by MP for Aljunied GRC, Sylvia Lim
In a Parliamentary answer on 14 February 2012, the Ministry confirmed that public hospitals operate their pharmacies as revenue centres. In other words, public hospitals mark up their drugs for sale to patients. It was stated that the typical range of mark up was between 5% to 30%, implying that the mark-up could be even higher than 30% for certain drugs. The rationale for this is to help hospitals earn revenue to defray their overall operating costs.
This latitude given to public hospitals results in the same drug being priced differently at different hospitals. Take for instance, the drug Mycophenolate Mofetil or MMF, which is used in the treatment of autoimmune diseases and for transplant patients. 1 tablet of MMF 500 mg is sold at $2.75 at SGH and NUH, but $3.31 at TTSH and $3.87 at Changi General Hospital. The prices quoted are the subsidized prices for transplant patients under the Standard Drug List II, showing a 40% variation among the public hospitals. I understand that non-transplant patients who need the drug for other conditions would pay significantly more. This disparity for one tablet is magnified manifold for patients who typically need to take several tablets a day over a prolonged period.
Another example is the drug Epoetin Beta, used in treating anaemia in kidney patients. This is a non-standard drug but recently included for means-tested subsidy under the Medical Assistance Fund. An injection of 4000IU dosage costs $24.67/per syringe at TTSH but $35.77* at CGH, a difference of more than $10.
*Note: Minister for Health clarified on 7 March 2012 that the price at Changi General Hospital had since come down.
Members of the public have expressed surprise and confusion as to why different hospitals in the public sector charge such varying prices for the same drug.
Why are the prices of drugs not standardised throughout the public hospitals? Is the variation partly due to the hospitals being organised into 2 clusters – which acquire their drugs separately? Is it feasible instead for all public hospitals to buy drugs together for greater economies of scale, to reduce prices for the patient?
More importantly, should public hospitals use their pharmacies as profit centres in the first place? The government has acknowledged that healthcare costs are uppermost in many Singaporeans’ minds, and that includes drug costs. For non-standard drugs which are not subsidized, is it not more equitable to price them based on cost recovery plus a small addition for administrative costs, rather than to let public hospitals make profits from the sales?
Lastly, could Ministry explain the nature of the subsidies given for drugs on the subsidized drug lists and the Medical Assistance Fund? For instance, under Part 2 of the Standard Drug List, the drugs can be subsidized at 50%. There are also 13 drugs under the Medical Assistance Fund list, which can be subsidized up to 75%. Are these subsidies based on the selling prices rather than the cost prices i.e. if the drugs have been marked up, the subsidy is a discount off the marked up price? Is it just a market subsidy?