Pharmaceutical News and Info

High time to decide on concession issue

Publish date: Fri, 30 Aug 2019, 08:57 AM

THERE is the possibility of a drugs shortage in public hospitals and clinics due to the government’s delay in making its decision on the logistics and distribution concession for drugs and medical supplies.

As reported in the media, the concession, which is currently managed by Pharmaniaga, is still under review even though it is due to end on Nov 30 this year.

My colleagues who are still in the service and on the ground are anxious and concerned about the situation because any untimely decision on the concession may disrupt the supply chain service and adversely affect the patients directly and the rakyat as a whole.

We understand that the government needs time to decide on this matter, but how much time is needed? In making the decision, the government should study whether the concession has met the objectives when it was first implemented and also the current needs.

The existence of a concession company was the result of the privatisation initiative undertaken by Tun Dr Mahathir Mohamad in 1994. The privatisation involved the concessionaire taking over all the assets and manpower of the Government Medical Stores then under the Health Ministry.

At that time, the terms and conditions of the concession were quite loose and did not require enforcement of key performance indicators (KPIs) or impose penalties for non-compliance. Hence, there were lots of problems in the logistics of the pharmaceutical supplies to government hospitals and health facilities.

However, the Health Ministry has, since 2009, placed very strict new terms and KPIs, resulting in substantial improvements. For example, Pharmaniaga successfully reduced the delivery period of pharmaceutical supplies from 60 working days to within seven working days in Peninsular Malaysia and 10 working days for Sabah and Sarawak.

The KPIs also required Pharmaniaga to provide door-todoor service delivery even to the remotest areas in the country. In this way, the government reduced tremendously its vehicle maintenance and staffing costs.

Pharmaniaga has achieved 98% of the KPI for the last seven years and stopped hospitals from overstocking supplies, hence reducing the need to build more or bigger stores.

The concessionaire is also required to develop pharmaceutical manufacturers and other companies within the ecosystem under the Vendor Development Programme (VDP), through which vendors are able to increase their economy, job opportunities, development of employees, R&D capabilities, technology transfer and other downstream effects.

Pharmaniaga, in collaboration with the Health Ministry, was also tasked to develop, implement and maintain the Pharmacy Information System (PhIS), a homegrown system for all government hospitals and health facilities. Completed in 2016, the system reduces wastage through optimal inventory management, lowers the risk of products being expired and minimises medication errors.

The perception that Pharmaniaga determines the price of pharmaceutical products supplied to the ministry is clearly wrong. Tender specifications are determined by the ministry, and all decisions on the tender, including products to be supplied, its suppliers and prices, are made by the ministry in accordance with Finance Ministry requirements. Pharmaniaga focuses on the logistics aspect of the pharmaceutical supplies after decisions are made by the ministry.

Another wrong perception is the monopoly issue. The concessionaire actually manages about 30% of pharmaceutical products supplied to the ministry. The remaining 70% are procured by the ministry via the normal open central contract following other strict procedures laid down by the Finance Ministry.

We should look into whether the concession has really benefited the government, pharmaceutical industry and the rakyat. It should be looked at through both the micro and macro aspects and spillover effects on the pharmaceutical ecosystem and downstream industries.

I understand that the government needs time to make the decision but it must be done without disrupting the pharmaceutical supply chain service. Procurement of pharmaceuticals is complex and takes time, as it needs to adhere to various strict guidelines laid down by the Finance Ministry.

Therefore, whatever decision the government makes must be based on the welfare of the rakyat and taken in a timely manner. As a citizen who has been in the field since the privatisation initiative, I strongly feel that a decision must be made immediately to avoid any disruption in supplies.

Imagine a situation where you are in a public hospital and are in dire need of treatment, but the medicines cannot be dispensed because the supply contract has expired and the government has yet to make a decision. This chaotic scenario may sound extreme, but I can imagine that it is not a situation where one would like to be in.

As an expert in this field, I urge the government to make the decision urgently.


  • The Star Malaysia
  • DR SALMAH BAHRI Former Senior Director of Pharmaceutical Services Programme Ministry of Health Malaysia


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