Competition Can Save Lives

By Azrul Mohd Khalib | 15 May 2019

Patients need access to medicines today, so that they can get a chance to live their lives today.

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With double digit medical inflation seemingly being the current norm, addressing the escalating cost of healthcare in Malaysia has been and will continue to be an urgent priority for the government.

Dealing with the crippling burden posed by a large proportion of the population living with non-communicable diseases such as diabetes, kidney diseases and cancer is a daunting challenge.

It is within this context that the government has made several announcements indicating that price controls would soon be imposed on medicines. It is hard to argue against what seems to be a reasonable measure intended to control expenditures amidst rising health burdens.

However, addressing the cost of healthcare is incredibly complex and differs from country to country. There is no one-size-fits-all approach or shortcut to achieving optimal balance between the paying costs of providing high quality healthcare and ensuring equitable, accessible and affordable treatment for all.

It goes without saying that the well-being and interest of patients should be at the heart and centre of any such decision-making.

I am not worried that international pharmaceutical companies may lose out in making their margins. Malaysia (population: 32 million) is a relatively small market compared to our neighbours, Indonesia (270 million), Thailand (70 million) and Philippines (95 million).

However, I am worried for the thousands of Malaysians whose lives depend on access to innovative medicines, to drugs which have yet to have generic or biosimilar counterparts or who are waiting for advanced therapies currently out of reach of most Malaysian patients.

This effort at cost-containment though high-minded and well-intentioned, is fraught with risks and consequences which extend beyond the health sector. Most economists consider price controls as a drastic action which distorts the market and often end up victimising the very people they are intended to help. Contrary to popular belief, they are not magic bullets.

Through a general circular dated 15 July 2013 from the Chief Secretary to the Government titled “National Policy on the Development and Implementation of Regulations” (Pekeliling Am – Bilangan 1, Tahun 2013), the government introduced the Regulatory Impact Assessment (RIA) process.

Similar in intent to an Environmental Impact Assessment (EIA), the RIA is a process of evaluating the likely impacts of a proposed regulation, both beneficial and adverse.

The circular indicates that a RIA is required of all proposed legislation, government regulations and decisions which have a regulatory impact on businesses.

This is to ensure that proposed regulations would have clear objectives, provide a comprehensive cost-benefit analysis, and obtain input and views from necessary stakeholders.

The general circular further emphasised on the need for the RIA to be carried out to ensure effective and fair administration through enhancing transparency, equality, and accountability in public administration. All ingredients vital to a good regulatory environment for developing sound economic conditions which will attract foreign investment, facilitate businesses and provide access to research, new markets and innovative technology.

Have the Ministry of Domestic Trade and Consumer Affairs, and the Ministry of Health undertaken a RIA before the proposal for price controls of medicines was adopted for implementation? Has the Regulatory Impact Statement been published, and have consultations with stakeholders taken place?

The advantages and disadvantages in the use of price controls should be fully understood and made known to the Malaysian public before they are imposed. At the least, a cost-benefit analysis exercise should be undertaken and the results shared with stakeholders. Only then can their buy-in and commitment be assured.

We need to learn from countries which have already implemented similar mechanisms.

Canada imposed controls on factory-gate prices, reference-based pricing, prices freezes and limits on mark-ups. They succeeded in controlling prices but drug expenditure continued to rise due to population demographics, prescribing practices, and increasing prevalence of non-communicable diseases.

The United Kingdom’s Pharmaceutical Price Regulation Scheme is voluntary, runs in five year cycles and is as a result of negotiations between the government and the pharmaceutical industry. Collaboration and consultation were critical in developing the drug pricing legislation and regulations.

The reality is that imposing price controls for medicines in Malaysia will send yet another red flag to the international pharmaceutical, biotechnology and life sciences community.

Combined with 2017’s issuing of a government use license which exploited the patent of a Hepatitis C drug, Malaysia’s reputation could take another hit and the country regarded as a risky and unpredictable place to introduce new innovative drugs for the treatment of illnesses such as cancer and rare diseases. Fewer new drugs would become available to Malaysian patients, depriving them of the benefits of advances in medical research.

We support the Malaysian government’s intent to gradually increase the use of generic drugs to 80 percent from the current 60 percent by 2020.

In fact, some of the first targeted cancer drugs are now reaching the end of their patents, enabling for generics to be produced. It has the potential to save hundreds of millions of ringgit each year, and to help deal with ballooning healthcare costs for a population which is both suffering from non-communicable diseases and ageing.

But not all drugs, particular those that are new and innovative such as targeted and immunotherapies, have their generic or biosimilar equivalent available today. We can’t possibly tell people to be patient and to wait.

Patients do not have the luxury of time to wait 12-20 years for patents to expire to get treated. Neither can they afford to just visit a neighbouring country to access the treatment needed.

They need access to these drugs today, so that they can get a chance to live their lives today.

This past April, the price of trastuzumab, a costly breast cancer drug for HER2-positive patients dropped by more than half in the tender bid to the Health Ministry.

This happened because of two main factors: the government decided to increase the amount of the drug being procured and a local pharmaceutical company brought in a biosimilar version of the drug, with a price half that of the originator drug, providing direct competition. The multinational company dropped their prices by 52% which was even lower than the price of the biosimilar.

Due to these savings, more metastatic breast cancer patients can potentially be treated today under the existing budget. Patients won. So we know competition works.

Competition provides for the possibility of better and improved treatment options, lower drug prices, increased affordability and coverage. It contributes to improving the quality of life for patients and most importantly, potentially save lives.

Azrul Mohd Khalib is Chief Executive Officer of the Galen Centre for Health & Social Policy

  • This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
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