Evaluating factors associated with pharmaceutical price variation, dispersion and higher-tier pricing in Malaysia's public segmented procurement system: exploring market competition

Background Effective procurement is crucial for securing affordable medicines, yet limited evidence exists on pricing influences in Malaysia’s dynamic pharmaceutical market. This study analysed factors associated with purchased price variation, bidder price dispersion, and higher-tier drug prices within the Ministry of Health’s (MOH) segmented procurement system, focusing on market competition dynamics.Methods A retrospective analysis was conducted on eight high-expenditure therapeutic subgroups (2017–2021) using data from 19 MOH facilities across five regions. Price variation was calculated as the ratio of observed to minimum brand price, and bidder dispersion as the ratio of highest to lowest quoted price. Higher-tier prices exceeded the median price for a given brand. The Kruskal–Wallis H test was applied to examine distributional differences in purchased drug prices and bidder-quoted prices across categorical variables, while logistic regression was used to identify factors associated with higher-tier pricing (p < 0.05). Factors analysed included geographical zones, facility types, procurement values, therapeutic subgroups, purchased product types, dosage forms and the number of competing agents and products.Results Among 97 drugs from 4,702 purchase records involving 28 suppliers, East Malaysia showed significantly higher price variation, and all regions had greater odds of higher-tier pricing than the Central region (p < 0.05). Lower procurement values were linked to greater price variation and higher-tier pricing (p < 0.05). Imported generics exhibited higher price variation (p < 0.001) but lower prices than innovators and local generics. Procurements with ≥3 competing agents had lower price variation (p < 0.008) but greater bidder dispersion (p < 0.001), while up to five agents increased the likelihood of higher-tier pricing (p < 0.05) compared to 7–12 agents.Conclusion Findings highlight that both market and non-price competition influence procurement efficiency and price stability.