Column - Keeping drugs and healthcare affordable

THE pharmaceutical industry is an integral component of any national healthcare system. Thus, in planning for accessible healthcare it is necessary to be cognisant of the pharmaceutical industry.

Pharmaceutical companies have a responsibility for physical well-being and yet they are profit-motivated. They produce drugs that are meant to cure and save lives. Like all other companies they have a profit-maximisation objective.

There is a tendency to expect pharmaceutical companies to behave unlike other profit-oriented companies, to be more welfare-oriented. Often, this is an unrealistic assumption, one that leads to unnecessary disappointment.

Analysts of the American pharmaceutical industry have cited disturbing issues that point to the opportunistic behaviour of companies.

There are good reasons why policymakers in Malaysia have to seriously examine commentaries and analyses of the US pharma industry. First, Malaysia can learn from the US's experience in healthcare provision and we can avoid the mistakes that are being made in the US model. Second, with a careful understanding of comparative healthcare systems we can intelligently upgrade our own system in due course.

One of the disturbing observations in the US is the unwarranted increase in drug prices. For instance, Kaleo Pharmaceuticals pounced on the increased need for naloxone devices by raising the price for Evzio by over 600%. Turing Pharmaceuticals raised the price of anti-parasitic pills from US$13.50 (RM59.90) to US$750.

Pharma companies, as these two instances indicate, have to be monitored. The market cannot be left to sort itself out because it will not. Not when a drug manufacturer is in a monopoly position and thinks it can raise prices as high as it wants to.

President Donald Trump seems resolved to tackle this problem. He has declared: "We have to get the prices down. We have to get the prices way down."

Trump has good reason to be concerned about rising drug prices in the US. Analysts have pointed out that the high prices of drugs, especially for cancer and HIV (though not only for these two diseases), causes financial distress for the affected.

The sick are driven to penury due to the high cost of drugs in the US. In 2014, it cost as much as US$120,000 a year to use some of the newer cancer drugs. For those who have private health insurance it costs an average of US$60,000 to treat someone suffering from cancer.

Dr Scott Ramsey, director of the Hutchinson Institute for Cancer Outcomes Research in Seattle, found that 4,408 of those diagnosed with cancer between 1995 and 2009 had filed for bankruptcy. Further, he points out that those with cancer were 2.5 times more likely to go bankrupt than others.

If the high cost of drugs is already a problem in the US, it could turn out to be the case for Malaysia in the course of time.

The public healthcare institutions in Malaysia are already stretched at their seams, the most recent budget has cut the allocation for healthcare, and private healthcare is expensive in Malaysia. All ingredients for an untenable situation.

There are at least two ways in which the abuse of monopoly power by pharmaceutical companies can be curbed. One way is to encourage the production of generic drugs. The second would be to monitor the prices of drugs and to ensure that firms do not make excessively high profits. The third would be for state-owned pharmaceutical companies, but that is not at all an acceptable solution.

In the absence of a strong competition commission and firm enforcement of measures against anti-competitive behaviour, pharma companies will take advantage of their position. And drug prices will skyrocket, as seen in the US, where the problem has reached epidemic levels.

Malaysia should do all it can to make sure that the economic well-being of all Malaysians is not adversely affected due to rising drug prices and the rising cost of healthcare.

Increasingly, Malaysia is moving towards a market-based model for the provision of education and healthcare, and one hopes that the government is not rolling back its role in the latter.

The US experience shows that we must pay attention to drug prices and the behaviour of pharmaceutical companies.

Healthcare is an issue that cannot be entirely left to the market. The government has a role to play: it must install safeguards against anti-competitive behaviour, structure healthcare financing, ensure universal access to healthcare and ensure that drug prices are within the reach of the average individual.

Shankaran Nambiar is author of Malaysia in Troubled Times. The views expressed in this article are his own. Comments: