MOH Clarifies Pharmaniaga Doesn’t Monopolise Drug Supply Logistics

Dr Lee says Pharmaniaga only provides logistics of supplying drugs to government health centres.

KUALA LUMPUR, Sept 11 – Deputy Health Minister Dr Lee Boon Chye has clarified that Pharmaniaga is not the sole logistics solution for drugs for Ministry of Health (MOH) and private health facilities, as there are other established companies providing similar services.

Dr Lee was quoted by Malay Mail as saying that that Pharmaniaga provides logistics support for the supplying of drugs to government health facilities, rather than the supply itself.

He said that the firm distributes medicine in the Approved Products Purchase List (APPL), while the purchase of the drugs falls under MOH rather than the company.

“Pharmaniaga is the concession holder for the distribution of APPL drugs to MoH facilities. Under the concession agreement, Pharmaniaga provides the logistics for APPL drugs only, which includes collection, storage and distribution based on a standard criteria or key performance indicator and earns a fixed percentage mark-up over the purchase prices,” he said.

He highlighted that the APPL drugs, which are valued at about RM1.1 billion in 2017 and RM1.2 billion in 2018, are purchased via a tender board headed by MOH and not Pharmaniaga.

“The logistics cost and profit to Pharmaniaga is a fraction of that amount.”

The clarification is following Finance Minister Lim Guan Eng’s recent remarks that the government is reviewing its drug procurement concession with Bumiputera tender agent Pharmaniaga that he described as a “monopoly”.

Lim noted that the public health system has to deal with rising costs as Malaysia becomes an ageing society, as it is projected that 7 and 14 per cent of Malaysians will turn 65 or older by 2020 and 2045 respectively.

“The government is also concerned with monopoly power over the provision of drugs and its effects on health care cost,” Lim said in a speech at a 2020 Budget focus group meeting on health last Friday.

Pharmaniaga is the biggest Bumiputera tender agent in the country with exclusive concession to supply 700 items in the APPL, determined by MOH, to government hospitals, institutions, and clinics. This comprises over a third of the government’s drug supply.

Pharmaniaga received sole concession for a quarter of a century since Putrajaya privatised the medicine procurement system in 1994.

Pharmaniaga’s concession provides distribution and logistics services for the products procured under the APPL.

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