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

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

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 (19801994) - 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 Taiwans GMP and clinical trial
  regulations Key contributor to Taiwans NHI
  pharmaceutical reimbursement system

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
  (19951997, 20072011.1) Advisor to Taiwans
  DOH(19992000, 20052007)Chairman of OTC
  Committee, DOH (19992007) Chairman of Pharmacy
  Service Quality Committee, DOH (20042007)
• Fields of Specialization Health Policy
  Evaluation, Pharmaceutical Pricing and
  Reimbursement in Health Insurance, Health
  Technology Assessment (HTA) , Development
  Strategies in Health Care Industry

4
Outlines

• Evolution of Drug Regulation in Taiwan
• Taiwans Generic Pharmaceutical Industry
• Access to Medicine and Generic Drugs
• Pricing and Reimbursement of Generic Medicines in
  NHI
• Key Issues in Generic Medicine
• Future of Taiwans Generic Pharmaceutical Industry

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 physicians
  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

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.

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

8
Governments Policy on Pharmaceutical Industry
- Past vs. Future
No. of Manufacturers
120(expected)
550
230
168
2005
1982
1988
1996
2001
2007
2013
1st Phase GMP
1st Phase GMP Completed
Aseptic Validation
cGMP Initiated
PIC/S Advocacy
PIC/s Expected
Source PIDC, 2008
9
Outlines

• Evolution of Drug Regulation in Taiwan
• Taiwans Generic Pharmaceutical Industry
• Access to Medicine and Generic Drugs
• Pricing and Reimbursement of Generic Medicines in
  NHI
• Key Issues in Generic Medicine
• Future of Taiwans Generic Pharmaceutical Industry

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.

11
Current Status of Taiwans Pharmaceutical
Industry

• Generic and domestic market oriented, weak
  innovation capabilities and international
  competiveness
• Government development policy concentrated on
  RD, 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

12
Top 20 Pharmaceutical Companies in Taiwan, 2007
(NT Million)
???)
(YSP)
(CCPC)
(TTY)
(Standard)
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.

14
Pharmaceutical Market Structure in Taiwan
Unit NT1M
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
2007 Market Structure UnitNT1M

• Hospital segment the major market
  (78),Drugstores the next (14), the rest are
  clinics (8)
• Foreign companies local companies by values -
  73?
• Foreign companies local companies by quantity -
  37

Source2008 Biomedical industry Almanac
15
Outlines

• Evolution of Drug Regulation in Taiwan
• Taiwans Generic Pharmaceutical Industry
• Access to Medicine and Generic Drugs
• Pricing and Reimbursement of Generic Medicines in
  NHI
• Key Issues in Generic Medicine
• Future of Taiwans Generic Pharmaceutical Industry

16
Four Elements in Access to Essential
Medicines
17
Four Elements in Access to Essential Medicines
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 Taiwans NHI system has
  different connotations from international
  narratives

19
Public Rights in Medicine Access

• Quality, Price and Rational Use
• Quality and price in Pharmaceutical Benefit
  Scheme of Taiwans 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.

20
Outlines

• Evolution of Drug Regulation in Taiwan
• Taiwans Generic Pharmaceutical Industry
• Access to Medicine and Generic Drugs
• Pricing and Reimbursement of Generic Medicines in
  NHI
• Key Issues in Generic Medicine
• Future of Taiwans Generic Pharmaceutical Industry

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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

24
Trends of Pharmaceutical Expenditure in Taiwan
(19972009)
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
26
International Comparison Cheaper Original
Products in TaiwanTop 20 Original Products in
Taiwans NHI)
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.

28
Outlines

• Evolution of Drug Regulation in Taiwan
• Taiwans Generic Pharmaceutical Industry
• Access to Medicine and Generic Drugs
• Pricing and Reimbursement of Generic Medicines in
  NHI
• Key Issues in Generic Medicine
• Future of Taiwans Generic Pharmaceutical Industry

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

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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

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.

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.

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.

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.

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

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

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 Taiwans
  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?

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.

39
Price Barriers Increasing

• Premium pricing products increasing rapidly
  annual claims gtNT500M, one product in 2000 to 17
  products in 2006, representing 16.8 of total
  drug bill annual claims gtNT300M, 11 product in
  2000 to 48 products in 2006, representing 27.5
  of total drug bill annual claims gtNT100M, 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.

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.

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, its only the
  beginning of another era.

42
Special Thanks to TFDA and BNHI, Department of
Health in making some content of this
presentation available

• Thank you for your kind attention
• huang_at_ym.edu.tw