Different mechanisms to contain the cost of pharmaceuticals in Malaysia

The rise of pharmaceuticals cost in Malaysia had put pressure on the Ministry of Health in managing scarce resources in the healthcare sector. Currently, drugs that are listed in the National Drug List are supplied free of charge through government hospitals and clinics. The main objectives of this paper were to review mechanisms that could be used to contain government expenditure on pharmaceuticals and to make recommendations as to which of these mechanisms should be adopted in Malaysia. In addition, an overview of the healthcare sector in Malaysia was presented, and current trends in pharmaceutical spending in Malaysia were compared with those of developing countries, namely Thailand and South Korea. Four mechanisms for containing the cost of pharmaceuticals were reviewed - the use of a national formulary, reference pricing, imposing restrictions on physicians, and cost sharing. After discussing the advantages and disadvantages of each of these mechanisms, the following were put forward as recommendations to contain the costs of pharmaceuticals in Malaysia: (i) to increase the role of cost sharing in the funding of pharmaceuticals in the public sector with exemption fees or other mechanisms used to safeguard low income groups from the increase in prices (ii) to introduce a requirement for the economic evaluation of new drugs seeking listing on the national formulary and only list those drugs that are shown to be cost-effective and (iii) to break the wholesaler monopoly of the drug supply and introduce a tender process whereby pharmaceutical companies compete to supply drugs to the public healthcare system.