Taiwan’s successful containment of the COVID-19 pandemic has underscored its outstanding public health infrastructure and positioned it as a regional healthcare leader. We were pleased to see that the government responded to our 2020 White Paper suggestions by beginning to shift from a cost-control mindset to one of value creation. For instance, funding for new indications was increased in the 2021 National Health Insurance Administration (NHIA) global budget, and in several media interviews Minister of Health and Welfare Chen Shih-chung stressed the importance for Taiwan of investing more in health.
Taiwan has world-class ICT infrastructure and capabilities, a high-quality healthcare system and talent, comprehensive health data collected and maintained by the NHIA, and robust and transparent regulations. These advantages provide Taiwan with the potential to excel in many healthcare areas in the Asia-Pacific. But for Taiwan’s healthcare ecosystem to continue advancing, it must take bold steps and adopt a more forward-looking approach.
Biopharmaceutical companies can help burnish Taiwan’s reputation on the global stage by becoming reliable partners for the Taiwan government. The Committee suggests the following solutions in hope of establishing strong partnerships with the government and making Taiwan’s healthcare ecosystem more sustainable.
Suggestion 1: Establish a platform for biomedical collaboration between the Taiwan authorities and industry.
In recent years, member companies have invested significant resources into collaboration with Taiwanese public- and private-sector partners on biotech innovation, talent development, precision medicine, digital health, public health, anti-pandemic collaboration, and other areas.
These projects have produced concrete results, but each was launched individually by various member companies and cooperating government agencies. We believe Taiwan could accelerate the development of its biomedical ecosystem by establishing a cross-agency platform to facilitate dialogue, identify opportunities, discuss challenges, and maximize the synergy between public and private resources. Such public-private collaboration would demonstrate Taiwan’s determination to be a pioneer in the region and attract more investment from multinational companies.
Establish a cross-sector, public-private taskforce, convened by Deputy Minister-level officials, preferably from the Ministry of Health and Welfare (MOHW), and joined by senior officials from the National Development Council (NDC), MOHW, Ministry of Science and Technology (MOST), and Ministry of Economic Affairs (MOEA). This taskforce would serve as an accelerator to enable Taiwan to achieve its national goal of developing biomedical industry under the Six Core Strategic Industries plan. It would provide a platform for more coordinated collaboration on areas such as R&D, healthcare system optimization, harmonization of regulations, talent cultivation, data sharing, and smart/digital health development.
Launch the platform in Q3 2021. We suggest starting by focusing on two public-private partnerships: one on anti-pandemic digital applications with the Centers for Disease Control (CDC), and the other to discuss pharmaceutical reimbursement policies, such as horizon scanning, with the NHIA.
Suggestion 2: Set bold goals for increasing the level of current health expenditure, embrace horizon scanning in budget planning, and improve MEA practices.
The Committee appreciates the Taiwan government’s moves to increase the new drug and new indication budget and introduce a horizon-scanning approach. However, unstable and incremental funding for biopharmaceutical products has led to inadequate reimbursement for new drugs and new indications, resulting in a high rate of unmet clinical needs. In addition, lengthy reimbursement timelines and “100% claw back” and “class cap” provisions in Managed Entry Agreements (MEAs) negatively affect healthcare companies. Ultimately, these measures impact patient access to innovative medicines and Taiwan’s global competitiveness in clinical research and development, the cornerstone of its biopharma ecosystem.
2.1 Use international standards as a benchmark for future biopharmaceutical investment.
Public funding in health is a matter of national economic priority. In terms of national health investment, Taiwan’s scorecard is lagging compared to those of its regional neighbors. According to a 2020 report from the World Health Organization (WHO), Taiwan’s current health expenditure (CHE) accounts for only 6.1% of GDP, less than that of most developed OECD countries, including Japan’s 11% and South Korea’s 7.6%. While the world’s investment in health has continued to grow, Taiwan’s CHE to GDP ratio has stagnated, growing only 3.3% since 2010, much less than Korea’s 28.8% and Japan’s 19.6%.
The Committee urges the Taiwan authorities to take concrete steps toward catching up with the world on health investment and strengthening Taiwan’s health reserves to ensure a stable, sufficient new drug and new indication budget. In so doing, Taiwan will set the stage for building up a biomedical research and development ecosystem, making it a key strategic driver of the Taiwanese economy.
Make patient access to high-quality healthcare and precision/personalized medicine part of the Six Core Strategic Industries initiative for the post-pandemic era. Doing so would position Taiwan as a world leader in health investment and driver of the global economy.
Set bold, specific goals for growing the CHE to GDP ratio through the creation of a sufficient new drug and new indication budget. Such actions would reinforce Taiwan’s competitiveness and leadership in health investment and R&D capability, attracting foreign investment and facilitating international linkages for local industries.
From the MOHW, allocate sufficient funding for a multi-year increase in the new drug and new indication budget using horizon scanning as a technique for determining potential new pharmaceutical developments.
Perform a cross-ministerial review with the goal of aligning policy objectives and mobilizing the resources needed to achieve Taiwan’s goal of meeting global standards of care and vigorously developing such areas as precision medicine.
2.2 Engage industry stakeholders in the horizon-scanning process for planning the new drug/new indication budget.
The Committee is pleased that the government has adopted horizon scanning as a prospective tool for budget planning. Since such an approach can accelerate patient access to new, innovative treatments, all of our member companies are willing to work together with the government to help with its implementation.
Still, we are concerned about a lack of clarity as to how horizon scanning would actually be utilized. We thus offer the following recommendations to ensure that a future horizon-scanning approach allows for predictability, flexibility, and transparency.
