End drugs procurement ‘monopoly’ within 5 years, think tank tells health ministry

Galen Centre for Health and Social Policy says the government should do away with exclusive concessions in the health industry as part of its commitment to institutional reforms. (Reuters pic)

PETALING JAYA: The Galen Centre for Health and Social Policy has called for an end to the “monopoly” of pharmaceutical giants to procure drugs for the government within five years.

Otherwise, it said, it would send the wrong signal to the healthcare industry that innovation, value and fair competition are not recognised or rewarded.

Commenting on the possibility of the health ministry extending the concession of Pharmaniaga for a further decade, the think tank’s founder and CEO, Azrul Mohd Khalib, said the company has enjoyed 25 years of an exclusive agreement to purchase, store, supply and distribute at least 700 pharmaceutical products.

This, he said, was more than a third of the government’s branded and generic drug supply.

“Should this (extension) happen, it would not only mean that for 35 years, this single company would have gained billions of ringgit in public funds annually, it would also send the wrong signal to the Malaysian healthcare industry that innovation, value and fair competition are not recognised and rewarded.

“Any aspiring or potential local competitor to Pharmaniaga’s business would rightly be discouraged from investing even if it were to offer a more cost-effective and efficient system,” he said in a statement today.

Azrul said that as part of its commitment to institutional reforms, the government should do away with exclusive concessions which grant individual companies a virtual monopoly and major influence over large portions of the healthcare system, including hospital services.

“It creates an unhealthy over-dependence in the belief that these companies will be considered indispensable and become ‘too big to fail’.

“Our public healthcare system is at risk of being vulnerable to such over-dependencies.

“Breaking up such anti-competition behaviour, putting a stop to the use of tender agents as middlemen, and encouraging the development of a more competitive, diverse and transparent drug procurement and supply chain framework will work in the best interest and well-being of patients.

“It has the potential to make better and improved medicines and treatment options available, lower prices of drug and services and help ensure sustainability of Malaysia’s healthcare system for years to come,” he said.

Azrul said Health Minister Dzukefly Ahmad had repeatedly emphasised his vision of value-for-money treatment and commitment to reforms which ensure better transparency, efficiency and cost effectiveness in health.

He also noted that Pharmaniaga had previously welcomed the idea of an open tender exercise rather than a concession arrangement.

“However, should this be too much, too soon, the government should grant a concession agreement of no more than five years and make preparations for a transition.

“The finance and health ministries should seriously consider these options,” he said.