Price control not for medicines
WITH medical inflation increasing from 12.7% last year to a projected 17% for 2018, addressing the escalating cost of healthcare in Malaysia is an urgent priority for the government.
Dealing with the crippling burden posed by a large proportion of the population living with non-communicable diseases such as diabetes, kidney diseases and cancer is a daunting challenge.
It is within this context that Deputy Health Minister Dr Lee Boon Chye recently announced that the government would soon introduce the mechanism of price controls on medicines prior to the tabling of the 2019 Budget.
Addressing the cost of healthcare is incredibly complex and differs from country to country. There is no one-size-fits-all approach or short-cut to achieving an optimal balance between paying the costs of providing high quality healthcare and ensuring equitable, accessible and affordable treatment for all.
It goes without saying that the wellbeing and interest of patients should be at the heart and centre of any such decision-making.
I am not worried that pharmaceutical companies may lose out in making their margins. Malaysia is a relatively small market compared to our neighbours, Indonesia (population: 270 million), Thailand (70 million) and the Philippines (95 million).
But I am worried for the thousands of Malaysians whose lives depend on access to innovative medicines or drugs which are yet to have generic or biosimilar counterparts, or those waiting for advanced therapies.
Most economists consider price control as a drastic action which distorts the market and often end up victimising the very people they are intended to help.
The advantages and disadvantages in the use of price controls should be fully understood and made known to the Malaysian public before they are imposed. After all, increasing transparency, accountability and consultation were among the promises of the new government.
We need to learn from countries which have already implemented similar mechanisms.
Canada imposed controls on factory-gate prices, reference-based pricing, price freezes and limits on mark-ups. They succeeded in controlling prices but drug expenditure continued to rise due to population demographics, prescribing practices, and increasing prevalence of non-communicable diseases.
The United Kingdom’s Pharmaceutical Price Regulation Scheme is voluntary, runs in fiveyear cycles and is the result of negotiations between the government and pharmaceutical industry. Collaboration and consultation were critical in developing the drug pricing legislation and regulations.
The reality is that imposing price controls for medicines in Malaysia will send yet another red flag to the international pharmaceutical, biotechnology and life sciences community.
Combined with last year’s issuing of a government use licence which exploited the patent of a Hepatitis C drug, Malaysia’s reputation could take another hit and the country regarded as a risky and unpredictable place to introduce new innovative drugs for the treatment of illnesses such as cancer and rare diseases. Fewer new drugs would become available to Malaysian patients, depriving them of the benefits of advances in medical research.
We support the government’s intent to gradually increase the use of generic drugs to 80% from the current 60% by 2020. In fact, some of the first targeted cancer drugs are now reaching the end of their patents, enabling for generics to be produced. It has the potential to save hundreds of millions of ringgit each year, and to help deal with ballooning healthcare costs for a population which is both suffering from non-communicable diseases and ageing.
But not all drugs, particularly those that are new and innovative such as targeted and immunotherapies, have their generic or biosimilar equivalent available today. We can’t possibly tell people to be patient and wait.
The World Health Organization states that “A competitive marketplace is the best way to ensure low prices for medicines. Proper organisation of the market and application of anti-trust (monopoly) laws should facilitate price competition. However, if pharmaceutical markets do not become competitive, governments may choose to institute price controls.”
Has the situation become so uncompetitive that price controls are needed? The Malaysian Competition Commission’s 2017 report titled “Market Review on Priority Sector Under Competition Act 2010 – Pharmaceutical Sector” describes the existence of opaque direct-negotiation mechanisms, inherent monopolies and the use of middlemen acting as intermediaries or tender agencies throughout the public sector’s drug procurement process. These middlemen are paid commission for practically every pill, solution and tablet which goes through this process. Cutting them out and having the government deal and negotiate directly with pharmaceutical suppliers would increase competition and significantly reduce the costs involved.
Competition provides for the possibility of better and improved treatment options, lower drug prices, and increased affordability and coverage.
The Health Minister has previously highlighted that public healthcare reform needs to include a more competitive, accountable and transparent medicine procurement and supply chain framework. It must be one that works for the best interest of patients and not just to save money for the government.