- Taiwan's National Health Insurance system was facing a growing deficit and needed reforms to ensure sustainability given an aging population and rising costs of conditions like cancer and diabetes.
- A new piece of legislation implemented reforms like a dual-track premium system and new policies around drug expenditures to help control costs.
- An economic model was developed by IMS Health at the request of pharmaceutical companies to examine the impact of pricing policies on innovation and future drug expenditures. The model found that reasonable pricing could be maintained without harming the system's finances.
Taiwan's National Health Insurance Reforms Ensure Affordability and Accessibility
1. And yet, President Ma conceded, re-
forms were long overdue. Premiums
had, after some struggle, been recently
adjusted upwards. The health care def-
icit was headed toward US$3 billion.
New legislation was essential to ensure
that the NHI—a single payer scheme
covering nearly all of Taiwan’s 23 mil-
lion citizens—could meet the needs
of a country facing the inherent chal-
lenges of a rapidly aging population,
not to mention the rising prevalence
of such expensive conditions as cancer,
cardiovascular diseases, and diabetes.
Quality, efficiency, and fairness would
lie at the heart of this second-genera-
tion NHI, President Ma promised. A
cadre of legislators—particularly those
from the Health, Environment, and
Social Welfare Committee—would
ensure its seamless implementation.
On January 5th, 2011, such legislation
came to pass. Among the new reforms
are a dual-track premium payment
system which, according to Bureau of
National Health Insurance (BNHI)
calculations, will reduce the premium
rate from its current level of 5.175%
to 4.915%, based on monthly salaries.
An additional premium will then be
levied on other income such as inter-
est earnings, stock dividends, income
from professional practices, rental in-
comes, year-end bonuses (exceeding
four months of salary), and non-in-
sured salary income.
On the drug expenditure side, several
new reforms will have been introduced
to help control costs:
• Once drug patents have expired,
from the first to the fifth year, the
BNHI will adjust the drug’s reim-
bursed price to the actual transition
price (ATP). It also appears as if the
BNHI will undertake reimbursed
price adjustments on a more
frequent basis.
• A drug expenditure target (DET)
will be implemented. Time will tell
if the reimbursed price adjust will
be instituted annually.
Modeling the future,
making way for innovation
Integral to the second-generation legis-
lation is a new pricing policy,the seeds for
which had been planted months before
when IMS Health, at the behest of the
International Research-based Pharma-
ceutical ManufacturersAssociation (IRP-
MA), built a comprehensive economic
model designed to help illuminate the
future of public expenditures on drugs
and the future, indeed, of pharmaceutical
innovation inTaiwan.
Ultimately, according to IRPMA COO
Carol Cheng, who was interviewed by
Don Shapiro for the American Cham-
ber of Commerce in Taipei, the IMS
Health model demonstrated “that rea-
sonable pricing can be made available
for innovative drugs without damag-
ing the finances of the NHI system.” It
wasn’t just a hopeful conclusion. It was
an honest one, bolstered by an intelli-
gent model and a bevy of facts.
Framing the Conversation
Work on the model began in 2009. Hav-
ing played an essential role in the develop-
ment of Health Technology Assessments
(HTAs) in the UK, Canada, Australia,
and elsewhere, the international IMS
Health team was cognizant of the need,
first, to identify the appropriate govern-
ment pricing policy levers—to conduct
analyses, in other words, on everything
from the number of drug categories,defi-
nitions, and price levels associated with
new drugs to the time of price cuts for
off-patent drugs,the premium for quality
generics,and the impact of balance billing
and price-volume agreements.
The idea, of course, was to define the
preferred positions of the BNHI and
IRPMA on each of the relevant pol-
icy levers—to establish, up front, just
where the government and the in-
dustry stood in terms of policy agree-
ments and potential conflicts.
Subsequently, IMS Health undertook an
in-depth analysis of three government
pricing policy scenarios—this with an eye
on establishing the value that new prod-
ucts can bring to nations such asTaiwan.
At the same time, IMS Health surveyed
IRPMA members regarding the status of
FramingTaiwan’s Health Insurance Reforms
By Patrick Chou, IMS Consultant and Elaine Salt, General Manager IMS Taiwan
On July 16, 2010, Taiwan President Ma Ying-jeou described his country’s
National Health Insurance (NHI) system as still providing “the best care one
could get for such a low price.” It isn’t easy, he continued,“to find anything
comparable in other countries,”and,indeed,by regional standards,health indicators
inTaiwan remained strong, with an infant mortality rate of just 5.26 per 1,000
live births and a life expectancy of more than 78 years.