Is Dual Policy an Overarching Strategy for Medicine Price Controls in Malaysia?

Several health-related policies have been interrupted when the coalition government, Pakatan Harapan, fell after winning the 2018 election. Regulating medicine prices via referencing pricing was among Pakatan Harapan’s most contentious proposals. Imposing reference pricing entails benchmarking medicine prices in Malaysia against other countries or within the domestic market. Referencing pricing is a prevalent form of price control to contain health care costs. ¹

A study compared the cost of 13 medicines for conditions such as heart disease and diabetes across 50 countries. ² Medicine cost profiles showed that Malaysia has the third cheapest medicines in the world. The United States has the most expensive medicines in the world, and Thailand has the cheapest. Even for costly therapeutic areas like oncology, medicine prices were not significantly higher than in other countries. ³ Medicines, particularly innovative ones, are often targeted in cost containment. ⁴

In Malaysia’s heavily subsidized public sector, cost containment should be directed to the public sector spending. ⁵ There is no reason to interfere with the private sector’s spending. Measures like dispensing separation, deregulation of physicians’ fees, and displaying charges in private health facilities that allow consumers to compare are more effective. The private market is best to be regulated by competition because it ensures that the best services are provided to consumers at competitive prices. ⁶ Thus, consumer education is important to enable them to make informed decisions.

India’s medicine price control policy’s failure is well known. Having one of the lowest medicine prices in the world, out-of-pocket expenditure is 61% of total health care expenditures and citizens are deprived of access to life-saving medicines. New medicine launches declined by 75% since 2011, and access to new medicines was delayed by more than5 years despite being available in other parts of the world. ⁷ There is no incentive for pharmaceutical companies to bring new medicines into countries with such policy, and at its worst, withdrawing existing medicines from the market.

Innovative medicines are inevitably costly due to the high-risk and capital-intensive nature of R&D. While costly, R&D is necessary because these drugs often fulfil unmet needs where there is no current therapy such as in rare and life-saving conditions. Rewarding innovations is essential in thrusting R&D toward the discovery of high-value treatments. “Value-based” approach is more practical to maximize health outcomes with limited health care resources. Health technology assessment and economic evaluations have been developed to facilitate efficient resource allocation. These methods take a spectrum of values such as severity, rarity, and involvement of children into consideration, which are often lacking in price controls.^1,4 A supportive role for price controls is possible for therapeutically equivalent medicines and situations where economic evaluations are inappropriate. A dual policy can be adopted to derive value for money from innovations using health technology assessment and supported by price controls in others. Netherlands’ policy is an example of how the 2 approaches can be complementary. ¹

A dual policy can be a sensible and acceptable compromise in pursuit of making efficient use of limited health care resources while maximizing health outcomes of patients in Malaysia.