The Committee recognizes the positive progress made by government in several key areas:
Legislative Yuan enactment of the of Patent Linkage (PL) and Data Exclusivity (DE) amendments to the Pharmaceutical Affairs Act.
Doubling the new-drug budget from NT$1.2 billion to $2.4 billion (US$40 million to $80 million) in 2017. The National Health Insurance Administration (NHIA) also positively responded to the previous requests from the AmCham Taipei Pharmaceutical Committee and other industry organizations by deducting the amount of clawback from price volume agreements (PVAs) when calculating spending under the 2017 Drug Expenditure Target (DET).
Increased communication with the pharmaceutical industry by relevant government agencies, including the Ministry of Health & Welfare (MOHW), Taiwan Food & Drug Administration (TFDA), and NHIA.
At the same time, significant improvements are still needed regarding some key issues. Although the enactment of PL into law has demonstrated the government’s determination to encourage innovative products, a clear timeline needs to be established for implementation of the legislation. In addition, the slow regulatory review timeline for new drugs and new indications continues to prevent quick access by Taiwan patients to the most innovative drugs. The situation is further aggravated by the long reimbursement timeline, low reimbursement approval rate, and low reimbursement prices compared to benchmark countries.
To make matters even more challenging, unexpectedly deep price cuts were imposed this year based on the DET mechanism, since the amount of drug expenditures exceeded the budgeted target. As a result, there is an urgent need for greater transparency, predictability, and reasonableness in the pricing system through DET. At the hospital level, additional pressure is coming from the growing demand for price discounts on drugs in order for them to be listed on the hospital formulary.
The Committee looks forward to active support from the Taiwan government to create a positive pharmaceutical market environment. We hope that all key stakeholders – including government, hospitals, and pharmaceutical companies – can work together to ensure that the best pharmaceutical products and services are made available to Taiwanese patients, who are always at the center of our focus.
Suggestion 1: Implement Patent Linkage (PL) and Data Exclusivity (DE) to strengthen IPR protection for innovative products and ensure that the investment environment rewards innovation.
The Committee applauds the Executive Yuan and Legislative Yuan for passage of the PL and DE bill on December 29, 2017. This step is very encouraging for the R&D-based pharmaceutical industry, as it shows the government’s commitment to strengthen IPR protection for innovative products. Creating an investment environment in Taiwan that motivates and rewards innovation will be essential for Taiwan’s participation in future bilateral or multilateral free trade agreements. It is also in line with the government’s policy objective of encouraging Taiwanese biotech companies to develop new drugs for the international market.
For PL, the next step following passage of the legislation is to set a clear timeline and milestones for implementation of the law, so that companies from both the R&D and generics segments of the industry can better prepare for the launch of the new system. For DE, the bill went into effect – bringing new indications within the scope of its coverage – upon promulgation by the Office of the President on January 31, 2018. The implementation rules have not yet been announced, however. We urge MOHW/TFDA to announce these rules as soon as possible to enable the industry to plan its future allocation of resources – for example, for investing in more clinical trials in Taiwan – in line with the extended data protection period.
The Committee appreciates the MOHW/MOEA’s efforts over the past three years in preparing the rulemaking framework for PL and DE and coordinating with other ministries. We hope to see completion of these efforts through implementation of the new law within 12 months of the bill’s passage.
Establish a simple, workable and user-friendly listing system for Patent Linkage, to take effect by December 29, 2018 – 12 months after passage of the bill by the Legislative Yuan. This timeline will meet the requirement of the government’s internal guidelines for the drafting of laws and regulations. Within the 12 months, we propose establishing key milestones as follows: (1) six months for the initial drafting of relevant regulations and establishing the on-line system and database; (2) the next four months for public hearings, input from stakeholders, and revision of the regulations and the listing system; (3) the final two months for communication with key stakeholders as well as training.
Rigorously implement IPR protection by releasing licenses and reimbursement prices to others only after the originator’s patent has expired.
In line with commitments from MOHW and the Ministry of Economic Affairs (MOEA), ensure that PL in Taiwan covers both big and small molecules to make the system as effective and efficient as possible. Establishing two separate systems for big and small molecules would require more resources from the public sector and be more complicated for TFDA to manage.
For DE, MOHW is requested to announce the implementation rules as soon as possible to give industry a better understanding of the regulations to be followed. Besides the addition of new indications, DE coverage should be extended to new formulations, new methods of administration, and biological products (12 years).
Suggestion 2: Shorten the reimbursement approval timeline for new drugs and new indications to provide timely patient access to innovative treatment.
Access to innovative treatment is a key contributor to improving health outcomes. As a result, enabling early access to new drugs and new indications should be one of the top focus areas for government investment in healthcare. According to the 2017 Biopharmaceutical Competiveness & Investment (BCI) report, a global executive opinion survey and index of economies’ biomedical investment attractiveness, Taiwan is recognized for its progress as a welcoming environment for innovative biotechnology investments. But the survey also identified market access to innovative medicine as an area in need of further improvement.
