Below are Third World Network’s initial issues and concerns regarding the CBA 2.0 preliminary findings. We strongly call for more details and information, especially with regard to the data and their sources, the CBA’s methodology and assumptions, the list of interviewees (categories if not actual individual names for personal privacy protection), and the interview questionnaires. We also put on record our concern that this CBA is conducted by a Ministry without the mandate nor competence, on a very important public interest issue that is the responsibility of other ministries, i.e. the Ministry of Health and the Ministry of Domestic Trade and Consumer Affairs.
1) Identity of the Third Party Consultant: Who is it? What are the credentials for appointing this consultant? Who funded the study? Can the TPC make a declaration of conflict of interest, if any? (Update: the latest response from the UPC admin on 5.12.2021 still did not reveal the identity of the TPC, but admitted that the private industry has funded the study)
2) Conflict of Interest: The composition of the steering and technical committees both look very much driven by the pharmaceutical and private healthcare sector major players (PhAMA, MOPI, MMA, APHM and even US-based PhRMA) who have direct interest in stopping or reversing the Cabinet-approved Medicines Price Mechanism (MPM) policy. A Senior Industry Representative from PhAMA is even the co-chair for the technical committee.
3) Need for a full study report with details and information: The preliminary findings are just results presented in numbers, without clear and specific methodology, assumptions, supporting data and calculation process for the public to validate and review each of the findings.
4) Misrepresentation of the MOH’s proposed Medicines Price Mechanism (Slide 8): The study used a two-tier margin system to calculate the mark-up margin (35% for < RM1,000 per unit drug; 10% for >RM1,000/unit), whereas the MOH has 4 tiers. Also, it is not correct to assume ALL other drugs in the market will have MPM mark-up control even in Phase 2 -- only prescription drugs will be covered. What are the 5000 medicines selected for the CBA2.0?
5) The first CBA was on Phase 1 of the proposed MPM, covering about 600 single-sourced prescription medicines available in the Malaysian market. Comparing that with 5000 (undisclosed list) medical products in CBA 2.0 is highly questionable.
6) Wrong assumption on the MPM model (Slide 10) : MPM policy is to regulate mark-up range at wholesale and retail levels, not ‘discount on cost of therapy’ as shown in the “Price-volume vs price scenarios” graph. In fact, in the CBA1.0, the study showed that 30% of medicines might even experience initial upward adjustments of prices; did the second study consider these gains for the wholesalers and retailers?
7) The exclusion of consumer and patient advocacy groups for the interviews (Slide 11): The interviewees are industry-dominant, not taking account of the public health and well-being costs. In the Webinar-format ‘consultation’ conducted by MPC, we were told that the patients under the Patient Assistance Programme were interviewed instead of what it is written as ‘patient advocacy groups’ - the patients may not have medicine access issues because they are sponsored or subsidised by the pharmaceutical companies. Insufficient access to affordable cancer medicines is a major issue voiced by patient advocacy groups such as Together Against Cancer and this is absent in what was presented by MPC.
8) No counterfactual in the analysis: For example in Slide 15, the assertion made claiming that 33% or 2,600 clinics will shut down. We do not know how the study arrived at that number. If it was based on interviews or a survey, we need to look at the questionnaire and response (sample size). The most damaging part of the assertion is that there is no counterfactual. We know that in recent years there were clinics shutting down, it was also the trend before the COVID-19 pandemic. If the study is serious, those clinics shut down in the counterfactual cannot all be attributed to the MPM policy.
9) Possible exaggerated claim in Slide 15: There is an assertion that the MPM policy will cause a 35-40% drop of total hospital revenue. According to the Malaysia National Health Accounts 2020 preliminary data, private hospitals contributed RM14.553 billion to the total health expenditure. 35% of total hospital revenue could mean a figure close to RM5 billion. Did private hospitals overcharge so much to the tune of RM5 billion a year, beyond the MPM proposed mark-up range? This admission of the difference is simply astonishing, we would like to understand how it is derived.
Given that there are such good prospects in the projection in private healthcare industry stated in Slide 13 (ie. RM1 Trillion economic value, RM44 billion planned investments), it is baffling to understand why the CBA 2.0 result claimed that “hospital industry operates on tight margins” (Slide 15). The wordings claiming that the hospitals “consider shutting down outpatient wings” sounded unfortunately more like a public threat than what could be qualified or quantified in the study.
10) Baseline problem for the B40 households in Slide 16: It is wrong to assume an increase in private healthcare usage especially for the B40 households based on the current baseline -- this is because the current high price or unaffordable prices are probably keeping a significant number of the medicines out of reach for treatment. With the possible effect of the MPM policy resulting in more affordable pricing of medicines, more B40 households should be expected to get access. The analysis in Slide 16 seems to have the intention to pit T20 and M40 against B40 in a moral narrative. There is no need to do that, as we are talking about access to medicines for all, especially for B40 households. Furthermore, M40 and T20 households do not deserve to be overcharged or exploited for the industry’s higher profit margin. 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.
The annual premium cost avoidance result in the same Slide 16 also suffers from similar prejudice, given that we know why not many B40 households are among the private health insurance purchasers, simply because they cannot afford it. And one of the major reasons why the premium could be prohibitively high for B40 households, is probably the medicine prices. Hence, there is no point in projecting the premium cost ‘avoidance’ based on the current scenario.
11) Doubtful Basis of the claim of fewer Innovative Medicine launches (Slide 21) : There is no counterfactual -- could it be due to the trend of the pharmaceutical industry having fewer new chemical entities? The MPM policy regulates the mark-up upper limit for wholesalers and retailers only, the medicines manufacturers should not feel deterred or discouraged to introduce their new medicines in the market. They can still declare and sell the products at their proposed prices. Given that these medicines would have certain healthcare demand in the country, would the companies really want to give up the Malaysian market entirely? So many other countries have some sort of Medicines Price Regulation policy, do they experience the same fate after the policy implementation?
12) Peculiar case of loss in medical tourism due to more affordable medicines pricing (Slide 19): The entire assumption seems based on loss of innovative medicine access (referring to the previous Point 11). If that is not logical, then it makes no sense to say that healthcare travellers would shun Malaysia as the destination if the medicine prices become lower. This MPM policy would instead increase the competitive edge of Malaysia against regional competitors such as Thailand for healthcare travellers.
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