KUALA LUMPUR, August 13 — The Ministry of Health (MOH) has called for a radical change of its pharmaceutical procurement process, including the ability to review existing contracts in certain circumstances.
This is the second phase of the MOH’s planned “improvement” of its procurement policies and processes for pharmaceutical products and medical devices.
“The second phase involves improving the procurement process, including the government’s right to renegotiate prices and cheaper alternative product supplies compared to the contract product in certain circumstances with the company that wins the tender, as well as the taking of turns by officers, including technical officers, involved in the procurement process, plus the presence of Integrity Unit officers as observers in the Procurement Board,” MOH said in a statement yesterday.
Last March, Deputy Health Minister Lukanisman Awang Sauni claimed that the fall of the ringgit would not affect drug prices in Malaysia due to three-year procurement contracts by the MOH.
The Malaysian Pharmacists Society 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.
In its statement yesterday, the MOH also expressed concern with the practices of “certain” pharmaceutical manufacturers and suppliers that offer higher prices to the government than to the private sector for certain drugs, especially by sole product registration holders, be it patented or generic medicines registered with the National Pharmaceutical Regulatory Agency (NPRA).
“The Ministry stresses that it will not tolerate any elements of exclusivity, price-fixing, anti-competition, or any practice that can compromise procurement management that contributes to an increase in the cost of drug procurement.”
MOH’s statement omitted mention of Pharmaniaga Berhad that won a new seven-year concession last year to supply medicines and medical supplies to the MOH until June 30, 2030.
The Galen Centre for Health and Social Policy had pointed out then that with the exclusive concession for Pharmaniaga, Malaysia’s health care system is highly dependent on a single company for over a third of its branded and generic drug supply, and almost all of its logistics and pharmaceutical supply chain.
Galen Centre chief executive Azrul Mohd Khalib said if suppliers were permitted to negotiate and bid directly with the government instead, it could result in substantial savings of public funds and reduce the cost of medicines.
Products on MOH’s Approved Product Purchase List (APPL) distributed by Pharmaniaga (over 700 products, including medical items and medicines) reportedly represent over a third of the government’s drugs and medicines.
Independent think tank EMIR Research wrote in April 2023 that “a non-transparent monopoly involving procurement could result in unfair commercial terms, where, for example, MOH may have little choice but to accept being charged a certain markup on top of the price obtained from suppliers.”
In its statement yesterday, the MOH said it welcomed Prime Minister Anwar Ibrahim’s statement that the government’s focus for the upcoming Budget 2025 was to reduce the cost of living caused by “mismanagement, corruption, cartels, and monopolies.”
Pharmaceutical product expenditure by the MOH runs at around RM5 billion to RM6 billion annually.
“The MOH has planned measures to review the pharmaceutical and medical equipment procurement policy and process for a solid governance system by taking into account the principles of transparency, ease of business, fair competition, and best return of investment in government procurement.”
MOH said the first phase of its planned change of its pharmaceutical and medical device procurement process was to “reduce bureaucracy” in applying for approval from MOH agencies.
“Currently, NPRA is reviewing the pharmaceutical product registration process to ease the registration of pharmaceutical products in the local market so that the MOH will have a wider variety of product options,” said the MOH.
The MOH also said it plans to work with the Malaysia Productivity Corporation (MPC) to improve the approval process for registration of medical devices and equipment under the Medical Device Authority (MDA), as well as applications for approval by the Private Medical Practice Control Section (CKAPS) to set up private health care facilities and services.
