PETALING JAYA: The health ministry has been urged to explain questions about the inefficiency of its procurement of medicines as highlighted by a Harvard University study.
Speaking to FMT, a source explained that a 2016 study by the prestigious Ivy League university indicated that between 2010 and 2014, the government spent “three to four times” the international reference prices (IRP) for drugs.
This comes in the wake of allegations that companies linked to politicians close to the previous government had control over the supply of billions of ringgit worth of medical drugs
The IRP is widely considered a price benchmark for medical drug procurement agencies around the world. It is calculated as the median price obtained for a drug by various procurement agencies in low to upper-middle income countries.
When it comes to public sector procurement, medical drug prices will be compared with IRP using the World Health Organisation (WHO) and Management Sciences for Health methodology for benchmarking procurement prices based on a basket of drugs.
The Harvard University study titled “Malaysia Health Systems Research Volume I”, which is available on the health ministry’s website, found that procurement prices were three to four times more than the corresponding IRP between 2010 and 2014.
The study noted that although overall procurement prices decreased from 2010 to 2014, only 22% (2012) to 30% (2013) of drugs were procured below IRP.
In the same period, between 45% (2012) and 50% (2013) of drugs were procured at more than two times the IRP. In 2014, nearly 80% of medicines were purchased at or below two times the IRP.
“These medicines, however, accounted for only 55% of total expenditures, indicating that higher procurement prices for high-cost but low volume products have a substantial impact on the budget for medicines,” read the study.
“This is a potential area for improvement in medicines procurement in the public sector.”
The source said the study raised questions on whether the government under the previous administration had been paying much more for medicines than it should have.
“As an example, say an ‘X’ brand drug costs RM2 per strip, what the study illustrates is that in 2010, the government may have paid RM8 per strip (four times more) and in 2014, paid RM4 per strip (two times more).
“The principle here, is that the prices of ‘X’ brand drug which were procured, whether in 2010 or 2014 were four or at best two times more than the IRP. Yes, it’s an improvement over time, but it appears as though the government still paid more than it should have.”
The source said health ministry officials, particularly those who had served from 2010 to 2014, must now come forward to explain why medicines were procured at apparently much higher rates than the IRP.
“These are serious questions of accountability and transparency which authorities need to look into and which need to be clarified.”
FMT has asked the health ministry for comments.