Pharmacist: Price Controls May Drive Drug Makers Out Of Malaysia

By Boo Su-Lyn | 04 September 2019

Drug makers charge high-income countries more expensive prices for their products than low-income countries.

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KUALA LUMPUR, Sept 4 — A pharmacist warned the government that multinational pharmaceutical companies may quit the small Malaysian market and shutter local offices if drug prices are regulated.

IPH Pharmaceuticals managing director Peilynn Cheong pointed out that global pharmaceutical company Bristol-Myers Squibb (BMS) pulled out from Malaysia more than 10 years ago because the local market was not considered profitable, but maintained its Singapore office.

“There are only two options for suppliers: they can accept the ceiling price, provided they have higher volume to compensate for the shortfall in the margin. But we only have a 30-million population, a very small market.

“Or they do not want to sell. The whole world got 200 over countries, just abandon Malaysia lah,” Cheong told the Second Federation of Private Medical Practitioners’ Associations, Malaysia (FPMPAM) Malaysian Health Care Conference here last Sunday.

Cheong, who previously worked in both local and multinational pharmaceutical companies, said drug makers charge high-income countries more expensive prices for their products than low-income countries, according to their global pricing strategy. African countries, she said, get free medicines from global drug corporations.

“We’re reaching high level income country. So they don’t believe me when I say most Malaysians can’t afford our products. They say ‘no, look at the data’,” she said, referring to her previous bosses in the pharmaceutical industry.

Malaysia is classified as an upper middle income country, according to the World Bank, with a gross national income (GNI) per capita of US$10,460 in 2018.

Cheong said pharmaceutical multinational corporations (MNCs) were also concerned that lowering their product prices in Malaysia under medicine price controls could lead to unapproved parallel exporting or importing, where the Singaporean branch imports cheap products from the Malaysian branch to avoid higher prices charged by headquarters.

“We’re famous for being a hub for illegal activities, like human trafficking. This is the worries that MNCs have if they sell below.”

She claimed that wealthy Indonesians, for example, buy six-month supplies of medicines from Singapore because those drugs are unavailable in their home country.

If medicine price controls are implemented in Malaysia, Cheong said health care providers will simply sell cheaper products to patients and recommend them to Singaporean doctors if the drugs don’t work.

“We will end up, as health care providers, lose high-income patients to high-income neighbors. We’re driving our economy away,” the pharmacist said.

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.

The proposed drug price ceilings will be imposed under the Price Control and Anti-Profiteering Act 2011 that punishes profiteering, and selling and buying goods outside the regulated price with a maximum RM500,000 fine for companies, and for individuals, a maximum RM100,000 fine and three years’ jail. This law is under the Domestic Trade and Consumer Affairs Ministry’s jurisdiction.

Former Malaysian Medical Association president Dr Milton Lum previously wrote that the introduction of medicine price regulations in India led to the exit of several pharmaceutical MNCs, citing a study that found new drugs were sold in the Asian giant more than five years after their first worldwide introduction.

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