role of generics in the taiwanese health care system, regulations and market competition issues...
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Role of Generics in the Taiwanese Health Care System, Regulations and Market Competition Issues
Workshop on Taiwan-Germany Generic Related Legal Issues, June 3, 2011
Weng-Foung Huang, Ph.D.
Professor
Institute of Health and Welfare Policy
National Yang-Ming University
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Professional Background Weng-Foung Huang, Ph.D.
BS in Pharmacy, National Taiwan University (1972); MS in Pharmacy Administration (1975) and Ph.D. in Social and Administrative Pharmacy, University of Minnesota , USA (1979)
Public service career (1980~1994) - Senior official in DOH: (Senior Specialist, Deputy Director General, and Director General of Pharmaceutical Affairs Bureau, Director General of National Laboratories of Foods and Drugs)
Architect of Taiwan’s GMP and clinical trial regulations; Key contributor to Taiwan’s NHI pharmaceutical reimbursement system
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Professional Background Weng-Foung Huang, Ph.D.
Academic career (1994 ~ present): Associate Professor, Director, Professor ; Institute of Health and Welfare Policy, National Yang-Ming University
President, Pharmaceutical Society of Taiwan (1995~1997, 2007~2011.1) ； Advisor to Taiwan’s DOH(1999～ 2000, 2005~2007)； Chairman of OTC Committee, DOH (1999～2007) ； Chairman of Pharmacy Service Quality Committee, DOH (2004～ 2007)
Fields of Specialization: Health Policy Evaluation, Pharmaceutical Pricing and Reimbursement in Health Insurance, Health Technology Assessment (HTA) , Development Strategies in Health Care Industry
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Outlines
Evolution of Drug Regulation in Taiwan Taiwan’s Generic Pharmaceutical Industry Access to Medicine and Generic Drugs Pricing and Reimbursement of Generic
Medicines in NHI Key Issues in Generic Medicine Future of Taiwan’s Generic Pharmaceutical
Industry
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Laws Relevant to Pharmaceutical Regulation in Taiwan
Physicians Act and Medical Care Act: Medical practices and medical behaviors, Pharmacists violating Physicians Act in providing prescription medicines without a physician’s prescription and involves diagnosis, treatment or therapy
Pharmaceutical Affairs Act: governing pharmaceuticals, medical devices, pharmaceutical companies and related affairs
Pharmacists Act: governing the practices of pharmacists Drug Hazard Relief Act: Drug relief payment for serious
drug adverse reactions as a result of legal drug uses
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Laws Relevant to Pharmaceutical Regulation in Taiwan Rare Disease Control and Orphan Drug Act Controlled Drugs Act/Illicit Drug Hazards and
Prevention Act 。 National Health Insurance Act: Pharmaceutical
Benefit Scheme, NHI Contract Pharmacy Statue for Control of Cosmetic Hygiene, Act
Governing Food Sanitation, Health Food Control Act, etc.
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Evolution of Drug Regulation in Taiwan
New drug approvals usually follow the marketing authorization of reference countries (such as USA, UK, France, Japan, Germany, Switzerland, Sweden, Belgium, Australia, Canada, etc.) in 1980s.
Center for Drug Evaluation, a miniature of USFDA, was established in 1998 and plays a pivotal role in enhancing the efficiency and quality of drug evaluation. Taiwan could eventually establish its own regulatory review system for domestic NDA review.
Requirement of bioequivalent study (BA/BE) for generics in 1989
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120(expected)550 230
1st Phase G
MP
Aseptic V
alidation
cGM
P Initiated
1982 1988
1st Phase G
MP
C
ompleted
1996
168
2001
Source: PIDC, 2008
Government’s Policy on Pharmaceutical Industry - Past vs. Future
20132007
PIC
/S
Advocacy
PIC
/s Expected
2005
No. of Manufacturers
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Outlines
Evolution of Drug Regulation in Taiwan Taiwan’s Generic Pharmaceutical Industry Access to Medicine and Generic Drugs Pricing and Reimbursement of Generic
Medicines in NHI Key Issues in Generic Medicine Future of Taiwan’s Generic Pharmaceutical
Industry
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Characteristics of Generic Industry
Not major league baseball teams, more like little league or youth baseball teams
Diversified players: Israel, India, Hungary, Korea, Canada, , etc.
