PUTRAJAYA, Nov 8 — The government has decided to extend Pharmaniaga Berhad’s concession with the Ministry of Health (MOH) to procure certain essential medicines for two years until December 2021.
The interim extension of Pharmaniaga’s 10-year concession ending this November 30 is to allow MOH to take over the Bumiputera tender agent’s functions so that the government can purchase medicines directly from pharmaceutical manufacturers without going through a middleman.
The government-linked company (GLC) will also get another five-year contract to store and distribute MOH’s medical supplies.
“Even before the 25 months is up, we may start the open tender system, whichever comes first,” Health Minister Dzulkefly Ahmad told a press conference here.
Bumiputera agents act as intermediaries between government hospitals on one hand, and foreign and Malaysian non-Bumiputera pharmaceutical companies on the other, who bid for public procurement of drugs and other medical supplies. Some Bumiputera tender agents provide additional services like warehousing and distribution, while others are purely middlemen. Bumiputera tender agents charge a fee of between 2 per cent and 3 per cent for their services.
Pharmaniaga, which has warehousing and logistics facilities, is the biggest Bumiputera tender agent in the country with exclusive concession to supply 700 items in the Approved Product Purchase List (APPL) comprising medicines and other medical items, determined by MOH, to government hospitals, institutions, and clinics. This comprises over a third of the government’s drug supply.
The 700 drugs that Pharmaniaga procures for MOH, according to Dzulkefly, are essential medicines.
The health minister said that the direct procurement of certain medicines by some government hospitals from pharmaceutical manufacturers without a Bumiputera tender agent, such as cancer or palliative drugs, will remain.
Pharmaniaga also separately provides logistics and distribution of all products in the APPL for MOH, beyond the 700 items it procures.
“One more aspect of the concession is logistics and distribution — the Cabinet has decided to give a five-year contract to Pharmaniaga based on their performance and capabilities.
“At the end of five years, the government will see if it should conduct an open tender, depending on the capabilities of other local companies,” Dzulkefly said.
Unlike typical logistics companies that charge shipping based on product weight and distance of the destination, Pharmaniaga charges MOH a percentage of the value of products purchased to cover logistics and distribution expenses.
Dzulkefly also said MOH owned the IT system developed by Pharmaniaga to manage drug procurement.
The government decided not to replace Pharmaniaga’s concession for public drug procurement with an open tender system after Finance Minister Lim Guan Eng deemed it a “monopoly” that cost the government over RM1 billion annually.