No profit margin from sale of drugs? Onus on MOH to prove Minister Gan is telling the truth

As one of the biggest drug purchasers in the world, MOH Holdings should have been able to obtain bulk discounts from overseas suppliers. When medications are sold at much-lower prices across the causeway, something is clearly not right.

WP recently queried MOH Minister Gan on whether public healthcare institutions have been making a profit on drugs. Minister Gan unabashedly told Parliament: “While the drug prices include a margin, this is to offset overheads and operations costs … They are not profit margins.” link

But why do patients – as taxpayers – need to help MOH offset overheads and operations costs when these have already been allocated in the budget? Did the government misallocate public resources by, say, allocating a higher than necessary budget to defence?

Minister Gan can’t simply make a statement, assume all Singaporeans are daft and expect it to be taken at face value.

Healthcare costs have spiraled out of control, no thanks to PAP’s corporatisation, since 3 decades ago.

How PAP has priced polyclinic consultation fee at more than 100% higher than a private GP, as well as the rate of its increase, strongly suggests there is a profit margin in the sale of drugs.

In 2015, polyclinic consultation fee was ‘$38.97’.

2015 polyclinic bill

A year later, just months after GE 2015, this was increased by a whopping 7%.

2016 polyclinic bill

Did inflation increase by 7%? Or wages of ordinary citizens? What has increased by 7% to justify the hike in consultation fees? Were polyclinics’ “overheads and operations costs” much higher than a private clinic?

Pricing consultation fee at $41.68 is a total rip-off unless MOH can justify this with a cost breakdown.

Patients may not have realised they have been ripped off because of the imaginary government ‘grant’. But the difference between the ‘full amount’ and ‘payable amount’ comes from taxpayers, ie patients.

It would be interesting to find out how MOH arrived at a $41.68 consultation fee when private GPs charge only about half the amount.

While the profit margin of consultation fee is clear as daylight – more than 100% – the profit margin of drugs can only be confirmed by MOH Holdings:
– Disclosing the cost price of all drugs, excluding ‘offset costs’.
– Publishing a complete set of accounts.

WP should not be satisfied with Gan’s reply as it would mean patients are forced to accept increasingly higher cost of drugs. If asking a question in Parliament is of no benefit to patients, then WP might as well not ask in the first place.

Since Minister Gan has claimed there is no profit margin in the sale of drugs, did high cost result from high staff cost? Million-dollar salary for top management? Was high land price (rental) included in the costing?

The days of PAP ministers making a statement and expecting Singaporeans to blindly accept as the gospel truth are over.

The ball in in PAP’s court and hopefully with some assistance from the WP, we will know for certain if indeed MOH did not profit from the sale of drugs.

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2 Responses to No profit margin from sale of drugs? Onus on MOH to prove Minister Gan is telling the truth

  1. sinkie says:

    WP should have gone further and ask for breakdown of actual drug cost & the “overhead margin”. I suspect the margin for “overheads and operations” are very high. This is the main problem with the restructuring & corporatizing of Singapore’s public hospitals since 1990. By being corporatized, the management of the restructured hospitals are incentivized to hire expensive doctors, increase salaries for the higher-level staff, buy expensive equipment, build expensive medical & specialist centres, have expensive building renovations, and then to pass on the costs to patients & their families on a cost-recovery basis. CEOs of the restructured hospitals & CEOs of the healthcare clusters e.g. SingHealth, NHG, Alexandria Health, Eastern Alliance etc etc KNOW that their KPIs DO NOT depend on merely providing low-cost basic healthcare to public earning $2K or less per month. Their KPIs, performance gradings and careers get more bang for the buck by engaging in high-profile but expensive medical “show biz”.

  2. Phillip Ang says:

    WP should have demanded transparency on many other issues but somehow stopped short of this. Strange. Doesn’t want to score goal? Will be surprised if they are able to shed any light by getting MOH to disclose material information on this issue.

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