The Committee is pleased to note the moderate improvement that has been achieved in the regulatory timeline for approving new drugs and new indications. According to the most recent data, the median review time for applications for new chemical entities and biologics was 295 days in 2017. Approximately 50-60% of the cases met TFDA’s review-time target of 360 days, which was better than in 2016. In the interest of assuring predictability, however, we urge the authorities to further improve the process so as to achieve the goal of completing all reviews within 360 days.
At the same time, significant delays have been encountered in the reimbursement approval time for new drugs and new indications. Other problems include low approval rates, unexpected delays in the reimbursement review process, and approved prices that do not appropriately reflect the value of the product.
The Committee gratefully acknowledges the doubling of the new-drug budget for 2018, which will immensely benefit patients’ health. We strongly urge MOHW/NHIA to continue to increase the budget for new drugs and new indications, and also to provide sufficient funding to enable the duration of the reimbursement process to be shortened so that unmet medical needs can be addressed in a timely manner.
1. Continue to increase the new-drug/new-indication budget.
The Committee commends the health authority for increasing the new-drug budget for 2018 and for the announced intention to delist OTC drugs from NHI reimbursement and to adopt a co-payment mechanism for refillable prescriptions for chronic illnesses. We suggest that NHIA again double the new-drug/ new-indication budget in 2019 from the 2018 level to avoid delays in patient access to innovative medicines due to budgetary constraints. Our recommendation is to adopt a three-phase approach to allocation of the new-drug/new-indication budget to ensure NHI’s financial sustainability and safeguard patient access to innovative medicines.
A. Short term – Allocate current NHI savings toward funding new-drug and new-indication reimbursement:
1) Any savings from the annual DET price cut should be prioritized towards reimbursement of new drugs/new indications, starting with the NT$7.382 billion in excess of the NHIA-adjusted drug prices in 2017.
2) Clawback from the forthcoming Managed Entry Agreement (MEA) system should be used for new-drug/new-indication reimbursement. As MEAs are signed as a part of the reimbursement process for new drugs or indications, the clawback should be subtracted from NHI’s pharmaceutical expenditure and reinvested in reimbursing new drugs/new indications.
B.Medium term – Align new-drug/new-indication budget planning with the following year’s new-drug/ new-indication reimbursement forecast:
To allocate sufficient funds for new-drug/new-indication reimbursement and to provide patients with timely access to necessary treatments, the Committee suggests that NHIA establish a sound budgeting methodology that takes into account the total amount of new drugs that will be available and needed in the following year. This exercise can provide a predictable new-drug/new-indication budgeting forecast so that patient access to innovative medicines will not be delayed or blocked due to budgetary constraints.
C. Long term – Change the policy mindset and reallocate NHI resources:
NHI currently covers an expansive range of medicines from the common cold to severe diseases. Given budget constraints, however, NHIA should shift its priorities by focusing insurance coverage only on serious diseases. Funds for the new-drug budget could be increased by adopting a co-payment mechanism and by following through on announced plans to delist OTC drugs from NHI reimbursement.
2. Ensure that Taiwan patients have access to innovative new drugs by adopting Managed Entry Agreements (MEA).
The growing patient demand for timely access to promising therapies in areas of unmet medical need has led to development of a new product reimbursement paradigm that balances financial impact and the value of new medicines to help ensure patient access to innovative medicines. MEAs are contractual agreements that permit timely reimbursement access of a health-technology innovation while addressing uncertainties in clinical effectiveness, affordability, and pricing. An MEA is seen as particularly applicable for meeting unmet medical needs when conventional approaches, such as Price Volume Agreements (PVAs) or restricted reimbursement criteria, make it difficult to grant reimbursement. Because the MEA is a contractual agreement entered into in confidence between the contracting parties, the terms and conditions should not be disclosed or discussed in public.
The Committee urges the Taiwan government to establish an effective MEA mechanism to ensure timely access to innovative medicines in the interest of improving public health. Equally important, the MEA should be confidential, flexible by offering pharmaceutical companies a choice of options, and voluntary, so that the mechanism can be sustainable and that industry can adopt it to accelerate reimbursement for new drugs and new indications for the ultimate benefit of patients.
3. Enable accelerated reimbursement approval of new drugs and indications through a “parallel review” mechanism.
The Committee acknowledges TFDA’s achievement in shortening the regulatory approval timeline, and its adoption this February of a “breakthrough designation” mechanism. The priority review mechanism is granted for new drugs when they meet the definition of being a “breakthrough” medication. While that is a positive development, the actual availability of these medicines to patients is contingent upon completion of the lengthy reimbursement approval process. In the interest of providing timely access to new medicines, we therefore urge the NHIA and TFDA to come to an agreement on the definition of breakthrough drugs, and to simplify and synchronize the regulatory and reimbursement review processes for these breakthrough innovative products.
Suggestion 3: Place the healthcare system on a sound and sustainable footing.
