Malaysia's government faces calls to immediately start regulating medicine prices, which have soared since the introduction of the Goods and Services Tax (GST) on 1 April.
IHS Life Sciences perspective | |
Significance | Malaysia's government must immediately start regulating pharmaceutical prices, which have soared following the introduction of a Goods and Services Tax (GST), according to a member of parliament. |
Implications | As Malaysia lacks a regulatory system for medicine prices, even before the introduction of the GST prices had been growing increasingly unaffordable, in particular for patients with chronic diseases requiring long-term treatment. |
Outlook | As expected, the GST has stoked a further increase in drug prices in Malaysia, a trend that is expected to continue given the country's lack of pricing regulation, the pharma sector's significant influence and the eventual introduction of the Trans-Pacific Partnership (TPP). |
Malaysian lawmakers are calling on the government to regulate pharmaceutical prices immediately, amid soaring healthcare costs following the introduction of the Goods and Services Tax (GST) on 1 April, according to Member of Parliament Charles Santiago, as quoted by The Malaysian Insider.
Even without the introduction of the GST, due to Malaysia's lack of pharmaceutical pricing regulations, patients were paying higher prices for the same drugs than their counterparts in Australia, India, and Sri Lanka, Santiago claimed.
Citing a study from the Journal of Pharmaceutical Health Services in 2012 ("A study comparing retail drug prices between northern Malaysia and Australia"), Santiago said that retail drug prices in Penang were 148.28% higher than the retail prices in Australia, and that Malaysian retail pharmacies marked up prices by approximately 25–38% on innovator brands and 100–140% on generic medicine. The added effect of the GST had made pharmaceutical and healthcare treatments unaffordable to Malaysia's middle- and lower-income classes.
Furthermore, Santiago argued that the Malaysian government's attempts to privatise the drug distribution system for public hospitals had led to a 30% increase in drug costs. This has in fact had the effect of enabling manufacturers, distributors, doctors and pharmacists to monopolise drug sales and allow business interests and profits to dominate the different stages of pharmaceutical production and distribution, leading to high medicine prices.
The government therefore needs to recognise the need for a medicine pricing policy and price monitoring system to bring about affordable and lower-priced medicine, in accordance with Malaysia's 2009 National Medicines Policy, according to Santiago. Furthermore, the government needs to stop "cronies" from using their political influence to win privatised projects in the public procurement of medicine.
Outlook and implications
Unlike most Western countries, Malaysia lacks a regulatory system to monitor the prices of pharmaceutical treatments, for example Britain's National Pharmaceuticals Pricing Authority monitors prices through the Pharmaceutical Price Regulation. Despite several attempts to suggest price-control policies such as separating drug prescription and dispensing to reduce price mark-ups and retail price caps, runaway medicine prices remain a long-standing problem in Malaysia (see Malaysia: 18 February 2015: Malaysia's MoH considers new pharmacy dispensing system to lower prices and Malaysia: 10 December 2014: Malaysia to introduce list of price-controlled drugs).
As expected, the introduction of the GST has exacerbated the trend of rising drug prices and will probably continue to restrict patient access to treatment (see Malaysia: 8 April 2015: Malaysia's new GST expected to restrict access to medicines despite exemptions and Malaysia: 8 January 2015: Patients requiring long-term medication to be hit hardest by GST in Malaysia). This has occurred despite the government's move to exempt more than 7,200 medicines, which mainly include older-generation treatments rather than innovative drugs targeting chronic diseases.
Multinational pharmaceutical firms have benefited from a large degree of freedom in terms of setting prices in Malaysia, and given the entrenched interests of the industry, this is expected to continue. Unsurprisingly, pharmaceutical players in Malaysia have opposed government moves to regulate drug prices, arguing instead that the country already has the lowest pharmaceutical prices in the ASEAN region, and that any control would hamper innovative research (see Malaysia: 8 December 2014: Malaysia has lowest ASEAN drug prices, according to industry group).
Looking ahead, the eventual introduction of the Trans-Pacific Partnership (TPP) is expected to further reinforce the pharma industry's influence over drug regulation in Malaysia. Despite the government's public refusal to grant drug patent extensions under the TPP, given the secrecy surrounding TPP negotiations it remains uncertain how much influence governments will have over medicine price-setting policy in future (see Malaysia: 18 March 2015: Malaysia will refuse drug patent extensions under Trans-Pacific Partnership, says health minister).