Transcript Effect of Privatization of General Medical Store on

EFFECT OF
PRIVATIZATION OF
GENERAL MEDICAL
STORE ON PRICES OF
ANTI-INFECTIVES IN
MALAYSIA
Baber ZU1, Ibrahim M2, Bukhari NI1
1 University College Sedaya
International, Kuala Lumpur, Malaysia
2 School of Pharmaceutical Sciences,
University Sains Malaysia, Penang
Malaysia
Effect of Privatization of General Medical Store on Prices of Antiinfectives in Malaysia
Baber Z1, Ibrahim M2, Bukhari NI1
1 University College Sedaya International, Kuala Lumpur, Malaysia
2 School of Pharmaceutical Sciences, University Sains Malaysia,
Penang Malaysia
Abstract
The Objectives of this study were to compare pre and post
privatization prices and also to compare current prices with
Median International Reference Prices (IRPs). The drug
prices per unit were calculated to compare them in different
years. When comparing pre-privatization prices (1994) with
those of 1995, out of 101 drugs, 60 were on both lists. Out of
these 60, the prices of 52 had an average increase of 39.91% .
while the prices of 8 drugs decreased an average of 10.71%.
When comparing 1997 data with pre-privatization data, out
of 59 drugs on both lists, 53 drug prices increased an average
of 20.84% .The prices of six medicines decreased an average
of 13.63%. When comparing 2003 data, out of 56 drugs on
both lists, 46 drugs showed an average increase of 67.19%.
The prices of 10 drugs decreased an average of 33.18%. Of
35 drugs matched for comparison of 2003 prices with IRPs,
an average increase of 100% was noted. Out of these 35,
2003 prices of 22 medicines were higher than IRPs . Prices
of 13 drugs were lower, with an average decrease of 33.08%.
Post-privatization pricing tended to increase, suggesting that
monitoring, regulation, and control of privatization may be
necessary. A detailed investigation will provide guidelines for
advocacy
Introduction
The objectives of privatization were: to reduce
the financial/administrative burden on the
government; to improve efficiency and
productivity of healthcare sector and to
facilitate economic growth.
Under the privatization programme in 1994,
General Medical Store (GMS), a government
body to procure and distribute drugs in public
sector was privatized.
After privatization, Remedi distributes about
75% of all drugs in the public sector and does
enjoy a near monopoly.
Data on the impact of privatization of GMS on
the distribution costs and its efficiency is
scarce.
A preliminary study on the issue revealed an
increase of 3.3 fold in drug prices without
improvement in efficiency of services since
privatization.(Izham,1997)
Study Aims
To evaluate the detailed effects of
privatization on prices of antiinfectives by comparing pre &
post privatization prices.
To compare current prices (20012003) with Median International
Reference Prices (IRPs).
Methods
All data on drug prices are in Malaysian Ringgits
(1RM= 0.382 US$) except IRP, which are in US$.
The drug prices per unit (ml, gm, tab, cap, inj, bottle,
tube etc) were calculated to compare them in
different years. Percentage differences in each
consecutive year were calculated as:
% Diff 
Post P Pr ices  Pr e P Pr ices
100
Pr e P Pr ices
Overall percentage growth was calculated for 3
different years 1995, 1997 and 2001-2003.
Individual post privatization prices were subtracted
from that of the pre privatization prices and
summated. Positive sum indicates an increase in
prices whereas negative sum otherwise. An overall
percentage growth rate was calculated by:
Overall% Growth 
Positive Sums
Negative Sums
Weighted increase was calculated by dividing the
change in pre and post year prices as reported by
Izham et al, 1997.
Methods
Price changes were also calculated by another
reported method (Kolassa, 1993).The original
difference was calculated by subtracting the
post privatization data from pre privatization
data, adding all price changes and then
computing the arithmetic means. A respective
mean was taken into account for all negative
and positive values.
IRPs were compared with drug prices of 20012003. Individual drug comparisons were made
by calculating percentage difference of the per
unit drug prices. The Post privatization prices
(2001-2003) were converted to US dollars to
match with that of IRP.
Employing SPSS (ver 11.0) a paired sample ttest was used for comparison between two
individual groups i.e.1994 with each of
1995,1997,2001-2003. Non-parametric test
(Friedman test for k-related sample) was
employed to compare the prices within the
overall groups.
A p value < 0.05 was taken as statistically
significant difference.
