THE government’s decision to grant an extension to the concession agreement with Pharmaniaga Berhad for the provision of medicines and medicinal supplies to Health Ministry (MOH) facilities for another 10 years has been called a “major blow” to much-needed healthcare reforms.
Galen Centre for Health and Social Policy CEO Azrul Mohd Khalib said this in response to MOH’s confirmation yesterday (April 18) that it is extending a logistics and distribution concession with the local pharmaceutical company to supply the government with medicine for 10 more years.
It was previously given a conditional agreement for 10 years in January last year, which was subject to terms and conditions that were initially supposed to be finalised before last Dec 31.
The deadline was then extended to June this year.
“This decision, while representing a big win for the company and good news for its shareholders, signals a confirmation that the Malaysian health system is vulnerable, at risk and heavily dependent on a single company for more than a third of the government’s branded and generic drug supply and most, if not all, of its logistics and pharmaceutical supply chain,” Azrul said in a press statement today (April 19).
“It also contradicts and refutes the previous denials that there is no such dependency.”
Azrul further noted that the government’s practice of exclusive concessions – which grants individual companies a dominant grip and major influence over large portions of the nation’s healthcare system – has created an “unhealthy over-dependence” in the belief that these companies will be considered indispensable.
The extension comes despite Pharmaniaga being included into Bursa Malaysia’s Practice Note 17 classification of financially distressed companies and found by the Auditor-General to have provided faulty ventilators to MOH during a public health emergency, he added.
“This decision is baffling, disappointing, and will be seen as rewarding the company regardless of its performance or the risk it represents. Will this be the approach whenever this GLC runs into financial trouble?” Azrul asked.
“The government’s decision will also send a signal to all pharmaceutical players that there is no point in building, investing, and growing its business here in Malaysia to compete for the provision of medicines under the concession arrangement as Pharmaniaga has practically locked it up for another decade.
“This is poor business practice deprives the Malaysian public healthcare system and the people of this country from the benefits of healthy competition, reduces the diversity of providers, and maintains the existence of tender agents as middlemen which unnecessarily increase the costs of medicines.” – April 19, 2023