Scale and technology gap are not limiting factors yet, forthcoming of giant generic companies like Sandoz, Teva-Ivax, etc.
Generic drugs just like personal computers, more price competition than brand competition, but it is changing.
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Current Status of Taiwan’s Pharmaceutical Industry
Generic and domestic market oriented, weak innovation capabilities and international competiveness
Government development policy concentrated on R&D, lacking effective integration of up-middle-down streams
NHI dominates the development of domestic pharmaceutical industry, however, NHI pricing and reimbursement policy inconsistent with national industry policy
For multinational pharmaceutical companies, a matured market without much momentum
Double jeopardy of NHI Pricing and PIC/S GMP
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Top 20 Pharmaceutical Companies in Taiwan, 2007 (NT$: Million)
(YSP)
(CCPC)
(TTY)
(Standard)
百萬元 )
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Public Listing on Stock Market 18 companies on Taiwan Stock Market, 33
companies on Taiwan OTC Stock Market 12 Pharmaceutical companies 5 Pharmaceutical API companies 15 Medical device companies 8 Biotech companies 4 Distribution companies 7 Others Nearly all top pharmaceutical companies are listed,
most listed biotech companies are founded over the past 5-10 years.
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Pharmaceutical Market Structure in Taiwan
Hospital segment the major market (78%)，Drugstores the next (14%), the rest are clinics (8%)
Foreign companies: local companies by values - 7:3。
Foreign companies: local companies by quantity - 3:7
Year 2003 2004 2005 2006 2007
Local companies 24,866 26,923 27,855 27,009 25,561
MNC/Imported 69,680 76,229 76,469 81,028 84,141
Total 94,546 103,152 104,324 108,037 109,702
Market share of local companies
26.3% 26.1% 26.7% 25.0% 23.3%
Unit: NT$1M
14716
70843
4957
10249
5916
3021
0%
20%
40%
60%
80%
100%
Hospitals Clinics
Foreign
Local
2007 Market Structure Unit:NT$1M
Source ： 2008 Biomedical industry Almanac 2011/6/03
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Outlines
Evolution of Drug Regulation in Taiwan Taiwan’s Generic Pharmaceutical Industry Access to Medicine and Generic Drugs Pricing and Reimbursement of Generic
Medicines in NHI Key Issues in Generic Medicine Future of Taiwan’s Generic Pharmaceutical
Industry
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Four Elements in Access to Essential Medicines
1. R
atio
nal S
elec
tion
4. R
elia
ble
Hea
lth
and
Sup
ply
Sys
tem
2. Affordable Price
3. Sustainable Financing
Access
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1. Rational Selection
4. Reliable Health and Supply
System
2. Affordable Price
3. Sustainable Financing
Access
Four Elements in Access to Essential Medicines
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Public Rights in Medicine Access
Access to medicines ：1. Rational Selection and Use
2. Affordable Price
3. Sustainable Financing
4. Reliable Health and Supply System Access to medicines in Taiwan’s NHI system
has different connotations from international narratives
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Public Rights in Medicine Access
Quality, Price and Rational Use Quality and price in Pharmaceutical Benefit
Scheme of Taiwan’s NHI, including drug product coverage and copayment, are not major issues
Rational use of medicines is an abstract issues without consensus, it is much affected by health professionals, NHI payment mechanism, patient behaviors in medical visits, and cultural factors.
