Analyzing Factors Influencing Drug Prices In Public Pooled Procurement: A Focus On Market Competition

• By: HATAH, Ernieda (Universiti Kebangsaan, Malaysia)
• Co-author(s): Dr Ernieda Hatah (Universiti Kebangsaan Malaysia, Kuala Lumpur, Malaysia)
  Ms Farahwahida Mohd Kasim (Universiti Kebangsaan Malaysia, Kuala Lumpur, Malaysia / Pharmaceutical Services Programme, Ministry of Health,, Petaling Jaya,, Malaysia)
  Dr Lokhman Hakim Osman (Universiti Kebangsaan Malaysia, Kuala Lumpur, Malaysia)
  Dr Adliah Mhd Ali (Universiti Kebangsaan Malaysia, Kuala Lumpur, Malaysia)
  Prof Dr Zaheer Babar (University of Huddersfield, United Kingdom)
  
• Abstract:

  Ernieda Hatah1, Farahwahida Mohd Kasim1,2, Lokhman Hakim Osman2, Adliah Mhd Ali1, Zaheer Babar3
  1Universiti Kebangsaan Malaysia, Kuala Lumpur, Malaysia
  2Pharmaceutical Services Programme, Ministry of Health, Petaling Jaya, Malaysia
  3University of Huddersfield, United Kingdom
  
  Background:
  Despite ongoing research efforts to explore the potential advantages of pooled procurement, there is a gap in the existing body of knowledge, particularly in understanding the determinants of drug price changes in long-term pooled procurement strategies, especially focusing on market competition.
  Objective:
  Employing a price index as a key metric in assessing the impact on changes in drug prices over time, this study aims to analyze trends and factors that influence the awarded prices particularly market competition in the pooled drugs procurement system in the Malaysian public healthcare sector.
  Methods:
  This study was conducted as a retrospective review of secondary data on public pooled drug procurement from the Ministry of Health Malaysia. The analysis focused on eight therapeutic subgroups of drugs' tendering processes that shows significant expenditure and consumption patterns from 2010 to 2021. Changes in pharmaceutical pricing were measured using a price index, and potential influencing factors were examined through multiple linear regression analysis. The variables studied for the Price Index included Quantity Index, product age, bidding period, therapeutic subgroups, type of procurement, type of competing products, number of competing products, and dosage form. The price index serves as a baseline, with a value of 100 indicating no change in price, values below 100 suggesting a decrease, and values above 100 indicating an increase.
  Results:
  Analysis of 88 drugs across 335 tenders over 10 years yielded a median drug price index of 89.28 (ranging from 1.91 to 123.81). Trends indicated a consistent decline in the median drug price index over the bidding period. Significant factors influencing the drug price index included quantity index, product age, number of biddings, therapeutic subgroups, type of competing product (e.g., innovator versus generic or biosimilar), and the number of competing products (p < 0.05). Notably, a higher reduction in the median drug price index was observed when at least four products competed in the tender, particularly during the sixth to twelfth bids.
  Conclusion:
  This finding underscores the importance of understanding market dynamics and their impact on pricing trends in the healthcare sector. While our analysis provides valuable insights, it's essential to interpret the results with caution as drug prices can be influenced by a multitude of direct and indirect factors beyond the scope of this study. Future study may want to explore the effectiveness of different procurement models (e.g., pooled versus segmented) in fostering competition and driving down drug prices while ensuring equitable access to essential drugs.