Dr James Jeremiah wrote an article under CodeBlue which blamed the Ministry of Health (“MOH”) for several missteps which resulted in the current medical inflation. As he sees it and rightly so, part of Malaysia’s health care cost dilemma lies in government’s unwavering support for monopolistic entities like Pharmaniaga Bhd, the sole distributor of essential medicines to public health care facilities for nearly 30 years. Pharmaniaga’s decades-long concession, handed without open tender and renewed multiple times, is an example of how monopolies distort markets.
Rather than transitioning to an open, competitive procurement system, the MOH has repeatedly defended Pharmaniaga’s role, citing logistics performance. But performance without price competition breeds inefficiency. Public funds are siphoned through intermediary fees, markups, and lack of pricing transparency, all of which ultimately drive up the national drug bill.
Source: https://en.wikipedia.org
When one company controls the flow of essential drugs, the costs are borne not only by the government, but by the entire health care ecosystem, including private sector spillovers.
Then the MOH has taken a paradoxical approach to the private health care sector: regulate it heavily, without any funding support. From mandatory drug price displays to price-capping proposals, the MOH has introduced regulatory measures that increase administrative burdens, reduce clinic efficiency, and raise operating costs, without offering any subsidies or structural support.
This is especially problematic because the private sector absorbs nearly 40 per cent of outpatient care in Malaysia. Yet, while public hospitals receive generous government allocations, private clinics are expected to modernise, digitise, and disclose pricing, often at their own cost.
The result? Many clinics raise
consultation or drug fees just to survive, pushing costs further onto patients.
The irony is stark: the very sector that helps reduce pressure on public
hospitals is being punished with red tape instead of supported as a partner.
Medical inflation isn’t just about prices, it’s about how budgets are spent. The MOH’s procurement processes, hospital administration, and resource allocation remain bloated and outdated.
Contracts are often awarded through opaque mechanisms, favouring politically linked entities over performance-based vendors. The ventilator scandal, where over 100 unusable ventilators were purchased during the Covid-19 crisis without proper contracts, is just one example of systemic waste and poor oversight. The there is vaccines purchased which Pharmaniaga had to write-off. Such inefficiencies mean that even as the health budget increases year after year, the cost per health outcome worsens. The MOH spends more, but doesn’t deliver more, a classic sign of institutional inflation.
When the government becomes a high-cost, low-efficiency buyer, it sets the price tone for the entire market. Malaysia’s health care policy still lags global best practices. While other countries adopt outcome-based procurement, digital health platforms, and decentralised care models, the MOH clings to outdated centralisation. Its hesitance to liberalise drug procurement, digitise public sector services, or accredit private sector innovation limits system-wide efficiency gains.
Furthermore, reforms like the introduction of national health financing models have been discussed for decades but never implemented. Without a coordinated financing strategy that balances public-private cost-sharing, Malaysia’s health care economy will continue to fragment, and inflate.
One of the root causes of Malaysia’s unchecked medical inflation is the lack of publicly available data. The MOH does not publish detailed drug procurement prices, hospital cost benchmarking, or contract justifications. This opacity breeds complacency, inefficiency, and worse, possible corruption. Civil society, watchdog groups, and even medical associations have repeatedly called for transparency, but little has changed. Without data, stakeholders cannot evaluate value for money. Without accountability, mistakes are repeated. And without a transparent system, the cost of care will continue to rise unchecked, often without any clear benefit to patients.
Unless MOH acknowledges its role in exacerbating, not containing, medical inflation we will continue to speak on such issues. Monopolies like Pharmaniaga must end. Overregulation of private clinics doesn’t help. And it must root out inefficiencies, embrace innovation, and rebuild public trust through transparency.
Health care inflation is not just an economic issue, it is a moral one. When drugs become unaffordable, patients suffer. When clinics close, communities lose care. And when policy protects profits over people, the health system fractures. Why can’t we be more transparent and accountable in our processes? Madani needs to evaluate what is best for the nation not the GLCs or the elite masters!
Reference:
The Primary Architect of
Malaysia’s Medical Hyperinflation, Dr James Jeremiah, CodeBlue, 24 March 2025
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