Medicines & Medical Devices: Impact of GST



During the announcement of the 2015 Budget, it was made known that 2,900 medicine brands listed in the National Essential Medicines List (NEML) will be "zero-rated"

Since then, it had been pointed out by the Pharmaceutical Industry that many of the medicines in this list are actually the same drug, with only the difference being the manufacturer and/or dosage size.

According to the Pharmaceutical Association of Malaysia (PhAMA), the current NEML – the fourth edition issued by the Health Ministry on September 29, 2014 – contains 320 chemical compounds, representing 500 medicines in specific doses or forms of packaging.

“This amount only makes up around 25% of the nearly 12,000 registered brands of medicine in Malaysia,” says PhAMA which represents the multinational importers and distributors in the country.

This means that the remaining 75% of registered and approved drugs in Malaysia will be subjected to GST.

At the current moment, these drugs are not subjected to any kind of tax, due to the Government’s National Medicine Policy, which includes ensuring the affordability of medicines.

PhAMA notes that the NEML was developed principally to ensure that essential and basic medications that “satisfy the priority healthcare needs of the population” were available at all times.

“As such, the NEML, which was developed based on WHO (World Health Organization) Essential Medicines list and the nation’s basic medicines needs for its healthcare system, does not provide a comprehensive medicines list to effectively treat all diseases or illnesses of the population,” it says.

The list only covers about 30 types of illnesses, with the medicines being older generation drugs, as these have been proven safe and are more cost-efficient.

According to PhAMA, this means that the majority of the latest, most advanced drugs that treat chronic illnesses like diabetes, hypertension, cancer, cardiovascular diseases, genetic disorders and severe infections, are not in the list and will be subjected to GST.

“Whilst the industry is cognizant of the Government’s intention to minimise the increased cost burden faced by Malaysians post-GST implementation, the GST zero-rate accorded to the NEML only covers 23% of the medicines used in the private sector. This, as such, does not provide much relief to patients in addressing the inflationary cost of living and overall healthcare.” 

It estimates that with the implementation of GST on April 1, patients will be required to pay an additional RM180mil per year for their medications. 
While the Royal Malaysian Customs Department recently revised the zero-rated medicines list to include all dosages and brands of the drugs in the NEML, bringing the total number of zero-rated medicine brands up to 4,215, the number of individual drugs that will not be charged 0% tax actually remains the same.

This, of course, does not include the dietary supplements many people take nowadays.


Medical Devices

Medical devices are often critical to helping diagnose, treat and manage patients with various conditions.

According to the Association of Malaysian Medical Industries (AMMI), the term “medical devices” encompasses a wide range of products that range from contact lenses, condoms, heart valves, pacemakers, wheelchairs and artificial limbs to surgical instruments, syringes, resuscitators and radiotherapy machines, and blood glucose monitors and pregnancy tests.

All such devices are required to be registered in Malaysia under the Medical Device Act 2012 (Act 737), and are currently not subjected to any tax.

AMMI chairman Hitendra Joshi notes that while those companies that are export-oriented will not be significantly impacted by the implementation of GST (as exports are zero-rated), those that serve the domestic market will be affected.

Initially, all medical devices were to be standard-rated under the upcoming GST. However, the Customs Department recently announced that they are in the midst of preparing a list of medical devices that will be GST-exempt.

 /the STAR29-03-2015
 

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GST - Confusion in Healthcare?



Malaysians who primarily use public health services need not worry as these are not subjected to  tax at all ie totally exempted from the Goods and Services Tax (GST)

However, those using private healthcare facilities, including purchasing their own medicines from retail pharmacies, will be subjected to 6% GST

The many different categories and methods of taxing private healthcare services and products under the GST regime is confusing to most patients seeking private healthcare.

Medicines alone fall under all three categories of GST, depending on the type of medicine and place of purchase.

4,215 medicine brands have been listed by the Customs Department as zero-rated, meaning 0% tax is charged on them. These will be identified by a “Z” at the back of their registration number, which begins with “MAL”, followed by an eight-digit number.

Medicines are exempted from GST when prescribed by a private doctor and bought from a hospital’s own pharmacy or the doctor’s private practice. However medicines bought at private retail pharmacies are subjected to the 6% tax.