Results
A total of 101 anti-infectives were
identified in the data, which were
almost all of the anti-infective in the
overall list of 500 drugs.
An overall 21513% increase in drug
prices were found in 1995, and
51531% in 1997 whilst a 1.86%
decrease was observed in 2001-2003
Comparison of pre-privatization prices
with those of 1995, out of 101 drugs,
60 matched in both lists.
Out of the 60, 52 medicines, prices
had an average increase of 39.91 %,
(median: 20.59%; max: doxycycline
hyclate 100 mg cap, 998%; min:
erythromycin stearate 250 mg tab,
1.25%) while the prices of 8 drugs
decreased, average 10.71%, (median:
4.73 %; max: rifampicin 300 mg
cap,35.17 ; benzyl penicillin 5 MU, 0.
48%).
Results
When prices for year 1997 were
compared with pre-privatization data,
out of 59 drugs, which matched, 53
drug prices increased by an average of
20.84%, (median: 20.38%; max:
rifampicin 150mg cap, 85.27%; min:
erythromycin stearate tab 250mg,
1.15%). While the prices of 6 drugs
decreased by average of 13.63%,
(median: 6.10%; max: rifampicin 300
mg cap,35.15% ; min: streptomycin
sulphate 5g inj, 1.38%).
Out of 56 drugs which matched in both
lists, when 2003 price list was
compared with that of the preprivatization, 46 drugs showed an
average increase of 67.19%, (median:
49.15%; max: streptomycin sulphate
1g inj, 303.73%; min: metronidazole
200 mg tab, 1.52%). 10 drug prices
decreased, average 33.18% (median:
28.13%; max: ampicillin 125mg/5ml
suspension, 74.44%; min: cefuroxime
1500 mg inj, 5.59).
Results
In comparison between 2003–IRP
prices, 35 drugs matched with an
average increase of 100.46% (median:
55.94%). Out of these 35, the prices of
22 drugs were higher than IRP (max:
streptomycin sulphate 1g inj, 483.53%;
min: cloxacillin sodium 0. 93%). Prices
of 13 drugs were lower with an
average decrease of 33.08% (Median:
27.90%; Max: amoxicillin 250mg cap
88.23%; Min: cloxaxillin sodium
125mg/5 ml suspension, 3.82%).
A paired sample t test revealed
significant differences when pre
privatization prices were compared
with 1995 post privatization prices
(p=0.00)
and
with
1997
post
privatization prices (p=0.00).
Results
However when pre-privatization
prices were compared with 20012003 prices, no difference was
observed (p>0.05). Similarly
when IRP were compared with
2001-2003 prices, no difference
was observed (p > 0.005).
Significant
differences
were
observed
when
the
post
privatization
groups
were
compared with pre privatization
data and when post privatization
groups were compared with each
other (p=0.00).
Discussion
Privatization of GMS seems to have had a
significant effect on the drug distribution
system. To our knowledge this study is the first
of its kind in Malaysia and gives detailed
insights into drug prices.
A 21513% increase in drug prices in 1995
(within 1 year of privatization) is a huge
increase in drug prices.
The increase in drug prices seems to depict an
adverse effect of privatization, which further
worsened in 1997-2000, where a 51531 %
increase in drug prices was found after
privatization.
The rise in price was particularly high in the
beta lactam antibiotic group, especially
penicillins.
Some extraordinary price differences were also
observed in the case of antifungals and
aminoglycosides.
Most of the AntiTB drugs have also shown a
price increase.
Another interesting case was doxycycline
hyclate 100 mg caps where a 998.56 %
increase in price was found in 1995, but the
drug prices fell to 8.83% in 1997 and then
increased again (27.31%) in 2001-2003.
Discussion
Inflation can be a contributing factor in
elevating drug prices, since most of the
pharmaceuticals or their raw materials
are imported. Nevertheless a declining
trend of drug prices in 2001-2003 does
not support the above.
Indeed, the prices declined during
2001-2003 and the prices of some
drugs were even lower than 1994
prices.
A critical evaluation of privatization is
clearly required to see whether the
objectives of privatization have met.
Conclusion
Post-privatization pricing tended
to increase, suggesting that
monitoring,
regulation,
and
control of privatization may be
necessary.
A detailed investigation will
provide guidelines for advocacy.
Therefore, a standard pricing
policy is necessary to serve as a
guideline for the pharmaceutical
industry as well as for other key
players.