Ringgit Fall Won’t Affect Drug Prices With Three-Year Procurement Contracts: Lukanisman

Lukanisman says the ringgit fall won’t affect medicine prices, due to MOH’s 3-year drug procurement contracts. But the deputy health minister did not explain if drug suppliers/ manufacturers can cancel contracts altogether if the ringgit fall is too steep.

KUALA LUMPUR, March 11 — Lukanisman Awang Sauni claimed today that the fall of the ringgit, among other factors, would not affect drug prices in Malaysia due to three-year procurement contracts by the Ministry of Health (MOH).

Drugs and medications provided in the country are generally procured by MOH, university hospitals under the Ministry of Higher Education (MOHE), military hospitals under the Ministry of Defence (Mindef), and private health care facilities separately. 

“Medicine prices are affected by various economic factors – like foreign exchange rates, research and development (R&D) costs, and manufacturing problems – that are beyond the MOH’s control,” Lukanisman told the Dewan Rakyat today.

“Therefore, to help the government reduce the cost of drug procurement, the MOH has taken these measures, such as drug procurement with three-year contracts.

“This method provides benefits to the government, such as saving costs for the government to get more stable offer prices to prevent a price increase for three years.

“For now, medication subsidies to patients receiving treatment in all MOH facilities are retained to prevent impact on the people with any drug price increase.”

Lukanisman did not inform Parliament if such pharmaceutical procurement contracts could be cancelled altogether by suppliers or manufacturers, in the event of a drastic drop in the ringgit to the US dollar that would lead to unexpectedly much higher prices than the original prices agreed on in the contracts.

Bloomberg recently reported that the ringgit briefly slipped past 4.8 against the dollar last February 20, its weakest level since an all-time low of 4.8850 in 1998. This year, the ringgit has slid by over 4 per cent so far.

The Malaysian Pharmacists Society (MPS) told the New Straits Times last January that drug prices were expected to go up by 5 to 10 per cent, especially medications originating from the United States, following reports that drugmakers were planning to raise prices in the US on more than 500 drugs.

Lukanisman, who was answering Tampin MP Mohd Isam Mohd Isa during Question Time in Parliament today on the issue, also cited drug pooled procurement efforts between the MOH, university hospitals, and military hospitals.

“Procurement by these three ministries is estimated to lead to savings of RM179.6 million for 2020 to 2022.”

The deputy health minister also said the MOH was exploring a drug price transparency initiative, in which selected private health care facilities would be required to publish drug prices, following Prime Minister Anwar Ibrahim’s announcement on the initiative last October.

“This initiative will increase access to drug supply with more competitive pricing, besides enabling people to know the prices of medications that they have to pay for and to make their own choices based on affordability,” Lukanisman said.

“Drug prices will be published on a public portal to enable people to make price comparisons.”

The Pharmaceutical Association of Malaysia (PhAMA) previously told the MOH in 2019 that pharmaceutical manufacturers were willing to declare wholesale drug prices to the MOH to avoid medicine price controls.

Lukanisman also told Parliament today that drugs and medical devices are exempt from the increase of the sales and service tax (SST) from 6 per cent to 8 per cent effective this month.

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