Kuala Lumpur, 9 March 2019 – The recent interview on BFM with Pharmaniaga’s Managing Director highlights the danger of allowing government-linked companies to continue to dominate the landscape of government procurement, particularly in providing services to the public healthcare system.

After enjoying twenty five years of an exclusive concession to purchase, store, supply and distribute at least 700 pharmaceutical products or more than a third of the government’s branded and generic drug supply, there is an air of entitlement that by November 2019, the government will grant this GLC yet another decade-long deal.

Should this happen, it would not only mean that for thirty five years, this single company would have gained billions of ringgit in public funds annually, it would also send the wrong signal to the Malaysian healthcare industry that innovation, value and fair competition are not recognised and rewarded. Any aspiring or potential local competitor to Pharmaniaga’s business would rightly be discouraged from investing even if it were to offer a more cost effective and efficient system.

As part of its commitment to ongoing institutional reforms, the government should do away with the practice of exclusive concessions which grant individual companies a virtual monopoly and major influence over large portions of our healthcare system, including hospital services. It creates an unhealthy over-dependence in the belief that these companies will be considered indispensable and become “too big, to fail”. Our public healthcare system is at risk of being vulnerable to such over-dependencies.

Breaking up such anti-competition behaviour, putting a stop to the use of tender agents as middlemen, and encouraging the development of a more competitive, diverse and transparent drug procurement and supply chain framework, will work in the best interest and well-being of patients.

It has the potential to make better and improved medicines and treatment options available, lower prices of drug and services, and help ensure sustainability of Malaysia’s healthcare system for years to come.

Health Minister Datuk Seri Dr Dzukefly Ahmad has repeatedly emphasised his vision of value-for-money treatment and commitment to reforms which ensure better transparency, efficiency, and cost effectiveness in health. This would be in support of his reforms.

Pharmaniaga has previously welcomed the idea of using an open tender exercise, rather than a concession arrangement. However, should this be too much, too soon, the government should grant a concession agreement of no more than five years and make preparations to transition.

The Ministry of Finance and Ministry of Health should seriously consider these options.

 

 

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