Boo Su-Lyn | CodeBlue

Putrajaya’s decision to retain pensioners at IJN comes at a price. MOH and MOF have directed IJN to replace originator drugs with generics for government patients to reduce MOH’s cost burden. Government patients include civil servants, besides pensioners.

KUALA LUMPUR, Oct 28 — The government has instructed the National Heart Institute (IJN) to substitute innovator medicines with generics for public patients to reduce charges to the Ministry of Health (MOH).

CodeBlue understands that a meeting between the MOH and the Ministry of Finance (MOF) was held last Monday, following an announcement by Prime Minister Anwar Ibrahim, who is also finance minister, during his Budget 2025 speech that government patients, particularly those aged 65 years and older, would be allowed to continue their treatment at IJN.

At the meeting, MOH and MOF decided for IJN – which is owned by the Minister of Finance Incorporated (MOF Inc.) – to switch to generic drugs for patients whose care is paid for by the MOH, in a bid to curb bills from the top cardiac centre that are expected to balloon from pensioners remaining at IJN.

Costs to MOH from IJN, a single hospital, exceeded RM600 million last year.

“For patients from the government, IJN will provide generics. For medicines that don’t have generics, government patients will have to buy from outside,” a source told CodeBlue on condition of anonymity.

“I believe IJN will probably follow the university hospital model. That’s how university hospitals control their budget – they provide generics for certain medications or patients will have to buy the originator drugs outside.”

Anwar’s surprise announcement – which wasn’t in his Budget speech text – has effectively forced a reversal of the current discharge exercise of pensioners from IJN and subsequent referrals to MOH cardiac centres.

The MOH is the payer for three categories of government-dependent patients at IJN: federal civil servants, retired federal civil servants, and underprivileged patients.

Last year, among 48,144 government-dependent patients, nearly six of 10 were pensioners at 28,522 people. Civil servants formed more than a third at 36 per cent with 17,384 people.

As a result of IJN’s mandated switch to generics, it is not only government pensioners, but also civil servants in active service who may potentially lose fully subsidised access to branded cardiovascular drugs.

The Anwar administration’s policy decision to shift IJN to generics – which is expected to have a major impact on IJN’s business – occurs after more than three decades of revenue from the government since the country’s top cardiovascular and thoracic care hospital was founded in 1992.

‘Panic’ Seizes Pharmaceutical Industry Over Patient Impact

Pharmaceutical multinational corporations (MNCs) have been thrown into a “panic” over the impact of switching treatment regimens – driven by the payer’s dictate, rather than clinical necessity – for heart disease patients with complex conditions.

Drug makers supplying IJN with innovator products are also staring at losses of potentially millions of ringgit a year.

CodeBlue understands that a number of active drug tenders with IJN have already adopted a dual supplier policy, such as 80 per cent original and 20 per cent generic.

Public patients comprise nearly 85 per cent of IJN’s patient load (68 per cent of the total patient load are MOH referrals), while private patients comprise just 15 per cent.

“Currently, with new leadership on board at IJN, the ‘purchase generic policy’ has been brought up again under pressure,” an industry source told CodeBlue on condition of anonymity.

The source indicated uncertainty among pharmaceutical companies as to which of their products supplied to IJN will be replaced by generics, but expect it to be potentially those under the existing dual tender contract policy.

Many pharmaceutical MNCs are now internally reviewing their current contracts in force with IJN, some of which are multi-year contracts that will still be active next year. Although IJN is a government-owned facility under MOF Inc., it operates as a private hospital under the Private Healthcare Facilities and Services Act 1998.

“As IJN is a centre that treats majority critical cases, a lot of considerations need to be taken from the clinical perspective,” cautioned the industry source.

Another industry source said they have received news that IJN is considering replacing originator anticoagulants like DOACs (direct oral anticoagulants) with generic versions.

“DOACs are drugs used for stroke prevention in atrial fibrillation, also known as blood thinners; they need to be balanced between its efficacy and safety. Switching anticoagulants poses risks for patients,” the source told CodeBlue on condition of anonymity.

A third industry source highlighted potentially poorer clinical outcomes and patient non-compliance with a change of treatment regimens.

“Already, pensioner patients are confused, and now we add another complexity,” the source told CodeBlue on condition of anonymity. “These are IJN patients – they’re high risk.”

One drug maker estimates at least RM10 million in lost annual revenue from IJN’s compelled switch to generic medications for government patients. “We will feel the dent for sure,” the pharmaceutical company told CodeBlue, adding that it still expects IJN to maintain its contract timeline.

It is unclear why the government decided to go with a blanket policy of almost fully switching IJN from innovator to generic drugs for government patients, instead of a less disruptive approach like MOH, as the payer, setting a limit to any price mark-ups from the cardiac centre.

CodeBlue has sought comments from IJN, MOH, and MOF. The three industry sources who spoke to CodeBlue requested anonymity due to fear of reprisal from the government.

Official Statements From DKSH And Boehringer Ingelheim

CodeBlue also reached out to 10 drug makers or product registration holders whose products are supplied to IJN. Many declined to provide a statement, pending official confirmation of IJN’s government-mandated shift to generic drugs.

