HEALTHCARE IN ACTION
Jeff Wang, President, DCB
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One of the most remarkable aspects of the Taiwanese healthcare system is its universal insurance system. Paul Krugman, the
2008 Nobel Laureate in economics, described it as one of the best healthcare insurance systems in the world. Taiwan's innovative
insurance system ensures almost universal access to a healthcare system that enjoys an 80 percent approval rating from Taiwan's
citizens. However, this year will see the revision of the legislation surrounding the system by the Bureau of National Health
Insurance (BNHI) and Legislative Yuan. Taiwan's Minister of Health, Chih-liang Yaung, described the reasons that the NHI will
soon be entering its second generation: "In any program you need to have some compromise. Even 15 years after implementing
the NHI we still have a lot of issues. For example, it is very difficult to increase the premium rate. There is one commission
that decides the premium rate and another commission that decides the budget. So who is accountable? The Taiwanese healthcare
system is one of the best in the world, but last year we had a $60 billion NT (US$1.88 billion) deficit. My predecessors were
never able to adjust the premium rate—it is a very sensitive political issue. Because of Taiwan's aging population, new drugs,
and technological advances, a premium increase is inevitable, yet raising the rate is political suicide. Taiwan only spends
6 percent of its GDP on healthcare, yet we have very modern hospitals and a low premium rate, so it is inevitable that the
country builds up a deficit." By increasing healthcare expenditure from 6.2 percent to 7.5 percent of Taiwan's GDP, Yaung
hopes that current imbalances in the system will be addressed. Both the Department of Health and the BNHI are working closely
with all stakeholders in the industry to ensure that the best possible legislative reforms take place in this second generation
of the NHI.
The current system has caused concern in the pharmaceutical industry. In this single-payer system, the government sets the
reimbursement price for drugs, hospitals then choose pharmaceutical partners who can offer the biggest discounts. Based on
these discounts, the BNHI conducts bi-annual price-volume surveys in order to make sure that their reimbursement levels accurately
reflect market prices. These price surveys have become known in the industry as "price cuts;" every time one has been conducted,
significant revenues have been taken away for companies trying to market their drugs in Taiwan. This is a problem that will
be addressed in the upcoming second generation of reforms. Carol Cheng, COO of the International Research-based Pharmaceutical
Manufacturers Association (IRPMA), says that "it is believed that change is crucial as the pharmaceutical industry has suffered
considerably under current NHI policies. We are urging the government to amend the law, and shape a more reasonable environment.
From the patient's perspective, this will improve the medication quality and increase the number of advanced drugs available
to society."
ADDRESSING THE PRICING ISSUE
Wayne Hsu, Managing Director, Chifu Trading
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The 2009 price-volume survey took as much as 15 percent away from the price of some drugs, making it difficult for multinationals
to plan a long-term strategy due to the unpredictability of the market. This has a knock-on effect in convincing global headquarters
that Taiwan is a country worthy of long-term investment—many companies simply do not know whether the next price cut will
mean that it is no longer cost-effective to maintain a presence in the country.
"I am of the opinion that it is going to get worse before it gets better," says Alex Chang, CPO head and country president
of Novartis Taiwan, when talking about the situation for multinationals in the country. "I believe that there will be more
price cuts to come in the next few years because the deficit is definitely an issue and it has not yet been decided whether
increasing patient premiums is a politically viable move." Although the current registration system means that it takes an
average of two to three years for a product to take off in the market, after patent expiry MNCs are currently seeing a very
slow dropoff in the sales of their drugs. The Taiwanese government wishes to see a quicker take-up of generic drugs in the
market, but they are willing to compensate by increasing the speed of market access for innovators. Chang finds some comfort
in the fact that these issues are likely to be addressed in the second generation of the NHI reform: "It's encouraging to
see clinical trials will also help accelerate product registration and gain a higher reimbursement price." Novartis is the
company with the most clinical trials currently ongoing in Taiwan, with over 55 studies ranging from Phase I to Phase III.
Warren Chen, Country Manager, Celgene Taiwan
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Uwe Dalichow, general manager of Bayer Schering Pharma Taiwan, believes that the second generation of healthcare reform is
a "logical evolution" of the system. Despite the problems with the system faced by pharmaceutical players in the country,
he is still extremely positive about the healthcare situation: "Taiwan was able to establish something extraordinary if you
compare with not just Asian standards, but even worldwide standards. You can see that the country is truly committed to providing
healthcare not just to the elite, but to the entire population."
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Lilly is another company that sees the value of the Taiwanese market despite the price cuts. Wei-li Shao, general manager
of Lilly Taiwan, explains that "Lilly is in an interesting position right now—around 90 percent of our sales are for our patent
products. Our strategy, discipline around negotiations, and portfolio has enabled high growth over the last four years." While
other companies in the market have struggled with the situation in Taiwan, Lilly's product mix and business strategy have
ensured that they grow a successful business in the country despite the unpredictable climate. Shao believes that his experiences
in Taiwan have placed him well for international success in the future: "It used to be the belief that if you knew how to
run the US business then you could run the global business. I don't believe that to be true any more because, if anything,
the US represents the tail of the reform situation. Then it became the belief that if you ran the EU business then you could
run the global business. However, today the EU is in decline and there is a trend of research investment being pulled out
of the EU to different parts of the world. Now we're shifting to a paradigm, which states that if you can run the business
in Asia, you can run the global business. The combination of Asian experience with the fierce Eastern method of negotiation
and politics is a requisite experience for any president or general manager."
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