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Outlines
Evolution of Drug Regulation in Taiwan Taiwan’s Generic Pharmaceutical Industry Access to Medicine and Generic Drugs Pricing and Reimbursement of Generic
Medicines in NHI Key Issues in Generic Medicine Future of Taiwan’s Generic Pharmaceutical
Industry
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Pharmaceutical Benefit SchemePharmaceutical Benefit Scheme
Fee for services in outpatient services Claims based on brand price published by the
NHI Bureau Positive listing and national unified
reimbursement price Daily drug payment clinics and pharmacies,
TCMs DRGs (Diagnostic Related Groups) for inpatient
services
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Trends of Pharmaceutical Expenditure in Taiwan (1997~2009)
1,2501,1701,1411,1211,094
945906847829804723
640
1,322
11.3%
4.4%
15.8%
2.5%
24.5% 24.8% 25.4% 25.4% 24.8% 24.4% 24.6% 24.9% 24.8% 25.0% 24.7% 25.1% 25.3%
5.8%6.9%
1.8%2.5%
6.9%
2.2%3.1%
12.9%
0 億
200 億
400 億
600 億
800 億
1,000 億
1,200 億
1,400 億
1,600 億
1,800 億
1997年 1998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年 2009年
0%
5%
10%
15%
20%
25%
30%
調價調價調價調價
調價調價調價
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International Comparison of Per Capita Outpatient Pharmaceutical Expenses, 2007
PE Per C
apita (U
S$)
Sources： 1.OECD Health Data 2009 2.DOH(Taiwan)Pharmaceutical expenses include Prescription, OTC, and TCM
725 719 689 666 650 636 628 604569 568 547 539 526 525
456 427 402 397318 318 301 273
234172
136
871
191
0
100
200
300
400
500
600
700
800
900
1000
美國 加 法國 比 希臘 冰島 德國 瑞士 義 奧 瑞典 挪威 日本 西 芬蘭 澳洲 丹麥 盧 葡 韓國 匈 斯 紐 捷克 台灣 波蘭 墨
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International Comparison: Cheaper Original Products in TaiwanTop 20 Original Products in Taiwan’s NHI)
409%
250%
224%212% 203% 201%
160%144% 139% 130%
116%100%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
美國 德國 瑞士 日本 加拿大 比利時 法國 瑞典 英國 澳洲 韓國 台灣
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Issues in NHI Pharmaceutical Benefit Scheme
1.Payment Gaps (Blackhole Issue)2. Waste in Medicines3. Unfair Drug Pricing4. Coverage of OTC Drugs5. Pharmaceutical Budget in Global Budget6. Trade Negotiation Issues7. Containment Strategies: Price/Volume Survey and
Price Cutting, Claw-Back Contract on New Drugs Reimbursement, Pricing New Drugs, Health Technology Assessment (HTA), etc.
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Outlines
Evolution of Drug Regulation in Taiwan Taiwan’s Generic Pharmaceutical Industry Access to Medicine and Generic Drugs Pricing and Reimbursement of Generic
Medicines in NHI Key Issues in Generic Medicine Future of Taiwan’s Generic Pharmaceutical
Industry
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Key Issues in Generic Medicines
GMP-cGMP-PIC/S GMP Quality of generic medicines Price barriers and generic medicines Reimbursement on API basis There is no incentive mechanism in NHI to
encourage the use of generics by the public
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QUALITY of National Generics There should be no argument about the quality of national
generics when two thirds of the drug quantity consumed by the public are actually manufactured by national generic manufacturers.
At least, the quality of national generics are equivalent to the quality of medical care, otherwise, why there has very limited evidence based criticism on generic quality.
DOH license is only the minimal criterion, generic industry needs to gain the quality recognition and support from the public.
Core Issue: Quality Commitment to consumers (Physicians, Patients, and the Public), not to regulatory agency only
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National Medicine Policy Conference, 2008/12/31
Resolution 4:
To elevate quality incentives, same price issued for the
products with the same API and the same quality in order to
encourage the generic products and early entry to the market For patent expired products, pricing policy is the same
price for products with the same API and quality. Pricing measures will take into consideration and
incentives of API Drug Master File (DMF), PIC/S GMP (or EU, US FDA approvals) and convenient package to use.
