Saudi Pharmaceutical Journal (Dec 2024)
Analyzing trends and factors influencing price changes in public pooled drugs procurement system in Malaysia: Exploring market competition
Abstract
Background: Pooled procurement is key to managing drug spending amid rising healthcare costs, but conclusive evidence on its sustained impact is lacking, driven by market competition. Objective: This study aims to evaluate the trends and factors influencing the price changes of drugs awarded for pooled procurement systems utilizing a drug price index analysis. Methods: This retrospective study involved a review of secondary data on public pooled procurement of drugs in Malaysia. Drugs were selected through purposive sampling and focused on eight therapeutic subgroups that showed significant patterns of expenditure and consumption. The observed data are retrieved from centralized contracts that were managed through a tendering process spanning from 2010 to 2021. A price index was computed to assess fluctuations in pharmaceutical pricing and market competition. To assess the influence of potential variables on market competition, quantified through the drug price index, a multiple linear regression analysis was utilized. The variables studied include product age, quantity index, bidding periods, therapeutic subgroups, and market competition elements such as types and number of competing products, dosage form, and types of procurements. The significance level was set at p < 0.05. Results: The median price index, derived from the analysis of 88 drugs involved in 335 tenders over 10 years was 89.28 (range between 1.91 and 123.81). The observed trends indicated a consistent decline in the median drug price index throughout the bidding periods. The regression model, encompassing 19 selected variables, demonstrated the ability to predict the drug price index shown by the F-statistic (F (19, 315) = 68.022, p < 0.0005) with adj. R2 = 0.79. The coexistence of innovative or reference products and their generic or biosimilar equivalents in a market may promote competition. Five to eight competing products resulted in remarkably low drug prices. Conclusion: Pooled procurement is one of the approaches to cost containment that is potentially subject to the dynamics of market competition. Time can be a limiting factor that hinders the realization of greater savings. Therefore, it is important to strike a delicate balance when considering regulatory measures, such as patents and barriers to market entry, in order to maintain a fair and competitive landscape within the industry.