Doctors who consult at private hospitals or clinics will have to charge 6% GST on their fees if they are not employed by the hospital or clinic, and earn more than RM500,000 a year.

Federation of Private Medical Practitioners’ Associations, Malay­sia (FPMPAM) president Dr Steven Chow said: “Consultants are required to invoice and itemise the 6% GST in their bills. The doctors are then required to submit this invoice to the hospital, which acts as the conduit for collection of their fees and GST."

“However, the hospital – with the provision of healthcare services having been designated as ‘exempted’ – is not allowed by law to have the item ‘GST’ itemised in their final invoice to the patient.”

In a letter to The Star from Association of Specialists in Private Medical Practice president Dr Sng Kim Hock said a circular from the Customs Department suggested that the bill should state “GST inclusive”, rather than “GST tax”.

The GST status of medical devices is yet to be decided, with the Customs Department currently working on a list that will be given the “exempt” status.

Customs GST division senior assistant director II Norazura Hashim has said that it was not wrong for doctors to increase their charges to cover the GST taxes as they would have to pay that could not be passed on to the patient directly as GST.

 /theSTAR 29-03-2015

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Latest: Anti-mosquito paint to fight dengue



An anti-mosquito wall paint is to become the latest tool to reduce the number of dengue cases in the country, Health Minister Dr S. Subramaniam said today.

The paint, mixed with the insecticide deltamethrin, is a product of research conducted by the Institute for Medical Research (IMR) and can kill mosquitoes that come into contact with walls coated with it, he said.

“IMR has scientific proof on the effectiveness of this anti-mosquito wall paint and the ministry has held discussions with the company keen to produce the paint,” he told reporters after visiting several houses in Section 7, a dengue hotspot.

Subramaniam said the paint was expected to be in the market by July.

He also said the ministry would apply the outdoor residual spray (OPS) approach that could reduce dengue cases by up to 95%. “The spray applied once on the external walls of buildings remains effective for three months,” he said.

The minister said the other approaches to fight the dengue menace included fogging indoors and keeping the surroundings clean.

This year up to March 21, a total of 30,890 dengue cases with 98 deaths were recorded, up from the 21,967 cases with 54 deaths during the corresponding period last year, he said.

/Bernama 25-03-2015

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IHH: Buys 51% stake in India’s Continental Hospitals for RM167mil



Malaysia’s largest private healthcare provider IHH Healthcare Bhd acquired a 51% stake in Hyderabad, India-based Continental Hospitals Ltd (CHL) for RM166.73mil.

The acquisition comes on the heels of the Competition Commission of Singapore’s blocking of a deal by IHH to acquire Radlink-Asia from Fortis Healthcare Singapore Pte Ltd for RM346.5mil.
 
The competitions regulator had blocked the deal as the acquisition would have resulted in a substantial lessening of competition in the area of radiology and imaging services for private outpatients in the island-republic.
 
IHH said in the filing with Bursa that it had acquired 71.09 million shares in CHL, which owns a 750-bed hospital with involvement in “delivering primary, secondary, tertiary and quaternary healthcare services.”
 
It said the acquisition would not have any effect on its issued and paid-up capital and substantial shareholders’ stakes.
 
There would also be no material effect on the company’s earnings and net assets for the current financial year ending Dec 31, 2015, it added.
 
Last week, the company announced the acquisition of five nursing homes in Japan via the injection of RM182.62mil into Godo Kaisha Samurai.

/theSTAR 24-03-2015

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Boss is always Right?



Rule No 1: The Boss is always right. Rule No 2: Refer to Rule No 1!

I was sharing this "work place wisdom" with a friend recently when she expressed her frustration and disappointment with her Superior.

She works in an enviable position where many would like to attain in career development and achievement. She is the Chief Operating Officer (COO) in a sizable Operation. Her Superior is the owner of the Company and, together, they manage the Organisation.

"My boss often makes the wrong decisions," she said "... and my reputation is affected... and thus I am not happy ..."

I retorted " ... no one would like to make a wrong decision ... especially she is the owner of the Company. She would definitely want to make the right decision."

Of course, unless, there is a hidden agenda, an agenda that is being misunderstood or she lacks the relevant information, knowledge and skill in quality decision making. In this case, open communications and sharing, with mutual respect, must be the order of the day in a matured subordinate-superior working relationship. This dysfunctional relationship, if not remedied, is disruptive and does not augur well for the Organisation.