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Generic Substitution
Article 17, Pharmacist Act
Pharmacists shall dispense according to the prescriptions
without any mistakes; in the case that pharmaceuticals are
not available or in short supply, pharmacists shall inform
the prescribing physician for change, and shall not omit
or substitute other pharmaceuticals at will.
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Generic Substitution
Article 19, Enforcement Regulation of Pharmacist Act
‘Other pharmaceuticals’ in Article 17 refer to
drug products having different active
pharmaceutical ingredients, content, dose, or dosage
forms.
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Generic SubstitutionArticle 40, Regulations for NHI Medical Care For any medication, if the doctor has not indicated that itcannot be substituted, the pharmacist (assistant pharmacist)can replace it with one made by another factory or of another brand, however, the substitute must be of the same ingredients, same dosage form and same dosage at an equalor lower price.
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Price Barriers in Pharmaceutical Benefit Scheme (PBS)
Reimbursement on brand basis: preference of physicians and patients, brand equity and business operation margins
Principles of NHI PBS: Price-Volume Contract for new drugs Reimbursement on Brand Basis No balancing billing on drugs Graduate phase-in to reimbursement on API Basis
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Price Barriers of Reimbursement on Brand Basis
Reimbursement on brand name basis: preference of physicians and the public, profit and brand equity concerns of pharmaceutical companies
Principles of Pharmaceutical Benefit Scheme in NHI Price setting and claw-back agreement on new drugs Reimbursement on brand name basis No balance billing permitted Gradually phase into payment by API
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Price Barriers of Reimbursement on Brand Basis
Payment Gap (Drug Procurement Profit) is the prime factor of purchase, the public confidence in drugs also imbedded in brand equity.
There is no solidarity concept in Taiwan’s society as a whole: why using cheaper generics when premium products are available ！ ?
Drug profit is a key element in hospital and physicians’ choice of drug
Why it is so difficult for paying by API instead of brand?
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Price Barriers in Pharmaceutical Benefit Scheme (PBS)
Price barriers increasing amid pharmaceutical expenditure structure
Recent saving from two NHI price adjustments were transferred to premium priced new drugs, it indirectly lowered the price barriers to access to new drugs, yet it elevated the overall price barriers to pharmaceutical resources.
For patent effective drugs, they are mostly of single source. Brand product equals to API product.
For patent expired drugs, they are of multiple sources, and there are many generic products in addition to the original product.
Pharmaceutical payment should be based on active pharmaceutical ingredient instead of brand name.
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Price Barriers Increasing
Premium pricing products increasing rapidly: annual claims >NT$500M, one product in 2000 to 17 products in 2006, representing 16.8% of total drug bill; annual claims >NT$300M, 11 product in 2000 to 48 products in 2006, representing 27.5% of total drug bill; annual claims >NT$100M, 85 product in 2000 to 199 products in 2006, representing 52.6% of total drug bill;
New drugs under patent represent 32% of total drug bill, much lower than USA and EU, yet patent expired originals still enjoy lucrative market share.
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The Future of Generics
Continuing expansion of market share by originals and biological products, may reach 80% by 2020.
Generic market will become more competitive in terms of price and quality.
More international competitors introduced to Taiwan while more industry consolidation can be expected, and more Taiwanese generic companies will penetrate into international market.
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The Future of Generics
A regulatory agency can only establish its credential for protecting public health in dealing with the quality, safety, and efficacy of drugs when public confidence in regulatory agency is assured.
For the industry, compliance to regulatory requirements is only a minimum standard, the industry should endeavor to build quality image to win the trust of the public and medical community by continuous dynamic quality approach.
For follow-on protein drugs, it’s only the beginning of another era.
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Special Thanks to TFDA and BNHI, Department of Health
in making some content of this presentation available
Thank you for your kind attention
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