Industry: Pump The Brakes On Controlling Medicine Prices

By Boo Su-Lyn | 15 August 2019

The Malaysian Medical Association says wholesalers and GPs and hospitals may charge the maximum ceiling price for medicines.

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KUALA LUMPUR, August 15 — Industry stakeholders have called for a more detailed impact study about regulating medicine prices, highlighting possible severe consequences, after the Health Ministry opened a public consultation.

The Malaysian Medical Association (MMA) warned the government that private clinics may not be able to sustain their business, especially since clinic general practitioners’ (GPs) consultation fees are still capped by the government at a 1992 rate of RM10 to RM35.

“While drug controls may be intended to benefit the public, it may have an impact on the operational costs of health care providers if there are significant price cuts. There may be supply issues as well,” MMA president Dr N. Ganabaskaran told CodeBlue.

“Wholesalers and private health care providers (GPs and hospitals) may charge the maximum ceiling price to protect against losses. Those who charge cheaper may not be able to sustain, especially the GPs in private clinics with the current fee schedule in place,” added the head of the doctors’ group.

CodeBlue reported last month that the Health Ministry, in its online public consultation on the Malaysia Productivity Corporation’s portal, pledged to prosecute drug wholesalers and private clinics, pharmacies, or hospitals with a criminal offence if they sold prescription medicines that exceeded gazetted price ceilings.

Under the Price Control and Anti-Profiteering Act 2011, profiteering, and selling and buying goods outside the regulated price is punishable with a maximum RM500,000 fine for companies, and for individuals, a maximum RM100,000 fine and three years’ jail.

Opening a public consultation on government agency MPC’s portal is the first step of the official policy-making process, even as the Health Ministry has yet to complete its negotiations with worried industry stakeholders.

The Health Ministry will use external reference pricing to determine maximum wholesale prices for medicines in Malaysia by benchmarking the prices of drugs sold in other countries, but the ministry has not stated which countries would be referenced, or how price mark-ups for retailers (private clinics, pharmacies, and hospitals) would be calculated.

Dr Ganabaskaran questioned if medicine price ceilings would be the same nationwide and how the government would determine the entry price of drugs, highlighting factors like geographical proximity, economic similarity, and similarity in health systems.

“How is the review mechanism and frequency of updates or drug registry?”

The MMA president also pointed out that Malaysia has a small population and is a net importer of pharmaceutical products.

“Suppliers may hike entry price for future profits. If the price is not acceptable for them, they may not bring in new drugs?” he asked.

Former MMA president Dr Milton Lum wrote in a column on CodeBlue that only half of the medicines approved in the United States between 2000 and 2009 went on sale in India more than five years after their first worldwide introduction. Malaysia’s population is 2.26 per cent that of India.

“Will access to innovator drugs be increased with drug price controls? The affluent can still have access to these drugs by seeking treatment abroad, but what about the vast majority?

“An interesting question is who will be held liable if patients suffer harm because of the imposition of drug price controls?”

Dr Milton Lum, former Malaysian Medical Association president

The veteran physician also questioned how Putrajaya can prevent regulatory capture, where regulators are influenced by special interest groups dominating the industry, during the implementation of medicine price controls.

He said some pharmaceutical companies in India coordinated to increase the price of the regulated formulation of Metformin, a diabetes treatment, before regulation, leading to a higher ceiling price. The price control of the 500mg dose of Metformin also incentivised some companies to focus marketing on unregulated formulations of the same drug.

Association of Private Hospitals of Malaysia (APHM) president Dr Kuljit Singh similarly urged the Health Ministry to conduct a more detailed impact study before rolling out medicine price controls.

“Yes we have urged the MOH (Ministry of Health) to look into the details on how private hospitals work in terms of its operating costs,” Dr Kuljit told CodeBlue.

When asked if drug price controls would force private hospitals to raise prices in other areas, such as medical procedures, Dr Kuljit said: “The operative cost and capex (capital expenditure) is fixed and increasing. Somehow, the cost will have to be covered.”

Malaysian Pharmaceutical Society (MPS) president Amrahi Buang said his pharmacists’ group was told that the wholesale price ceiling for medicines was the floor price for retail.

“MPS also is concerned about price undercutting among community pharmacists. This is detrimental to the pharmacy profession,” Amrahi told CodeBlue.

“MPS supports MOH initiative for medicine price control. MPS feels that the consumers is the most important concern. Fair price to them.”

Billy Urudra, president of the Malaysian Organisation of Pharmaceutical Industries, a group comprising mostly local generic manufacturers, told CodeBlue that his association would put their comments on the MPC portal about drug price controls.

He previously said last May that rather than regulating medicine prices, it was more important for the government to expedite approval of generics and biosimilars for them to move faster into the market and compete with innovator drugs.

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