Mandatory drug price display is a double-edged sword

 While consumer advocates believe it will benefit ordinary Malaysians, GPs say the fate of about 2,600 small clinics will hang in the balance.

A private doctor acquaintance of mine in the Klang Valley has been a worried man these days.

The GP (general practitioner) started his private clinic a few years ago after going through some difficult times in the public hospital where he had worked.

He opened his clinic in a semi-urban area, using up most of his hard-earned savings and with a little help from family members. He is his own boss, besides providing jobs for another doctor, four nurses and a security guard.

Given the approved consultation fee structure drawn up 30 years ago, and the cost of living which has escalated over the decades, he says it is a struggle to make ends meet.

“I get about 40 patients a day, from 8am to 10pm, charging RM20 per consultation in my area. So for 30 days, I earn RM24,000 a month. With the two doctors being paid an average of RM8,000 each and the total for four nurses at RM8,000, this income is just enough for salaries.

“I also have to pay the security guard RM1,700, rent of RM3,000 a month, while the utility bill comes to around RM2,000. The profits are minimal actually, but this is how the disbursement of medicine helps us out,” he told FMT.

He said it was a struggle for most individual operators like him, and many GPS faced this problem.

Big chain networks

Private doctors say the new mandatory price display that came into force on May 1 will have little impact on the big players in the industry.

The big third-party operators with a chain of clinics and linked to major commercial pharmacies are likely not to fill the pinch. On the contrary, they stand to benefit the most from the impact of this new move.

One doctor gave the example of Japan’s Sumitomo Corporation, which has invested in two Malaysian companies and formed the leading clinic network.

According to the company’s profile, more than RM100 million was invested over the years to buy up clinics and third-party operators owning a number of clinics each.

In addition, these chains are reportedly linked to huge pharmaceutical companies which have taken control of the drug market. In 2021, Sumitomo Pharma Co Ltd set up Sumitomo Pharma Malaysia Sdn Bhd, a wholly-owned subsidiary.

Price war

According to one doctor, the clinics in the chain have been prevented from dishing out medicines for chronic illnesses such as high blood pressure and diabetes. Patients are instead diverted to the pharmacies controlled by the chain.

“These big companies order medicine in bulk; with the sheer numbers they have, they get the wholesale prices which are much cheaper. They can afford to charge lower selling prices because of the sheer volume they deal with,” he said.

He said small clinics, especially those who operate independently, cannot afford to charge these prices because they would have obtained their stock at a much higher price after ordering in much smaller amounts.

The doctors feel that the mandatory price display rule is a precursor to stopping GPs from selling medicines completely and handing the responsibility solely to pharmacies, especially those owned and operated by giant companies.

New monopoly

Sources in the know claim that with the entry of big players who are also closely linked to major pharmaceutical companies, a different form of monopoly is taking place in the Malaysian healthcare sector.

According to former health minister Dr S Subramaniam, a cost-benefit analysis conducted by the health ministry in collaboration with the Malaysia Productivity Corporation has clearly outlined the long-term impact of the move.

“The analysis clearly outlines the potential closure of up to 2,600 private clinics, with a projected RM206 billion net economic loss over 15 years and the risk of job losses ranging from 91,000 to 136,000,” he had told FMT.

I wonder if the health ministry paid any attention to these projections, let alone the nation losing billions which will be repatriated to the home countries of these giants.

Win-win solution needed

A group of doctors who spoke to me believe that an urgent long overdue review of the fee structure for private practitioners can save thousands of clinics from closing down and thus save many jobs.

The government has not done so despite having more than 10 health ministers over the last three decades. Obviously, they are taking a populist approach by pleasing voters.

Besides the new structure, the GPs feel that the introduction of a ceiling price for all medication could help smaller players, who are on the verge of being swallowed by the big guys.

“They should allow us to display the ceiling prices of the drugs and decide how much discount we can give the patients at our discretion. This will level the playing field to a great extent,” said one doctor.

In view of the seriousness of the matter, there is a suggestion that a special independent committee comprising all stakeholders be set up to look at the matter holistically.

There have been too many major policy decisions being made without proper and effective consultation lately.

Now that the health ministry has given a three-month grace period before enforcing the new policy, there is ample time for the authorities to take another look at it. -FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.