TRIPS, Free Trade Agreements and the Pharmaceutical Industry in Malaysia

Mohamed Azmi Hassali, Jayabalan Thambyappa, Shankaran Nambiar, Asrul Akmal Shafie and Hans Lofgren

Malaysia has a relatively well-functioning healthcare system that, with small and limited resources, ensures access to services for the vast majority of the population, including the poor. Between 1990 and 2009 life expectancy at birth increased significantly (from 69.0 to 71.5 years for men, and from 73.5 to 76.3 years for women); the infant mortality rate fell (from 13.5 to 6.2 per 1000 live births); while the maternal mortality rate held steady (at 29 per 100,000 live births) (MOH, 2010). Malaysia has a dual system of public and private health services. The main public healthcare provider is the Malaysian Ministry of Health (MOH), which operates primary care, secondary care and tertiary care facilities across the country through general hospitals, district hospitals and health clinics. In 2010 there were 2833 health clinics, 131 MOH hospitals (with 33,211 beds), and six special medical institutions (with 4582 beds), for a population of 28.3 million (MOH, 2010).

The health system, however, is under threat as a result of increased pharmaceutical and healthcare costs. The World Trade Organization's (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and several bilateral and regional free trade agreements (FTAs) (already signed or under negotiation) threaten access to a sound healthcare delivery system. The implementation of stricter intellectual property rights (IPR) protection is affecting the cost of medicines, while these several agreements can also be expected to have a negative impact on the viability of the domestic pharmaceutical industry.

In this chapter we explain Malaysia's healthcare system and its financing and provide an overview of the country's pharmaceutical industry. We discuss the possible impact on the industry of tightened intellectual property standards contained in the TRIPS Agreement and FTAs. We move on to discuss compulsory licensing and examine TRIPS and generic drugs in relation to domestic suppliers. Following an analysis of the role of government


H. Lofgren (eds.), The New Political Economy of Pharmaceuticals © Hans Lofgren and Owain David Williams 2013

regulation, the question of pricing and distribution of essential medicines is addressed. Finally, the issues confronting domestic generics suppliers are examined, followed by our concluding remarks.

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