Monday, 18 July 2016

Why Medication Cost is High in Malaysia. From RM10 per pack marked up to RM45!

steadyaku47 comment : This was in my Whatsapp Chat space...sharing it with you guys.


There are a few reliable companies that imports generic drugs from India / Japan / Taiwan and sells it to Government hospitals until 2003.

India is now a major pharmaceutical power in the world and it manufactures high quality generic drugs at very low cost. Thailand too has this capability since 2009.

These particular companies buys various drugs in India at an approximate cost of RM10.00 per pack. They actual business model is to sell the imported medicine directly to the Government hospitals, at approximately RM15.00 per pack - which means a 50% mark-up to cover storage, transportation, labour, quality checks, expiry, insurance and of course some profit for the company yet making it affordable for patients.

But the drug is actually sold to the Government hospitals for RM45 per pack.

Here is how it happens. The importing company cannot sell the drugs directly to the Government. They must go through Pharmaniaga Bhd a politically linked / owned company.

Its Directors include UEM boss Dato Ahmad Pardas Senin, failed outsourcing guru Dato Azman Yahya and political dropout Dato Raja Nong Chik.

But even here the importing companies cannot sell the drugs directly to Pharmniaga at RM15.

They first have to sell their drugs to yet another crony company which is "connected" to Pharmniaga. So the crony intermediary buys the drugs first at RM15.00 and then sells it to Pharmniaga at a mark up of say RM30.00.

This is how cronies do business.. it’s called "rent-seeking" no need to sweat or take risks, just collect, collect, collect!. Only cost is letterhead.

They instruct the importing company to deliver the drugs directly to Pharmniaga.

They just bill Pharmniaga and cream off the difference.

This has been going on for numerous years since Pharmniaga was set up in the 1990s.

Then Pharmniaga finally sells the drug to the Government hospitals for RM45.00 a pack.

And who pays for all this creaming off ?

It is the hard-working taxpayers and the ordinary folks.

When questioned the Government replied it is to support the New Economic Policy.