Medicine expenditure accounted for 11.4% of the operating budget of the Ministry in 2012

This keynote address by the Director General of Health Malaysia was read by the Senior Director of Pharmaceutical Services Division, Ministry of Health Malaysia, Dato’ Eisah Abdul Rahman at 7th Asia Pacific Future Trends Forum 2014, 12 September 2014, Sheraton Imperial Kuala Lumpur


Y.Bhg Datuk Dr. Jeyaindran Tan Sri Sinnadurai
Deputy Director General of Health (Medical)
Ministry of Health Malaysia

Professor Adrian Towse
President Elect
International Society for Pharmacoeconomics & Outcomes Research (ISPOR)

Jennifer Cain
Director Market Access
Novartis Africa, Middle East & Asia Countries (AMAC)

Eric Van Oppens
Head, Asia Cluster
Novartis Asia Pacific

Distinguished Speakers & Guests,

Ladies and Gentlemen,

Assalamulaikum w.b.t. and a very good morning.

I am very honoured to be part of this commendable occasion of 7TH Asia Pacific Future Trends Forum 2014. A very warm welcome to everyone to this platform of sharing and learning experiences from Asia Pacific countries to face the changes taking place in the global health care sector. A special welcome to our foreign delegates….”SELAMAT DATANG” to Malaysia. Malaysia is a nation with multicultural society consisting of 29.7 million populations . The year 2014 being Visit Malaysia year is the perfect time to see, feel and experience our beautiful country!

Distinguished guests, Ladies & Gentlemen

As we are aware, the global environment for health is changing. Recent industrialisation and globalisation have raised new challenges for health systems globally especially in the Asia Pacific region. Most of the countries are facing a formidable challenge to manage the rapidly increasing cost of health care raising issues on provision of quality, equitable, affordable and sustainable health care services.

The Economist Intelligence Unit (EIU) estimates that global health care spending as a percentage of Gross Domestic Product (GDP) will average 10.5 percent in 2014 (unchanged from 2013), with regional percentages of 17.4 percent in North America, 10.7 percent in Western Europe, 8.0 percent in Latin America, 6.6 percent in Asia/Australasia, and 6.4 percent in the Middle East/Africa. Among developed nations, health is the second-largest category of government spending, after social protection.

From a regional perspective, health care spending in the Asia-Pacific regions is expected to grow at a rate of 7.1 percent from 2013-2017. In 2012, Japan spent an estimated $384 billion on health care (about 8.15 percent of GDP), making it the third-largest health care spender in the world after the U.S. and China. In Singapore, direct government spending on health care has risen from $3.3 billion (8.5 percent of the government’s budget) in fiscal year 2010-2011 (April-March) to $5.7 billion in FY 2013-2014. The city state’s total health care spending is expected to rise by an average of 7.9 percent annually (in U.S. dollar terms) until 2017. Spending on health care in India is estimated to be five percent of GDP in 2013. Total annual health care spending is expected to more than double from 2012-2017, to $201.4 billion, an average annual growth rate of 15.8 percent.

Health spending in Malaysia has been increasing at rates that exceed GDP growth and it has been driven primarily by rises of health spending in the private sector. In 2011, total health expenditure in Malaysia was RM 37.87 billion compared to 8.12 billion in 1997 (approximately four-fold increase in total expenditure). The health spending between the public and private sector translates to a share of 53% versus 47% in 2011 with a similar pattern noted throughout the time series from 1997 to 2011. The Ministry of Health expenditure, both in real and nominal terms, has increased steadily, though as a percentage of total Government spending, it has remained steady. However Malaysia is not a high-spending country on health. The 2011 estimated total health expenditure at 4.3% of GDP is below the 6.1% GDP average for upper middle-income countries internationally. , This mimics a lower middle income nation profile although Malaysia is an upper middle income country.

