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Evaluating Drug Prices, Availability, Affordability, and Price Components: Implications for Access to Drugs in Malaysia

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  • Zaheer Ud Din Babar
  • Mohamed Izham Mohamed Ibrahim
  • Harpal Singh
  • Nadeem Irfan Bukahri
  • Andrew Creese

Abstract

Background: Malaysia's stable health care system is facing challenges with increasing medicine costs. To investigate these issues a survey was carried out to evaluate medicine prices, availability, affordability, and the structure of price components. Methods and Findings: The methodology developed by the World Health Organization (WHO) and Health Action International (HAI) was used. Price and availability data for 48 medicines was collected from 20 public sector facilities, 32 private sector retail pharmacies and 20 dispensing doctors in four geographical regions of West Malaysia. Medicine prices were compared with international reference prices (IRPs) to obtain a median price ratio. The daily wage of the lowest paid unskilled government worker was used to gauge the affordability of medicines. Price component data were collected throughout the supply chain, and markups, taxes, and other distribution costs were identified. In private pharmacies, innovator brand (IB) prices were 16 times higher than the IRPs, while generics were 6.6 times higher. In dispensing doctor clinics, the figures were 15 times higher for innovator brands and 7.5 for generics. Dispensing doctors applied high markups of 50%–76% for IBs, and up to 316% for generics. Retail pharmacy markups were also high—25%–38% and 100%–140% for IBs and generics, respectively. In the public sector, where medicines are free, availability was low even for medicines on the National Essential Drugs List. For a month's treatment for peptic ulcer disease and hypertension people have to pay about a week's wages in the private sector. Conclusions: The free market by definition does not control medicine prices, necessitating price monitoring and control mechanisms. Markups for generic products are greater than for IBs. Reducing the base price without controlling markups may increase profits for retailers and dispensing doctors without reducing the price paid by end users. To increase access and affordability, promotion of generic medicines and improved availability of medicines in the public sector are required. Drug price and availability data were collected from West Malaysian public sector facilities, private sector retail pharmacies, and dispensing doctors. Mark-ups were higher on generic drugs than on innovator brands. Background.: The World Health Organization has said that one-third of the people of the world cannot access the medicines they need. An important reason for this problem is that prices are often too high for people or government-funded health systems to afford. In developing countries, most people who need medicines have to pay for them out of their own pockets. Where the cost of drugs is covered by health systems, spending on medicines is a major part of the total healthcare budget. Governments use a variety of approaches to try to control the cost of drugs and make sure that essential medicines are affordable and not overpriced. According to the theory of “free market economics,” the costs of goods and services are determined by interactions between buyers and sellers and not by government intervention. However, free market economics does not work well at containing the costs of medicines, particularly new medicines, because new medicines are protected by patent law, which legally prevents others from making, using, or selling the medicine for a particular period of time. Therefore, without government intervention, there is nothing to help to push down prices. Why Was This Study Done?: Malaysia is a middle-income country with a relatively effective public health system, but it is facing a rapid rise in drug costs. In Malaysia, medicine prices are determined by free-market economics, without any control by government. Government hospitals are expected to provide drugs free, but a substantial proportion of medicines are paid for by patients who buy them directly from private pharmacies or prescribing doctors. There is evidence that Malaysian patients have difficulties accessing the drugs they need and that cost is an important factor. Therefore, the researchers who wrote this paper wanted to examine the cost of different medicines in Malaysia, and their availability and affordability from different sources. What Did the Researchers Do and Find?: In this research project, 48 drugs were studied, of which 28 were part of a “core list” identified by the World Health Organization as “essential drugs” on the basis of the global burden of disease. The remaining 20 reflected health care needs in Malaysia itself. The costs of each medicine were collected from government hospitals, private pharmacies, and dispensing doctors in four different regions of Malaysia. Data were collected for the “innovator brand” (made by the original patent holder) and for “generic” brands (an equivalent drug to the innovator brand, produced by a different company once the innovator brand no longer has an exclusive patent). The medicine prices were compared against international reference prices (IRP), which are the average prices offered by not-for-profit drug companies to developing countries. Finally, the researchers also compared the cost of the drugs with daily wages, in order to work out their “affordability.” What Do These Findings Mean?: These results show that essential drugs are very expensive in Malaysia and are not universally available. Many people would not be able to pay for essential medicines. The cost of medicines in Malaysia seems to be much higher than in areas of India and Sri Lanka, although the researchers did not attempt to collect data in order to carry out an international comparison. It is possible that the high cost and low availability in Malaysia are the result of a lack of government regulation. Overall, the findings suggest that the government should set up mechanisms to prevent drug manufacturers from increasing prices too much and thus ensure greater access to essential medicines. Additional Information.: Please access these Web sites via the online version of this summary at http://dx.doi.org/10.1371/journal.pmed.0040082.

