Drug Pricing

14 February 2012

Question No. 104

Name of person: Ms Sylvia Lim

Question

To ask the Minister for Health (a) whether public hospitals are free to determine the price of drugs sold to patients or whether they have to comply with certain guidelines and, if so, what are the guidelines; (b) what is the range of mark-ups over the cost of drugs used by public hospitals in pricing drugs to patients; and (c) what is the range of mark-ups over cost used by public hospitals in selling (i) plavix (ii) augmentin (iii) statins and (iv) erythropoietin to patients.

Answer

1     MOH sets overall subsidy targets for the different services at the public hospitals, for example, up to 80% for Class C patients and 50% for subsidised patients at the Specialist Outpatient Clinics. As the public hospitals operate on a non-profit basis, any revenue from sale of drugs, consultation fees and other services help to defray their overall operating costs. In FY2010, the public healthcare institutions incurred operating deficits of over $2 billion, before subvention from the government.

2     The margins for drugs sold in the public hospitals (excluding overheads and before subsidy) varies and they typically range between 5% and 30%, on a per drug basis. This helps the public hospitals to cover overhead costs of procuring and storing each drug, preparing, packing and dispensing each prescription, and running the pharmacy and inventory. Any surplus is used to cover other operating expenses of the healthcare institution. Various schemes such as the Standard Drug List (SDL) and the Medication Assistance Fund (MAF) help keep these drugs affordable for lower income Singaporeans who are able to access these drugs often at significantly below cost. For needy patients, they can also apply to Medifund for financial assistance.

3     Ms Lim enquired about the following drugs:

• Plavix (Clopidogrel)
  

The retail price for Plavix (branded) is currently about $4 per tablet in the private sector. Generic Clopidogrel is available in the public hospitals at around $1.09 per tablet, or $7.63 per week, assuming a dose of one tablet per day. However, as this is a standard drug that is capped at $1.40 for a week’s supply, subsidised patients pay $1.40 for one week’s worth of this drug, which is below its cost.

• Augmentin (Co-amoxiclav)
  

The retail price for Augmentin (branded) is currently around $4.20 per tablet in the private sector while generic Co-amoxiclav is available at around $0.36 per tablet (with a margin of about 30%) in the public hospitals. Patients pay $3.60 for a five-day course of antibiotics, assuming a daily dosage of two tablets. Co-amoxiclav is currently a non-standard drug and MOH is in the process of reviewing Co-amoxiclav together with several other antibiotics for possible inclusion into the SDL, which would lower the price for subsidised patients.

• Statins
  

There are various statins available in the market, including both branded and generic versions. A commonly used statin is Simvastatin. The current retail price for generic Simvastatin is about $0.43 per tablet in the private sector. Generic Simvastatin is available at around $0.26 per tablet in the public hospitals, with subsidised patients paying about $0.13 per tablet (after 50% subsidy). Generic Pravastatin is available in public hospitals at around $0.19 per tablet after 75% subsidy for eligible patients and this is significantly below the cost of the drug. Another commonly used statin is Atorvastatin. The current retail price for Atorvastatin (branded) is about $2.60 per tablet in the private sector. Generic Atorvastatin is available in the public hospitals at around $1.36 per tablet. Atorvastatin is scheduled for review later this year for possible inclusion into the SDL, which would lower the price for subsidised patients.

• Erythropoietin

Erythropoietin is available in a variety of forms. The current retail price for the commonly used Epoetin alfa 4000 IU injection ranges from $100 upwards to about $200 in the private sector. In the public hospitals, Epoetin alfa 4000 IU injection is available at around $28.36. Under the MAF, eligible patients can receive up to 75% subsidy for this drug, i.e. they only pay $7.09, significantly below the cost of the drug.

4     MOH regularly reviews and seeks to improve the affordability of drugs for subsidised patients. In August 2011, we announced enhancements to the MAF to increase the subsidy for higher-cost drugs under the MAF to up to 75% (from 50%), as well as to provide financial assistance to eligible patients who require non-standard drugs that are clinically necessary for their treatment. We also enhanced the subsidy for certain standard drugs needed for the treatment of conditions under the Chronic Disease Management Programme (CDMP) from the current 50% to 75% on a means-tested basis. We will continue to review our drug pricing and subsidy policy, to keep abreast of medical advances and costs, and to meet the evolving healthcare needs of Singaporeans.