Nevertheless, I added, if all communications and effort failed, the following Rules apply "Rule No 1: The Boss is always right. Rule No 2: Refer to Rule No 1!"

She should either allow the Superior to continue her way, which is not ethical and professional, in order to "preserve her job" or look for alternative!

Then she added: "Rule No 3: Get out and move out to be your own Boss or to another job opportunity!"

Hmmm ... adverse and non-conducive situation, often times, create new entrepreneurs and/or new job opportunities ... food for thought...

/20-03-2015

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Growing healthy: Second Anniversay!



This site enters its third year ... commencing April 2015 ... looking back it was a journey filled with high expectation, strong will and determination to write on my personal experience, thoughts, opinions and post articles of relevance to the healthcare business development in Malaysia.



I do hope regular visitors find this site useful and helpful in their search for quick and relevant information which enabled them to make intelligent opinions, plans and/or decisions.

As I embark on the third year journey, I do hope that many would continue to drop in for information and share their respective experiences, thoughts and opinions. 

Once again, thanks for dropping by ...

ps: Kindly "click on" 1st Anniversary Message

/15-03-2015

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Dispensing Separation - How and When?



What is Dispensing Separation (DS)? Basically it is "a doctor diagnosed the patient and prescribed medicines to the patient for the ailment diagnosed. Patient will then visit the Pharmacist in a Pharmacy to dispense the prescription presented". The act of dispensing is a process of "auditing" the prescription, filling the prescription followed by patient counselling.

Many of us, who had visited many foreign countries, and had the misfortune of having to seek medical treatment, would realise that the above scenario is already in place. There is no surprise nor any complain uttered as we, together with the locals, went through the process of "dispensing separation".

Thus why is it that Malaysia, being one of the last few developing countries left in the World, still had not implemented "DS"? In fact, many of us are not consciously aware that the Government Hospitals are already practising DS ... this practice had existed since the Country's independence ... that it becomes a routine and "norm" ... with no complains.

Reading the many comments in the media over the last few months on DS, I believe the public would be confused, as there are sensible and logical arguments and facts from both sides of the divide.

Today, the focus in healthcare outcome delivery is the PATIENT himself! Thus, patient's interest MUST take precedence in this debate "for or against" DS.

I am of the opinion that all healthcare stakeholders ie the doctors, pharmacists, insurers, industry players, the Government health regulators, consumer/patient groups be gathered together to "deep dive" into the "advantages and disadvantages" of having DS.

Once there is an agreement for the separation of roles for both the doctors and pharmacists, leading to DS implementation, a DS laboratory be set up comprising of relevant stakeholders to study, manage and resolve issues and challenges with agreed timeline for implementation. Indeed there must be a clear driver for the DS Project, structure, resource and finance.

However, if there is no agreement in having DS in the Country, then it should be dropped and  revisited again at a later agreed timeline as the health eco-system may have changed by then.

/12-03-2015

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Malaysia: Economy on planned Growth Path



Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz has maintained 2015 economic growth target at 4.5% to 5.5% despite potential external shocks, dismissing doomsayers of the economy as being "aught up with misperceptions surrounding the Malaysian economy".

She said economic growth will be anchored by domestic demand, continued expansion across all economic sectors and external sector is expected to remain resilient.

Domestic demand, which is projected to maintain at 6% growth, will continue to drive the economic growth, supported by robust private investment and spending.

On the trade side, she said an expected narrowed current account surplus of 2% to 3% of gross national income (GNI) is in line with global rebalancing and structural transformation in the local economy.

Lower projected current account balance of RM21.4 billion, meanwhile is due to low oil price and higher deficit in income account.

She pointed out that Malaysia should not be viewed as a highly dependent on oil and gas revenue, but the fact is the economic structure has changed with a significant contribution derived from the manufacturing and services sector. Manufacturing and services, which are expected to expand by 4.9% and 5.6% respectively, contribute some 77% to the nation's GDP collectively.

"Shifts in economic activity have resulted in a more diversified economic structure," Zeti said.

"We've to strengthen our fundamentals of being on a steady growth path, if the growth weakens or fragile, this would affect us badly," Zeti told a media briefing in conjunction with the release of Bank Negara Annual Report 2014.