Several factors such as demographic and epidemiologic transitions, advances in medical technology and more demanding populations are noted to be drivers for healthcare demands. Life expectancy is projected to increase from an estimated 72.6 years in 2012 to 73.7 years by 2017, bringing the number of people over age 65 to around 560 million worldwide, or more than 10 percent of the total global population. In Malaysia, life expectancy at birth has increased over the years, rising for males from 56 years in 1957 to 72.6 years in 2013, and better still for females from 58 years to 77 years. ,

Like many countries in Asia Pacific, Malaysia’s socio-demographic shift shows a somewhat accelerated aging pattern. The proportion of older persons aged 65 years and above in Malaysia is now 5.5% and this is increasing over the years. The United Nation has projected Malaysia to be an aged society in 2030.13,14 Aging populations and increasing life expectancies are anticipated to place a huge burden on the health care system in Malaysia as well as in region such as Japan, and China.

Another shared demographic trend creating increased health care demand is the spread of chronic diseases — heart disease, stroke, cancer, chronic respiratory diseases, diabetes, and mental illness, among others — which is attributable to the aging population, more sedentary lifestyles, diet changes, and rising obesity levels, as well as improved diagnostics.

Chronic diseases are, by far, the leading cause of mortality in the world, representing 63 percent of all deaths. Cancer and heart disease are becoming major killers, even in emerging markets. Africa, the Middle East, Asia, and Latin America are experiencing epidemics in diabetes and cardiovascular illnesses. China, with 92 million diabetics, has overtaken India (80 million) as the world leader in diabetes cases, according to International Diabetes Federation. This scenario also holds true for Malaysia.

As Malaysia becomes more affluent, there are new epidemics of diseases including non-communicable diseases (NCD). We now have the highest prevalence of NCD risk factors in the ASEAN region. According to our National Health Morbidity Survey in 2011, compared to the prevalence in 2006, adults with high cholesterol increased from 20.6% to 35.1% with 26.6% undiagnosed; and Diabetes increased from 14.9% to 20.8% with 10.1% undiagnosed. The prevalence of psychiatric morbidity among children and adolescents has also increased to 20.0%, compared to that 19.4% in 2006 and 13.0% in 1996.

The rising cost of treatment for diabetes and other chronic diseases is expected to compel a more intense focus on disease education and prevention by governments and health care practitioners. Thus, the current and next Malaysia Plan will continue to focus on individual and community empowerment to reduce the exposure to NCD risk factors.

Ladies & Gentlemen,

Improving health care access is a major goal of governments around the world, and a centrepiece of many reform efforts. While facilitating increased health care access is an important and worthy endeavour, more people in the system means more demand for services that numerous health care systems are unable to accommodate due to workforce shortages, patient locations, and infrastructure limitations, in addition to the cost issues.

Nations around the globe are taking steps to address patient access issues by helping to ease the health care workforce shortage; a shortage that directly affects the quality of care. Globally, the number of doctors per 1,000 populations is expected to remain virtually the same between 2012 and 2015.

In Australia, the government has launched the Australian General Practice Training program to increase the number of trainee general practitioners. In 2011 the country’s health minister reported the administration was halfway to achieving its goal of adding another 600 to the program by 2014. China’s Ministry of Civil Affairs has set an ambitious target to train six million caregivers by the end of 2020. In Malaysia, efforts are in place to improve current doctor-population ratio of 1:633 to achieve 1:400 by year 2020.

The rapid urbanization in the region has also created a disparity in healthcare services in terms of resources and workload between the rural and urban areas and also between the urban poor and urban rich. In India, for example, about 80 percent of the population lives in rural areas. Many of these rural areas lack good hospitals when compared to urban parts of India. Malaysia will address this issue through the Healthcare Facility Master Plan which is being prepared to study and overcome the problem of public facility congestion and to better locate new facilities in areas where they most required.

Ladies & Gentlemen,

Health services have become an important industry, with a mix of public and private non-profit and for profit actors, along with the growth of trade and medical tourism. The provision, financing, and regulatory functions of the public sector have to adapt accordingly to these transformations. The need to restructure healthcare delivery and financing systems becomes crucial to balance new demand and supply equilibriums.

