Are government subsidized medications really subsidized?

By Hardeep Saini

A concerned patient about 80 years old contacted me recently about the cost of some medications prescribed to him/her and expressed the unhappiness about the subsidies offered for the medications in Singapore.

I embarked on a research trip to inform myself what this subsidy of prescription medication was about and also took the undertaking to familiarize myself with the cost of medications in Australia.

Both Australia and Singapore are former British Colonies and both are categorized as first world. So it would make sense to compare the price of some medications between the two countries.

During my research in the Singapore context, I came across a question asked by Ms Foo Mee Har, Member for West Coast GRC, on the 7 July 2014, to the Minister for Health, Gan Kim Yong.

Ms Foo asked the minister, whether the same medicines sold in Singapore’s public hospitals are significantly more expensive than those in neighbouring countries such as Malaysia and Thailand; and if so, how can the price differential be narrowed to make medicines more affordable to Singaporeans

The minister replied with the following answer,

“The cost of goods and services differ across countries for a number of reasons, such as distribution costs, exchange rates, purchasing power of the country and pricing strategy of suppliers.  This similarly applies to medicines, and are factored into the pharmaceutical firms’ pricing of medicines.

For the above reasons, the retail prices of medicines in Singapore are generally higher than in some of our neighbouring countries.  To help keep medicines affordable for patients, our public healthcare institutions tender jointly for the majority of their drugs in bulk to enjoy economies of scale.  Savings are reflected in the overall pricing of medicines sold to patients in the public healthcare institutions.”

I would assume that the Singapore government would have a greater bargaining power than a retailer and should be able to source medications at a much more reduced price.

I have compared the prices of some of these medications from the website of a pharmaceutical retailer in Australia and as I have only been able to research the medications prescribed and charged to this individual, this list should be taken as a token audit of prices.

The reader is free to research further such prices as charged to oneself to ascertain the value. As of July 2016, 1 Australian dollar (AUD) is about 1.01 Singapore dollar (SGD).

Medication no.1

Sodium Valproate at 2 tablets a day for 15 weeks. (210 tablets in total)

Price before subsidy is S$75.60. Cost on prescription to this patient was S$10.50 (this must be after subsidy)

In Australia, one can buy 200 tablets for AUD$16.00 before subsidy.

Medication no.2

Escitalopram at 3 tablets a day, as required. (28 tablets)

Price on prescription (28 tablets) is S$84.27 (no subsidy for this medication).

In Australia, one can buy 28 tablets for AUD$5.20 before subsidy.

Medication no.3

Lactulose at 10 ml a day as required.

Price on prescription (500ml) is S$10.50, subsidized.

In Australia, one can buy a 500ml bottle for AUD$8.40 before subsidy.

It is important to note that Australia has a subsidy scheme known as the Pharmaceutical Benefits Scheme (PBS) which prescribes free medications to the following:

  1. Pensioners (people at 65 years old and over),
  2. People who have sustained injuries in a motor vehicle accident, managed by the Transport Accident Commission (TAC).
  3. People who have been injured in a workplace accident, managed by Worksafe.
  4. People who have been issued with a Health concession card by Centrelink, Australia’s social service department.
  5. Refugees
  6. Prisoners
  7. War veterans.

Additionally, every Australian citizen is eligible for a concessionary fee structure for the listed medications.

From 1 January 2016, Australians pay up to a maximum $38.30 for most PBS medicines or $6.20 if you have a concession card. The Australian Government pays the remaining cost.

Australia currently has Reciprocal Health Care Agreement (RHCA) with New Zealand, the United Kingdom, the Republic of Ireland, the Netherlands, Finland, Sweden, Norway, Malta, and Italy, meaning, one only has to show one’s passport to get these benefits in these countries.

I would be shocked if the Singapore government was making a profit by increasing the prices of certain medications and then “subsidizing” them to show that they indeed have that human touch.

The government needs to be transparent about the pricing of medications that are subsidized.

A medical professional whom TOC contacted said that the reason for the $10.50 cost for the first and third medication is because that is the standard charge for drugs on the Standard drug list (SDL) – this is very complicated and includes SDL1 and SDL2. This charge is fixed and does not come down even if the cost of the drugs has come down which is a flaw in the system.

For Escitalopram – the generic version is available in Australia but not in Singapore (at least in 2015) and part of the reason is the high cost of Health Science Authority (HSA) approval for generic drugs.

To read more about Standard Drug List, refer to this article published on International Society for Pharmacoeconomics and Outcomes Research (ISPOR).