Be sure to include safeguards to prevent business secrets from being revealed in the horizon-scanning process. After all, the purpose of the process is to improve patient access to new medicines without disclosing pharmaceutical companies’ confidential information.
Communicate with industry in devising the methodology for planning the new-drug budget so that the voices of industry stakeholders are heard before decisions are made. Invite industry representatives to join the Pharmaceutical Benefit and Reimbursement Scheme (PBRS) New Drug Planning working group to reach a consensus before the horizon-scanning technique is fully implemented.
2.3 Establish a mechanism to ensure the continuous improvement of MEA practices.
The Committee applauds NHIA not only for announcing draft MEA implementation principles to industry groups in September 2020, but also for committing to review the execution of MEAs using a mechanism to ensure continuous improvement.
Under the current scheme, the presence of various options under the MEA umbrella such as class budget caps, product MEAs, and Price-Volume Agreements (PVA) has impacted the operations of member companies and may not be conducive to the introduction of innovative medicines on the Taiwan market. It is therefore time to improve current MEA practices.
First, when setting the budget cap, NHIA should refer to objective data such as the eligible patient population or year-on-year forecasts to prevent manufacturers from bearing all the risks associated with deviation from the clinical practices and prescriptions stipulated in MEAs.
Second, the agreements should be flexible enough to leave room for different terms based on product and disease characteristics. The Committee recommends that MEAs be terminated automatically once the use and financial impact of the medication have stabilized to a certain degree.
Further, the Committee urges NHIA to provide drug manufacturers with sufficient flexibility and room for negotiation before an MEA is signed. In addition, the agreement should fully reflect the opinions of manufacturers, demonstrating basic equitable treatment, predictability, and mutuality.
Establish the promised rolling review mechanism with industry to continuously improve MEA practices.
For existing MEAs, reexamine the budget threshold mechanism and align it with clinical treatment situations. Apply the implementation principles announced last September (i.e., decrease the 100% clawback provision or increase hard cap numbers based on evidence and forecasts provided by companies) and create a tiered rebate structure. Termination of agreements should occur when the use and financial impact of the medications have stabilized.
For new MEAs or those to be renewed, put in place a face-to-face negotiation mechanism, allow for amendment of and additions to terms in the standard agreement, and ground such terms in objective evidence such as eligible patient population.
Refrain from any regulatory changes without first seeking consensus with the industry. Upon the termination of PVAs and MEAs, price cuts and agreement extensions should not be compulsory.
Grant VAT refunds for MEA and PVA rebate payments to reflect the nature of the transaction and improve the sustainability of business operations in Taiwan. Currently, the authority only issues receipts rather than invoices for MEA and PVA rebate payments.
Suggestion 3: Continue the DET pilot program to ensure patient access to innovative treatments.
Reform of the NHI system’s payment policy should be geared toward NHI sustainability and the development of Taiwan’s biopharmaceutical industry. To that end, government and industry should work together to improve and optimize the Drug Expenditure Target (DET) system by continuing the DET pilot program until there is consensus on the methodology and allocation among all stakeholders.
In the meantime, the government should consider both increasing the budget allocation for medical services and reducing discounts. In this way, hospitals will not need to compensate for the loss of value in medical service payments by seeking to profit from drug-price gaps. We suggest a modest approach to formulating price-adjustment measures that recognizes the value of innovative medicine in improving patients’ lives.
Maintain DET as a pilot program: Gather input from industry representatives before making any changes to the current DET scheme so as to minimize the impact of such changes and provide a more sustainable path forward for the NHI. As is done with PVAs, we urge NHIA to deduct MEA rebates from the excess drug expenditure amount to reflect actual drug expenditures.
Grant single-sourced products under Category 3A a minimum 10% reasonable-zone (R-zone) in setting price adjustments. This would ensure patient access to single-sourced medicines before generics or biosimilars are launched in Taiwan. Doing so would also align Taiwan with other developed countries where the review of drug prices is triggered by the market entry of the first generic product.
Consider predictability and stability in making DET price adjustments for biopharma products.: Avoid making drastic price cuts that heavily impact industry or implementing an additional mechanism that would result in a one-time large cut to the price of both patented and off-patent products. Such an approach would encourage continued investment by the industry in Taiwan and the introduction of innovative new medicines for Taiwanese patients.
Suggestion 4: Uphold patient safety by strengthening patient access to authentic medicine and accurate information on medications.
Counterfeit drugs and illegal generics remain an issue for unreimbursed trademarked medicines that fulfill unmet medical needs. Distributors actively advertise, import, and sell such drugs, which are not approved by the TFDA, via social media. The situation not only puts patients at risk but also infringes on the intellectual property rights of multinational pharmaceutical companies, creating barriers to the launch of innovative authentic medicines in Taiwan.
Since online advertising of these illegal products is ubiquitous and hard to regulate and given that such commercial activities have grown in scale in recent years, we urge the government to partner with industry to tackle this issue.
Establish a communication channel for legitimate drug manufacturers to address misinformation and IPR infringement taking place on online platforms. Such a channel would equip the public with the knowledge and tools to differentiate between authentic and counterfeit drugs. The channel should be exempt from the provisions of the Pharmaceutical Affairs Act related to the advertisement of medicaments so as to allow pharmaceutical companies to provide the public with correct drug information and uphold drug safety.
Promote cross-agency cooperation to combat the importation and sale of counterfeit drugs. Such cooperation would involve the Taiwan Intellectual Property Office (TIPO), National Police Agency, Customs Administration, and TFDA.
Fulfill the unmet critical medical needs of patients by improving patient access to innovative medicines that have been impacted by counterfeit drugs and illegal generics.