Drugs priced to recover all costs: Govt never spend a cent?

By: Leong Sze Hian

No profit margins on drugs sold in public hospitals

I refer to the article “No profit margins on drugs sold in public hospitals: Gan” (Straits Times, Mar 10).

It states that “Public healthcare institutions do not make a profit on the drugs they prescribe, said Health Minister Gan Kim Yong in Parliament yesterday.

Drug prices include a margin, to offset overheads and operations costs

“Our public healthcare institutions are not-for-profit organisations,” he said. “While the drug prices include a margin, this is to offset overheads and operations costs… They are not profit margins.”

Drugs priced to recover all costs?

So, does it mean that drugs are priced to recover all costs, including overheads and operation costs?

Total public healthcare expenditure – $9.8b?

As to “In fact, last year, we provided a total of $4.3 billion of funding to our public healthcare institutions to support their operations, to keep our healthcare costs low.” – our total public healthcare spending (operational and developmental expenditure) was about $9.8 billion.

Medisave top-ups & withdrawals – $3.4b?

Total Medisave top-up schemes ($402.6 million), Medisave grant for newborns ($106.3 million), withdrawals for direct medical expenses ($899.9 million), MediShield ($892.8 million), private medical.insurance scheme ($581 million), ElderShield ($364.3 million), dependents’ protection insurance scheme’s premiums ($190.8 million) – adds up to a total of about $3.4 billion in 2015.

Public healthcare spending + Medisave top-ups + withdrawals = $13.2b?

Does this mean that total public healthcare spending, Medisave top-ups and total withdrawals from Medisave, was about $13.2 billion ($9.8 + $3.4 billion)?

Medisave contributions + annual % on Medisave accounts’ balances = $13.3b?

I estimate that the annual Medisave contributions plus the annual interest on Medisave accounts’ balances to be about at least $13.3 billion.

Cashflow perspective – Govt not be spending a single cent on healthcare?

So, from a cashflow perspective – does it mean that the Government may still not be spending a single cent on healthcare. if annual inflows exceed outflows ($13.3 billion – $13.2 billion)?

CPF contributions exceed withdrawals by $11.5b?

By the way, CPF contributions by members for the year was $30.2 billion, against withdrawals of $18.7 billion.