Industry Ministry should not overstep its own boundaries and dictate the policy direction of other ministries. This industry-driven CBA study sets a dangerous precedence to interfere in, and subvert, a decision already made by the Cabinet.

The CBA claimed it is “independent”, “data-driven”, “comprehensive” and “unbiased”. In my opinion, what was presented to the public is the opposite. The Medicines Price Mechanism policy in the long term can ensure fair and transparent medicine pricing for patients in Malaysia. It is not true that the policy does not allow wholesalers and retailers to make profits. Excessive profits at the cost of people’s health and lives is what the policy helps to safeguard against. Narrow vested interest for profiteering should not trump public interest, let alone people’s health and lives.

LIM CHEE HAN, PhD

Senior Researcher, Third World Network

Co-convener, People's Health Forum