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Role of Generics in the Taiwanese Health Care System, Regulations and Market Competition Issues

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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Role of Generics in the Taiwanese Health Care System, Regulations and Market Competition Issues

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  1. 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 HWF/YMU

  2. 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 HWF/YMU

  3. 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 HWF/YMU

  4. 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 HWF/YMU

  5. 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 HWF/YMU

  6. 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. HWF/YMU

  7. 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 HWF/YMU

  8. Government’s Policy on PharmaceuticalIndustry -Past vs. Future No. of Manufacturers 120(expected) 550 230 168 2005 1982 1988 1996 2007 2001 2013 1st Phase GMP 1st Phase GMP Completed Aseptic Validation cGMP Initiated PIC/S Advocacy PIC/s Expected Source: PIDC, 2008 HWF/YMU

  9. 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 HWF/YMU

  10. 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. HWF/YMU

  11. 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 HWF/YMU

  12. Top 20 Pharmaceutical Companies in Taiwan, 2007 (NT$: Million) 百萬元) (YSP) (CCPC) (TTY) (Standard) HWF/YMU

  13. 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. HWF/YMU

  14. Pharmaceutical Market Structure in Taiwan Unit: NT$1M • 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 2007 Market Structure Unit:NT$1M HWF/YMU Source：2008 Biomedical industry Almanac

  15. 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 HWF/YMU

  16. 3. Sustainable Financing 1. Rational Selection Access 4.Reliable Health and Supply System 2. Affordable Price Four Elements in Access to Essential Medicines HWF/YMU

  17. 3. Sustainable Financing 1. Rational Selection Access 4.Reliable Health and Supply System 2. Affordable Price Four Elements in Access to Essential Medicines HWF/YMU

  18. 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 HWF/YMU

  19. 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. HWF/YMU

  20. 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 HWF/YMU

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  23. Pharmaceutical 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 HWF/YMU

  24. 調價 調價 調價 調價 調價 調價 調價 Trends of Pharmaceutical Expenditure in Taiwan (1997~2009) HWF/YMU

  25. International Comparison of Per Capita Outpatient Pharmaceutical Expenses, 2007 PE Per Capita (US$) Sources：1.OECD Health Data 2009 2.DOH(Taiwan) Pharmaceutical expenses include Prescription, OTC, and TCM HWF/YMU

  26. International Comparison: Cheaper Original Products in TaiwanTop 20 Original Products in Taiwan’s NHI) HWF/YMU

  27. Issues in NHI Pharmaceutical Benefit Scheme 1.Payment Gaps (Blackhole Issue) 2. Waste in Medicines 3. Unfair Drug Pricing 4. Coverage of OTC Drugs 5. Pharmaceutical Budget in Global Budget 6. Trade Negotiation Issues 7. Containment Strategies: Price/Volume Survey and Price Cutting, Claw-Back Contract on New Drugs Reimbursement, Pricing New Drugs,Health Technology Assessment (HTA), etc. HWF/YMU

  28. 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 HWF/YMU

  29. 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 HWF/YMU

  30. 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 HWF/YMU

  31. 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. HWF/YMU

  32. 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. HWF/YMU

  33. 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. HWF/YMU

  34. Generic Substitution Article 40, Regulations for NHI Medical Care For any medication, if the doctor has not indicated that it cannot 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 equal or lower price. HWF/YMU

  35. 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 HWF/YMU

  36. 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 HWF/YMU

  37. 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? HWF/YMU

  38. 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. HWF/YMU

  39. 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. HWF/YMU

  40. 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. HWF/YMU

  41. 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. HWF/YMU

  42. Special Thanks to TFDAand BNHI, Department of Health in making some content of this presentation available Thank you for your kind attention huang@ym.edu.tw HWF/YMU

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