Medical hyperinflation, the steep and sustained rise in health care costs, is no longer a distant threat in Malaysia. It is a daily reality for patients, private practitioners, and even government hospitals struggling to stay afloat.
While multiple factors contribute to this crisis, one institution stands at the centre of this spiralling cost structure, and I am sorry to say that it is the Ministry of Health (MOH) themselves.
Far from being a neutral regulator, the MOH has, through decades of policy missteps, protectionist concessions, and overregulation, played an active role in inflating medical costs.
Rather than reforming structural inefficiencies, the MOH has allowed monopolistic practices to flourish, stifled competition, and imposed burdensome policies on sectors it doesn’t even fund.
This essay critically examines how the MOH has become not just a bystander, but a primary architect of Malaysia’s medical hyperinflation.
Protecting Monopolies Instead Of Patients
At the heart of Malaysia’s health care cost dilemma lies the government’s unwavering support for monopolistic entities like Pharmaniaga Bhd, the sole distributor of essential medicines to public health care facilities for nearly 30 years.
Pharmaniaga’s decades-long concession, handed without open tender and renewed multiple times, is a textbook example of how monopolies distort markets.
Rather than transitioning to an open, competitive procurement system, the MOH has repeatedly defended Pharmaniaga’s role, citing logistics performance.
But performance without price competition breeds inefficiency. Public funds are quietly siphoned through intermediary fees, markups, and lack of pricing transparency, all of which ultimately drive up the national drug bill.
When one company controls the flow of essential drugs, the costs are borne not only by the government, but by the entire health care ecosystem, including private sector spillovers.
Overregulation Of The Private Sector Without Financial Support
The MOH has taken a paradoxical approach to the private health care sector: regulate it heavily, fund it never. From mandatory drug price displays to price-capping proposals, the MOH has introduced regulatory measures that increase administrative burdens, reduce clinic efficiency, and raise operating costs, without offering any subsidies or structural support.
This is especially problematic because the private sector absorbs nearly 40 per cent of outpatient care in Malaysia. Yet, while public hospitals receive generous government allocations, private clinics are expected to modernise, digitise, and disclose pricing, often at their own cost.
The result? Many clinics raise consultation or drug fees just to survive, pushing costs further onto patients. The irony is stark: the very sector that helps reduce pressure on public hospitals is being punished with red tape instead of supported as a partner.
Inefficiencies And Bloat In Public Health Care Spending
Medical inflation isn’t just about prices, it’s about how budgets are spent. The MOH’s procurement processes, hospital administration, and resource allocation remain bloated and outdated.
Contracts are often awarded through opaque mechanisms, favouring politically linked entities over performance-based vendors. The ventilator scandal, where over 100 unusable ventilators were purchased during the Covid-19 crisis without proper contracts, is just one example of systemic waste and poor oversight.
Such inefficiencies mean that even as the health budget increases year after year, the cost per health outcome worsens. The MOH spends more, but doesn’t deliver more, a classic sign of institutional inflation.
When the government becomes a high-cost, low-efficiency buyer, it sets the price tone for the entire market.
Delayed Policy Reforms And Resistance To Innovation
Malaysia’s health care policy still lags behind global best practices. While other countries adopt outcome-based procurement, digital health platforms, and decentralised care models, the MOH clings to outdated centralisation.
Its hesitance to liberalise drug procurement, digitise public sector services, or accredit private sector innovation limits system-wide efficiency gains.
Furthermore, reforms like the introduction of national health financing models have been discussed for decades but never implemented. Without a coordinated financing strategy that balances public-private cost-sharing, Malaysia’s health care economy will continue to fragment, and inflate.
Poor Data Transparency And Public Accountability
One of the root causes of Malaysia’s unchecked medical inflation is the lack of publicly available data. The MOH does not publish detailed drug procurement prices, hospital cost benchmarking, or contract justifications.
This opacity breeds complacency, inefficiency, and worse, possible corruption. Civil society, watchdog groups, and even medical associations have repeatedly called for transparency, but little has changed.
Without data, stakeholders cannot evaluate value for money. Without accountability, mistakes are repeated. And without a transparent system, the cost of care will continue to rise unchecked, often without any clear benefit to patients.
Conclusion: A Ministry In Need Of Reform, Not More Control
The MOH must acknowledge its role in exacerbating, not containing, medical hyperinflation. It must stop protecting monopolies like Pharmaniaga.
It must end the punitive overregulation of private clinics. And it must root out inefficiencies, embrace innovation, and rebuild public trust through transparency.
Health care inflation is not just an economic issue, it is a moral one. When drugs become unaffordable, patients suffer. When clinics close down, communities lose care. And when policy protects profits over people, the health system fractures.
It’s time the MOH realises, all the issues mentioned above are for real. We need full transparency at the MOH to beat medical hyperinflation in Malaysia, which remains one of the highest in Southeast Asia.
The author is the past president and founding president of the Association of Private Practitioners Sabah (APPS).