Following the lessons learnt from the past financial crisis in 1997-1998, most countries have strengthened their social protection mechanisms and essential health services. There is a greater push among countries to increase universal coverage of basic health services, especially to vulnerable and disadvantaged populations. Throughout the region, many innovative pro-poor financing schemes were implemented, such as the Health Card and 30baht Schemes in Thailand, the Health Fund for the Poor in Vietnam, Health Equity Funds in Cambodia and Laos, and, even in affluent Singapore, the Medifund, a means-tested hospital fees subsidy scheme for indigent patients.

Improving health has many dimensions including adequate shelter, sanitation, improving nutrition, and education along with the provision of appropriate and affordable health care for the prevention and treatment of disease. Medicines and their judicious selection, availability, affordability and use are important in effective health care.

Medicines are a major driver of quality, safety, equity, and cost of care in low and middle-income country health systems. Medicines are major contributors to the health and wellbeing of individuals and populations when used appropriately, and they waste resources and endanger health when used unnecessarily or incorrectly. Ensuring that medicines which achieve important health outcomes are available, accessible to all, used appropriately, and sustainably affordable is essential for realizing universal health coverage.

Pharmaceuticals are responsible for a large proportion of total health care expenditures in low and middle income countries and often account for nearly half of all Out of Pocket costs paid by consumers. In Malaysia, for example, medicines expenditure has been increasing from MYR 1.61 billion in 2010, 1.76 billion in 2011, 1.98 billion in 2012 and 2.2 billion in 2013. Medicine expenditure accounted for approximately 11.4% of the operating budget of the Ministry of Health Malaysia in 2012. Recent international reports have shown that global medicines spending has surpassed US $1 trillion per year and accounts for up to 67% of total health expenditures in some countries, mostly paid out of pocket by consumers. At the same time, medicines constitute three of the top ten sources of waste of scarce health system resources. ,

The cost of pharmaceuticals seems to be a barrier of access to affordable medicines. Medicine prices in Malaysia have been reported to escalate with significant variations between private and public sectors; Prices in private sector was on average four times more than the public sector. World Health Organization/Health Action International (WHO/HAI) study in 2007 reported that medicine prices in our private sectors were among the highest in the region. The drive of free market economy and absence of pricing policy in which manufacturers, distributors, and retailers set medicine prices without government control has led to this scenario.

The financial challenges associated with the annual increase in medicine costs and prices have induced the government to address medicine pricing and funding issues. Our current efforts include development of National Pricing Reference for Medicines based on the National Medicines Formulary as well as Medicines Price Database consisting of national and international reference prices. In addition, we have decided to impose certain level of control on medicine prices in the country.

These efforts are in line with the aims of Malaysian National Medicines Policy (MNMP) which emphasises on access to equitable availability and affordability of essential medicines to those who need them. The Malaysian National Medicines Policy was developed and embedded in the health policies and system as a strategy towards pharmacy transformation. The policy is comprehensive to cover the Governance in Medicines, Quality, Safety and Efficacy of Medicines, Access to Medicines, Quality Use of Medicines and Healthcare Collaboration and Partnership.

Given the importance of medicines to health care and overwhelming evidence of problems with medicines’ access and affordability in the Asia Pacific region, governments are beginning to employ methods of cost containment such as risk-sharing agreements, cost-effectiveness assessments, generic drug promotion, and international price referencing versus previous blunt methods such as spending caps, allocating patient contributions, prescription controls, and mandatory price controls.

Ladies & Gentlemen

The transformational changes taking place in the global health care sector can be disconcerting and challenging, but they can also drive participants to innovate in new and exciting ways. Additionally, shared health care challenges may lead to shared solutions if individual countries endeavour to learn from other nations’ successful practices and adapt them to local needs. Thus, sharing country experiences in forums such as this is apt and may help bring forth practical and sustainable solutions for the region. We hope this forum becomes an avenue to develop further future discussions and exchange of ideas.

On that note, ladies and gentlemen, I have the pleasure in declaring open the 7th Asia Pacific Future Trends Forum 2014.

Thank you….


Categories: Blog, Pharmacy, Speech

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