Suggested Citation

  • Zaheer Ud Din Babar & Mohamed Izham Mohamed Ibrahim & Harpal Singh & Nadeem Irfan Bukahri & Andrew Creese, 2007. "Evaluating Drug Prices, Availability, Affordability, and Price Components: Implications for Access to Drugs in Malaysia," PLOS Medicine, Public Library of Science, vol. 4(3), pages 1-10, March.
  • Handle: RePEc:plo:pmed00:0040082
    DOI: 10.1371/journal.pmed.0040082
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    1. Chong, Chee Ping & Hassali, Mohamed Azmi & Bahari, Mohd Baidi & Shafie, Asrul Akmal, 2010. "Evaluating community pharmacists' perceptions of future generic substitution policy implementation: A national survey from Malaysia," Health Policy, Elsevier, vol. 94(1), pages 68-75, January.
    2. Sabine Vogler, 2019. "Fair prices for medicines? Exploring competent authorities’ and public payers’ preferences on pharmaceutical policies," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(3), pages 443-469, August.
    3. Zhu, Minmin & Dib, Hassan H. & Zhang, Xinping & Tang, Shengchun & Liu, Liqun, 2008. "The influence of health insurance towards accessing essential medicines: The experience from Shenzhen labor health insurance," Health Policy, Elsevier, vol. 88(2-3), pages 371-380, December.
    4. Amna Saeed & Hamid Saeed & Zikria Saleem & Yu Fang & Zaheer-Ud-Din Babar, 2019. "Evaluation of prices, availability and affordability of essential medicines in Lahore Division, Pakistan: A cross-sectional survey using WHO/HAI methodology," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-16, April.
    5. Chong, Hooi Ying & Chan, Tze-Haw, 2014. "Market Structure and Competition: Assessment of Malaysian Pharmaceutical Industry based on the Modified Structure-Conduct-Performance Paradigm," MPRA Paper 59537, University Library of Munich, Germany, revised 15 Sep 2014.
    6. Minghuan Jiang & Shimin Yang & Kangkang Yan & Jun Liu & Jun Zhao & Yu Fang, 2013. "Measuring Access to Medicines: A Survey of Prices, Availability and Affordability in Shaanxi Province of China," PLOS ONE, Public Library of Science, vol. 8(8), pages 1-8, August.
    7. Leila Zarei & Iman Karimzadeh & Najmeh Moradi & Payam Peymani & Sara Asadi & Zaheer-Ud-Din Babar, 2020. "Affordability Assessment from a Static to Dynamic Concept: A Scenario-Based Assessment of Cardiovascular Medicines," IJERPH, MDPI, vol. 17(5), pages 1-19, March.
    8. Xiao Wang & Yu Fang & Shimin Yang & Minghuan Jiang & Kangkang Yan & Lina Wu & Bing Lv & Qian Shen, 2014. "Access to Paediatric Essential Medicines: A Survey of Prices, Availability, Affordability and Price Components in Shaanxi Province, China," PLOS ONE, Public Library of Science, vol. 9(3), pages 1-7, March.

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