Funding Challenges in the Malaysian Health Care System

Adrian Towse presented at the Monash Malaysia Health Economics Forum 2019 on three related topics: health system financing in Malaysia; pharmaceutical price regulation and competition in Malaysia; and the potential for using real world evidence to improve the efficiency of the Malaysian health system.

Adrian Towse presented at the Monash Malaysia Health Economics Forum 2019 on three related topics: health system financing in Malaysia; pharmaceutical price regulation and competition in Malaysia; and the potential for using real world evidence to improve the efficiency of the Malaysian health system.

In his first presentation, Adrian explored the challenges facing Malaysia in expanding universal health coverage. Currently, health care spending is around 4% of GDP split roughly 50:50 between public and private spend, which is at the low end of spending for comparable countries seeking to achieve better health coverage for their citizens. 

He listed both demand side and supply side pressures for higher spending, notably the growing burden of chronic disease in Malaysia, and noted evidence from the Lancet Commission and elsewhere that investment in health can have a high payback. There was understandable scepticism on the part of Ministries of Economy and Finance in all countries about the returns on investment in health. He referred to Peter Smith’s OHE annual lecture which set out how the case for investment in health can be made.  

He noted the World Bank recommendations for increasing overall government revenue as a share of GDP which included expanding the tax base, removing fossil fuel subsidies, and raising taxes on health–damaging products. 

The Malaysian government recognizes that health care spending needs to increase to around 6% of GDP, but Adrian noted that increasing public spending will not be easy. He argued that the public – private divide, together with high dependence on OOP spending, needs to change. Specifically: the public sector should buy from private sector providers and vice versa; moves to national health financing need to be incremental and progressive; the new government financial protection schemes should lead to strategic purchasing of services for patients; and there is a need for private sector purchasers that are able to manage care for their policy holders and bargain effectively with hospitals and clinics. There should be an overall strategic vision for national health financing implementation, although he recognized that there had been many reform plans in past decades that had not survived political challenge. The health system financing presentation is available here.

In his second presentation, Adrian looked at the pharmaceutical pricing reforms proposed for Malaysia, starting from first principles of economic regulation. He argued that external reference pricing was a poor substitute for developing a pathway to locally assessed value-based pricing. In Malaysia, this could build on the work of the current two government groups undertaking HTA. His slides on pharmaceutical pricing reform are available here. Adrian also argued for an increase in competition to tackle high price mark-ups on drugs sold in private clinics and hospitals. He recommended: separating prescribing from dispensing to let patients get drugs from any pharmacy outlet; letting clinics charge realistic rates for core services so they don’t need to cross-subsidise from high mark-ups; and ensuring competition between clinics and between hospitals for patients. These were picked up in an online publication and can be seen here. 

In his third presentation, Adrian looked at the potential role for real world data to be generated, curated and used in Malaysia to provide evidence to support an efficient healthcare system. He concluded that: digital health offers great opportunity for efficiency improvements and better health outcomes; the data captured can be used to generate evidence on the performance of drugs, pathways of care, and how particular groups of patients fare in the health system;  Malaysia has plans to significantly increase the RWD generated but turning that into opportunities for producing RWE raises a number of challenges. Two of the most important are: (i) Governance issues arising from the need to make data available whilst protecting the privacy of patients; and (ii) Raising the standards of analysis and reporting in RWE studies so that they can more readily be used in decision making. His RWE presentation is available here