Industry-driven attempt to block medicines price regulation
Medicines are 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 University of 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 the private hospitals on the 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 approved the Medicines Price Mechanism policy proposal tabled by the Ministry of Health (MOH) in collaboration with the Ministry of Domestic Trade and Consumer Affairs. 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 3 years later, the policy is still not yet implemented.
Recently, I was shocked to discover that certain vested interests in the private healthcare and pharmaceutical sectors who have strong objections to the policy, managed to persuade the Ministry of International Trade and Industry (MITI) to have a go at conducting a Cost-Benefit Assessment (CBA) on the medicines pricing policy impacts on the private healthcare sector.
On 29th November, the preliminary findings of the study were uploaded to the UPC (Unified Public Consultation) website of the Malaysian Productivity Corporation (MPC). The presentation of the findings was conducted via Zoom using the Webinar format on 1st December, where the participants were merely restricted to typing questions in the Q&A box without being able to see each other’s questions or find out who were present in the meeting. The so-called public consultation lasted about 1 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 is the identity of the so-called ‘Third Party Independent Consultant” and the funder(s) behind the study. It was not revealed throughout the meeting and in the document despite being repeatedly asked by a number of participants. What is the point of having public consultation then?
What I found most troubling is the direct involvement of the major private sector players in the steering committee and technical committee for this CBA study: Pharmaceutical Association of Malaysia (PhAMA) comprising multinational companies, the Malaysian Organisation of Pharmaceutical Industries (MOPI), the Association of Private Hospitals of Malaysia (APHM), Malaysian Medical Association (MMA) and even the Pharmaceutical Research & Manufacturers of America (PhRMA) -- they all have direct interest in stopping or reversing the new policy. Should this not already present the red flag of conflict of interest? Not surprisingly, eventually the preliminary findings produced questionable results indicating the big negative impacts to the economy, especially to the private sectors themselves.
However, the preliminary findings are just numbers presented without showing the supporting data and calculation processes. The methodology of the study is also sketchy in its details, and the interview questionnaire used by the consultant is not known. Among the ‘expert interviews’ groups, no one represents the 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. they already have access to the medicines concerned at some reduced cost).
What is of concern is that the CBA might have misrepresented the MOH’s original proposed mechanism, such as reducing the regressive mark-up (10-35% in 4 categories) to just two categories, hence exaggerating the price impact. The study also showed the impact of ‘discount on cost of therapy’ to B40-M40-T20 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 for some cases in the beginning, a possibility that the MOH presented in its own extensive consultations in 2019/2020.
There also seems to be an intent to divide the income groups, pit B40 households against M40 and T20 in order to show the benefits will go most to the T20. But even M40 and T20 households do not deserve to be overcharged or exploited for the industry’s greed. The study might also miss the point that when the medicine prices become more affordable and accessible to the B40, the utilization volume will go up as well. In any event, the B40 relies on the public health 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 preliminary findings attributed to the Medicines Price Mechanism policy. First it is said that there will be a 35-40% total drop in private hospital revenue. According to the Malaysia National Health Accounts 2020 preliminary data, private hospitals had contributed a total of RM14.553 billion in health expenditure in 2020. If the claim of 35% of hospital revenue drop was true, this means RM5 billion per year is forgone! Is this the admission of private hospitals that RM5 billion is the amount they have overcharged their patients following implementation of the MOH new policy?
Secondly it is claimed that 33% or 2600 private clinics will close. How does the study arrive at this number? Hence it is in the best interest for 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 travelers 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 10-35% of new drug launch/access resulting in 54% healthcare travelers who will stop coming. Is the assumption plausible? Given the MOH new policy is to regulate the mark-up upper limit only for the 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 MOH and the Ministry of Domestic Trade and Consumer Affairs. MITI should not overstep its own boundaries and competence, and dictate the policy direction of other ministries. This industry-driven CBA study sets a dangerous trend and precedence shown to interfere in, and subvert the decision already made by the Cabinet.
Forget about the CBA’s self acclaimed virtues of being ‘independent’, ‘data-driven’, ‘comprehensive’ and ‘unbiased’. What was presented in the public now 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
6.12.2021
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