Review Pharmaniaga’s role, think tank urges government

Think tank Galen says there must be competition in the drug procurement process, not dependance on a monopoly by a single company. (Reuters pic)

PETALING JAYA: A think tank has recommended that the government review the role of Pharmaniaga in the public healthcare system, saying the government-linked company (GLC) essentially acts as a middleman.

The Galen Centre for Health and Social Policy said it was rare for countries to rely on a single concessionaire company to supply biopharmaceutical products for such a long period of time.

“Pharmaniaga is the sole concession holder to purchase, store, supply and distribute both branded and generic approved drugs and medical products to 148 government hospitals and 2,871 clinics and district health offices nationwide,” Galen CEO Azrul Mohd Khalib told FMT.

Of the RM27 billion allocated for public healthcare in 2018, he said, RM2.5 billion was for medical supplies and RM1.6 billion for consumable and medical support items.

“With 100% market share of the government concession, more than RM1 billion goes to Pharmaniaga annually,” he said, adding that the GLC had a 10-year concession agreement with the health ministry which will end next year.

He claimed Pharmaniaga would source for required medicines and sell them to the health ministry at a pre-determined price with an additional mark-up and commission rate to cover the costs of distribution, inventory holding and procurement.

“It is time that the ministry deals directly with pharmaceutical companies rather than depend on a middleman,” he said. This would allow for millions of ringgit in savings, he added.

“Ensuring that Malaysians are able to have accessible and affordable quality healthcare begins by ensuring that there is competition in the drug procurement process, not dependance on a monopoly.”

Azrul said the lack of competition was stunting the development of the public healthcare system and limiting patient access to life-saving drugs.

Malaysian Pharmaceutical Society (MPS) president Amrahi Buang voiced similar opinions, saying the government should review the roles played by all GLCs in the healthcare system, including Pharmaniaga.

However, he said the government had to have had good reasons for setting up Pharmaniaga in the first place.

“It must be remembered that Pharmaniaga’s role isn’t limited to supply, but also logistics and ensuring accessibility to pharmaceuticals throughout the country,” he told FMT, adding that Pharmaniaga also provided the pharmacy information system for the health ministry.

In the interest of fairness, he said, the health minister could review the role and impact of such GLCs and consider the alternatives before coming to a decision on the matter.

He added that it was unfair and simplistic to blame Pharmaniaga for the cost of medication, saying the GLC was only one part of the supply chain and that profiteering could be taking place along other parts of the line.

When contacted, Health Minister Dr Dzulkefly Ahmad declined to comment on specific companies but said the ministry was studying ways to reduce the price of medicines.

DAP MP Tony Pua had in the past said the prices of medicines in Malaysian hospitals were up to 148% higher than in Australia, as the Barisan Nasional-led government “forced” hospitals to purchase them through Pharmaniaga.

Former health minister Dr S Subramaniam said last year that Pharmaniaga played an important role, especially in logistics and distribution.