In August 2018, the government announced its concern regarding the escalating cost of healthcare in Malaysia. Malaysia’s annual nett medical inflation rates in 2016, 2017 and 2018 were 11.5%, 12.1% and 12.4% respectively. For 2019, it is projected to hit 13.6%. This is considered one of the highest in Asia, where medical inflation in the region averages at 10%.
One aspect under intense scrutiny were the prices of pharmaceutical products, specifically drugs and medicines. A price control mechanism for these products has been under serious consideration. This follows regional trends in countries which have seen significant increases in public health spending such as the Philippines, Vietnam, Taiwan and South Korea.
There is currently no price regulation or control mechanism in place for the pharmaceutical industry in Malaysia. The free market approach to this industry is intended to help foster and encourage innovation and competition, leading to better value for consumers, for the private sector and the government.
The government currently spends 11.1% of its budget on medicine procurement, out of which RM916.2mil is spent on central contract tenders, RM773.93mil on approved product purchase list items and RM417.47mil on local purchases.
On 12 April 2019, the Cabinet approved imposing price control measures for pharmaceutical drugs utilising the Price Control and Anti-Profiteering Act 2011 (PCAPA 2011). Implementation has been targeted for either late 2019 or early 2020.
Addressing the cost of healthcare is incredibly complex and differs from country to country.
There is no one-size-fits-all approach or quick fix to achieving an optimal balance between paying the costs of providing high quality healthcare and ensuring equitable, accessible and affordable treatment for all.
- A Regulatory Impact Analysis (RIA) of the proposed price controls regulation must be conducted to determine impact of drug price controls on general practitioners, patients, hospital service providers, pharmaceutical manufacturers, and other stakeholders. The results should be made publicly available and shared with all stakeholders.
- A Cost Benefit Analysis should be carried out by an independent party and presented to the Cabinet before gazettement to ascertain the impact to the industry.
- The issue of price controls should be referred to the Parliamentary Select Committee on Health, Education, Community and Social Development before the policy is implemented.
- The Ministry of Health should be more transparent in sharing proposed changes to legislation and timelines.
- The Ministry of Health should conduct timely and meaningful consultations with all industry players and publish their concerns.
The Policy Brief can be downloaded here.