She believes the ringgit is also undervalued as a large adjustment in the ringgit over the recent months has been due to concerns over the impact of low oil price on the Malaysian economy. 

Zeti further added that Malaysia has the strength to intermediate volatile capital flows, thanks to the strong and resilient financial market. She said a stress test for the banking sector shows that there is strong financial buffer and is sufficient to support debt obligations.

"Bank's minimum capital requirement will be maintained. Banks will remain profitable and not cause a collapse in our banking system...there is a high degree of resilience," she noted, citing defaults in highly leveraged entities has been taken into account.

Zeti expects lower headline inflation of 2% to 3% 2015, reflecting the drop in global energy and commodity prices. "Inflation won't exceed 3% in 2015 and possibly 2016," she said.

For 2014, Bank Negara recorded a net profit of RM6.38 billion, with a dividend payment of RM3 billion to the government.

/theSTAR 12-03-2015
 

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CCM Duopharma - Poised to be the largest pharmaceutical manufacturer in Malaysia



CCM Duopharma Biotech Bhd (CCMD) is set to become one of Malaysia’s largest pharmaceutical manufacturers following its purchase of six pharmaceutical units from parent company, Chemical Company of Malaysia Bhd (CCM) for RM245.1 million.

CCMD will be taking over CCM Pharmaceuticals Sdn Bhd, CCM Pharma Sdn Bhd, Innovax Sdn Bhd, Upha Pharmaceutical Manufacturing (M) Sdn Bhd, CCM International (Philippines) Inc and CCM Pharmaceuticals (S) Pte Ltd.

The acquisition will allow CCMD to enhance its product offerings and scale via the combined production facilities.The deal will be beneficial for both CCMD and CCM and bring value to their shareholders, CCM said in a statement today.

“The acquisition will give us greater manufacturing capacity and flexibility to cater to the growing demand for generic medicines, thus allowing us to bid for larger contracts,” said CCMD Chief Executive Officer Leonard Ariff Abdul Shatar.

He said the company was confident of keeping its margins healthy as it ventures into new niche segments including biotherapy and biologics, specifically erythropoietin (EPO) and insulin.

CCMD, a subsidiary of CCM, will undertake a renounceable rights issue of 139.48 million new shares at RM1.40 each to raise RM195.27 million to fund the acquisition.

CCM is a key player in the fertilisers, chemicals and pharmaceuticals industries.

/Bernama 12-03-2015

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Shelved - the Use of GM Mosquitoes to Control Dengue.



The Malaysia Government’s plan to release genetically modified (GM) mosquitoes as a way to fight dengue had been shelved.

The Director General of Health, Datuk Seri Dr Noor Hisham Abdullah said that after the field trials in 2010 and 2011, the Ministry did not proceed further as it was not cost effective to be implemented.

The purpose of GM mosquito dengue control was to reduce the Aedes Aegypti population – the GM mosquito would mate with the females in the wild and the eggs would hatch but the offspring would die before reaching adulthood.
In the field trial undertaken by the Institute of Medical Research and British-based biotech company Oxitec Ltd, about 6,000 male GM Aedes aegypti mosquitoes were released at an uninhabited forested area near Bentong, Pahang, on Dec 21, 2010.

An equal number of unmodified male mosquitoes were released at the same time for the purpose of studying and comparing the GM mosquitoes under natural conditions against their wild counterparts.

The study ended on January 5 and the area was fogged to destroy the mosquitoes the following day.

In response to public outcry over safety concerns at that time, Medical Entomology Unit & WHO Collaborating Centre for Vectors IMR head Dr Lee Han Lim said that the exhaustive studies lasting four years confirmed that the biology, behaviour, mating competitiveness and the capacity to transmit disease of the GM Aedes aegypti were not altered.

Health Ministry vector-borne disease sector head Dr Rose Nani Mudin said Brazil, which had carried out a large-scale of GM mosquito testing there, had announced that they would not implement the dengue-control method.

GeneWatch UK director Dr Helen Wallace wrote in the New York Times recently that computer model­ling of the findings showed that 2.8 million genetically engineered adult male mosquitoes would need to be released per week to suppress a wild population of only 20,000 mosquitoes, which was impractical on any scale.

“There is no evidence of any reduction in the risk of dengue fever, which can continue even if the number of mosquitoes is reduced,” she said.

/theSTAR 06-03-2015


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