In order to provide patients with a better medical-service environment, the Taiwan healthcare system needs more funding, as well as a stable and transparent mechanism for adjusting drug prices. The Committee is grateful to NHIA for maintaining an open dialogue with the pharmaceutical industry over the past year and responding to the industry’s suggestions by gradually reducing gaps in the price adjustment mechanism. As more and more new and breakthrough technology is expected to be developed in the coming years, there is a need for continuing communication between government and industry to facilitate the search for a transparent, predictable, and more reasonable mechanism for drug-price management.
The third pilot DET phase started in 2017, and we would like to work with NHIA to improve this system before it is implemented on a permanent basis. While DET offers potential advantages in terms of transparency, fairness, and predictability, there are also some key issues to be resolved regarding its future implementation, including revision of the R-zone for mono-source compounds, as well as price adjustments on drugs in their first five years after going off patent. It is also vital to initiate payment-system reform to reduce hospitals’ dependency on drug discounts.
In addition to obtaining a license and NHI reimbursement from the government, new drugs must be listed in the formularies of the hospitals so the physicians can prescribe the medicine to patients. As hospitals may have different rules and processes for such listings, in some cases patients need to wait for another one or two years for the new medicine even though it has been approved for reimbursement. The hospitals generally apply a “one-in, one-out” principle at the time of a drug entry. That is, a new drug may be introduced only after an existing drug is removed. This practice affects patients’ right to medication, as physicians may only prescribe what has been listed by their hospital, posing a challenge to their professional desire to make the most effective medicines available to their patients.
The Committee urges MOHW and NHIA to reform the payment system to enable healthcare providers to reduce their dependency on drug discounts, expedite patient access to needed drugs, and sustain a more stable drug-supply system.
1. Improve the following aspects of the current DET system:
A. Calculation of each year’s DET baseline. The DET baseline needs to be revised from the current practice to one that benchmarks the previous year’s actual expenditure, multiplied by the annual growth rate in the Global Budget. In addition, drug expenditures categorized in special-budget accounts (for example, HIV/HCV; rare diseases, hemophilia) should be included in the base for DET calculation. Further, new reimbursed technology (for example HCV treatment) which was not included in the previous year’s Global Budget should be reflected in the DET target growth rate.
B. Transparency of calculating DET and drug spending. To improve transparency and predictability, we urge NHIA to release key data periodically, as well as to hold periodic meeting to communicate with industry.
C. Broader definition of patents. Since breakthrough technologies and certain treatments might not be covered by compound patents (which is the only type of patent recognized by NHIA in the pricing scheme), we urge NHIA to reference the recent amendments to the Pharmaceutical Affairs Act regarding Patent Linkage and Data Exclusivity with an eye to how to how broader recognition of patent types can reward innovation.
D. Treatment of 2013-2016 PVA clawbacks. Since clawbacks from PVAs and price cuts under DET are duplicated mechanisms, the clawbacks should be deducted from DET price cut to be fair to industry. The Committee appreciates that NHIA responded positively to its previous request and deducted the clawback from the 2017 expenditure. In the interest of fairness, we encourage NHIA to also deduct the accumulated clawback from the 2013-2016 period.
E. R-zone mechanism.
a) New products with data exclusivity or that come within the TFDA monitoring period should be given a 15% R-zone because there are no generics to be launched. Too large a price cut will cause the product to be withdrawn from the Taiwan market, with a negative impact on patients’ right to treatment.
b) Mono-source products require a 15% R-zone. Although the major compound has been off-patent or never had a registered patent in Taiwan, the product is the only source in this market, without any generic substitution. If there is no price protection, the drug may be forced to be withdrawn from Taiwan, impacting patients’ rights.
c) An R-zone of 10% could be applied to unpatented new products that are in the first four years after launch and may co-exist with generics. We suggest that remaining category 3A medications receive a 5% R-zone.
2. Remove constraints on physicians’ ability to prescribe innovative medicine to meet patients’ needs.
The above-mentioned hospital policies regarding management of their drug formularies threaten to diminish the government’s good intentions and hard efforts to expedite access to new drugs and enhance the quality of healthcare. The Committee urges the government to create a regulatory environment that encourages hospitals to adopt an efficient and flexible drug-management policy, removing barriers to new-drugs access posed by financially oriented procurement policies. As an alternative, physicians could be allowed to prescribe medicine, based on the patients’ need, from the NHI reimbursement list instead of the limited hospital formulary. In that way, their professional judgment can be respected in line with the spirit of Separation of Dispensing and Prescription policy (SDP), and the quality of care could be improved.
3. Reform the payment scheme for medical services.
To reduce the waste of medical resources and enhance patient safety, NHIA has actively promoted the PharmaCloud and a platform for sharing diagnostic images. Significant progress has already been achieved in this regard, potentially saving billions of dollars for the NHI system. The Committee calls on the government to re-invest these savings in the payment scheme for medical services to reflect actual clinical costs and enable hospitals to provide adequate compensation packages for healthcare professionals to ensure sufficient manpower. Through such reform, hospitals would no longer have to reply on drug-price margins to sustain their operations, restoring order to the pharmaceutical market.