DKSH Holdings (Malaysia) Bhd – the local office of global market expansion services provider DKSH headquartered in Switzerland – declined to disclose what products it supplies to IJN, or its communications or tender agreements with the cardiac centre, citing trade confidentiality.

“DKSH remains fully committed to adhering to regulatory requirements and providing high-quality health care solutions to meet IJN’s needs,” said Sandeep Tewari, vice president, health care, and head of DKSH’s Malaysia country leadership in a brief statement.

“DKSH is committed to supporting its partners’ evolving needs, including the supply of generic drugs that DKSH represents, while ensuring that we continue to provide value through our product offerings.”

Boehringer Ingelheim Malaysia, the local office of the Germany-based global pharmaceutical company, merely told CodeBlue that it provides medications for the treatment of non-communicable diseases (NCDs) at IJN.

“We have established contracts with various health care providers, including IJN, where we cannot disclose specific terms and conditions due to confidentiality obligations,” a Boehringer Ingelheim Malaysia spokesperson said in a brief statement.

Cardiothoracic Surgeon: Fallacy That Originals Are Always Better Than Generics

Senior consultant cardiothoracic surgeon Prof Dr Raja Amin Raja Mokhtar, who practises at UM Specialist Centre (UMSC), stressed that generic medicines are safe as they have been tested for bioefficacy.

He told CodeBlue that the equivalency (in terms of the active ingredients), strength, and dosage of generic versions are the same as the originator drug.

“In terms of efficacy and safety, generics are usually comparable with the original. It must be bioequivalent (therapeutic effects) to more than 80 per cent of the original,” said Dr Raja Amin, who also sits on the Board of Studies of Universiti Teknologi MARA (UiTM)-IJN’s cardiothoracic surgery postgraduate programme.

“The difference between them is the content of the inactive ingredients, which does not affect the therapeutic outcome but may have an effect on the tolerance of these drugs. There may be some difference in absorption and metabolism, but it doesn’t affect the therapeutic outcome.

“It is a matter of perception and trust that originals are always better than generics. This is a fallacy. Under proper monitoring and guidelines of choosing the generics, I emphasise and reiterate that they are similar in terms of therapeutic effects.”

IJN Potentially Faces At Least RM100 Million Revenue Loss

Despite declining patient numbers and stagnating patient visits of government-dependent patients to IJN, the MOH’s payments to IJN Sdn Bhd (IJNSB) have been on an upward trend over the past decade, jumping 68 per cent from RM361.8 million in 2013 to RM606.5 million in 2023.

A 2023 analysis on 10 drugs, all innovators, with the highest usage and claims charged by IJNSB to the MOH shows prices that range between 42 per cent and 4,323 per cent more expensive than the ministry’s procurement. These include statins like atorvastatin, as well as other medications like pantoprazole, which lowers stomach acid, and empagliflozin that mainly treats type 2 diabetes.

There is no public data on the drug prices charged by pharmaceutical companies to IJNSB and the subsequent prices charged by the hospital to MOH, as this is proprietary information.

As the MOH projects drug cost savings of RM130 million from just the top 10 prescribed medicines at IJN if patients were to be treated in government facilities, CodeBlue estimates that IJN may potentially see a loss of least RM100 million in revenue from its forced shift to generics.

Outpatient visits to IJN cost the MOH more than inpatient cases. Last year, of the RM606.5 million paid by the MOH to IJNSB, outpatient costs comprised 56 per cent of the bill at RM340.1 million for 222,795 outpatient visits. Inpatient cases, on the other hand, cost RM266.4 million for 11,090 inpatient visits.

At a media briefing about a fortnight ago, IJN Holdings group chief executive officer Prof Dr Mohamed Ezani Md Taib, who just got into the job on September 1, unveiled ambitious expansion plans for IJN to diversify into non-cardiovascular services, such as building a new stroke centre, to more effectively deal with competition from major private hospital groups.

IJN had also sought to double its private patient load from 15 per cent to 30 per cent, as its MOH referrals were expected to drop due to the initial discharge exercise of pensioners.

Now, IJN faces a potential double whammy of an even bigger public patient load and loss of revenue from innovator drugs billed to the government. It is unclear if the October 21 meeting between MOH and MOF approved IJN’s requested fee hike of between 10 per cent and 40 per cent for the government. The quantum of the fee review was proposed before the government’s decision for IJN to switch public patients from originator to generic medications.

Over the past several months, many pensioners discharged from IJN took their grouses to the media. Some, writing to CodeBlue, complained that government hospitals did not have many of the originator medications that they were prescribed at IJN, as the MOH only provided generics.

One said he had multiple drug allergies and that IJN had gone through a number of drugs before finding ones that both worked and were safe for him to use. The son of another pensioner said his father’s body was used to the medicines from IJN that he had been taking consistently for years, with high patient compliance and confidence.

“My father doesn’t need to return to IJN for follow-up treatment unless there’s a serious case. But what he really wants is continued medicine supply from IJN; treatment can be transferred to MOH hospitals,” the pensioner’s son wrote to CodeBlue last March.

A pensioner, who was discharged from IJN earlier this year and referred to an MOH cardiac centre, wrote: “I say with all honesty that I probably would be dead, if not for the prompt and expert care I received at IJN from senior cardiologists.”