Any price control mechanism would force drug firms to reconsider launching innovative medicine

by AZREEN HANI/ pic by BLOOMBERG

MALAYSIA’S medical health tourism industry could be hit if the government introduces the medicine price control mechanism for private healthcare operators.

Pharmaceutical Association of Malaysia (PhAMA) president Chin Keat Chyuan warned the industry could face setbacks as any price control mechanism would force drug companies to reconsider launching innovative medicine.

He said the absence of the latest solutions would limit options for patients.

“Medical health tourism is expected to reach RM1.8 billion by year-end, registering a 25% growth. The growth is largely because patients from neighbouring countries seek treatment here, due to the relatively affordable and good private healthcare.

“Our drugs are accessible. We have innovative medicines at affordable prices and I think the figure is a testament to that,” Chin told The Malaysian Reserve recently.

He said any intervention to cap prices would impact patients’ experience, minimise treatment options, impede access to innovative medicines and reduce Malaysia’s attractiveness as a health tourism destination.

He claimed Malaysia is the only country where the government intends to regulate medicine prices in the private sector, stressing that the prices are only 14% of the total “out of pocket” healthcare costs.

“By controlling this 14% from the total out-of-pocket expenses, would that significantly reduce healthcare costs? What if the cost is being shifted to in-patient and outpatient costs?” he said.

Chin, who heads the association of 48 members comprising multinational and local companies, said the Ministry of Health (MoH) is only zooming in at single-source drugs, large multinational companies and research and development-based firms.

He said any action, which would be deemed as discriminatory, would impact investors.

“It could pull foreign investors away,” he added. Health Minister Datuk Seri Dr Dzulkefly Ahmad announced that the ministry intends to use external reference pricing (ERP) to benchmark drug prices in Malaysia against seven to eight selected countries by choosing the average three lowest reference prices to determine the ceiling price sold to dispensing channels in Malaysia.

The ministry plans to impose a ceiling price at supply, namely wholesale through ERP and retail levels.

Chin said putting controls on the prices of medicine without proper engagement, consultation and cost-benefit analysis would have far-reaching consequences.

He said based on benchmark pricing compared to APEC countries done in 2014, Malaysia’s medicine price is at a reasonable price.

“We do acknowledge that there is up to 900% mark up at multiple-source drugs, but this is largely multiple or generic drugs,” he said.

For the last five years, Chin said the competition among drug companies is very intense.

“Free market itself will regulate prices and there will be more options for the people,” he added, adding that there were engagements with the ministry.

The association, he said, has proposed a price transparency mechanism where industry players will share their wholesale prices and the government can compare the retail prices among players.

“By doing this, it will be easier for the government to determine which area has been marked up along the value chain. What we want from the government is to not rush their decision,” he said.

MoH representative when contacted said the consultation process is being conducted until the end of the year.

It noted PhAMA’s proposal and that the government is still studying various factors on the issue, the representative said.