Pricing and Reimbursement of G i M di i i T iGeneric Medicines in Taiwan

Workshop on Pricing and Reimbursement of p gGeneric Medicines in Asia, December 4, 2012

Weng-Foung Huang, Ph.D.Professor

Institute of Health and Welfare PolicyNational Yang-Ming University, Taiwan

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Professional Background gWeng-Foung Huang, Ph.D.

BS in Pharmacy, National Taiwan University (1972); MS in Pharmacy Administration (1975) and Ph D in Social andPharmacy 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 GeneralGeneral of Pharmaceutical Affairs Bureau, Director General of National Laboratories of Foods and Drugs)

Architect of Taiwan’s GMP and clinical trial regulations; Key g ; ycontributor to Taiwan’s NHI pharmaceutical reimbursement system

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Professional Background gWeng-Foung Huang, Ph.D.

Academic career (1994 ~ present): Associate Professor, Director, Professor ; Institute of Health and Welfare Policy, National Yang Ming UniversityNational 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)DOH (2004～2007)

Fields of Specialization: Health Policy Evaluation, Pharmaceutical Pricing and Reimbursement in Health gInsurance, Health Technology Assessment (HTA) , Development Strategies in Health Care Industry

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Outlinesl i d i ’ G i Drug Regulation and Taiwan’s Generic

Pharmaceutical Industry Taiwan’s NHI and Pharmaceutical Benefit Scheme Pricing and Reimbursement of Generic Medicines Pricing and Reimbursement of Generic Medicines

in NHIK I i G i M di i Key Issues in Generic Medicine

Future of Taiwan’s Generic Pharmaceutical Industry

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Law and Regulation gof Pharmaceuticals in Taiwan

Physicians Act and Medical Care Act: Medical practices and medical behaviors, Pharmacists violating Physicians Act in providing prescription medicines without aAct in providing prescription medicines without a physician’s prescription and involves diagnosis, treatment or therapyor therapy

Pharmaceutical Affairs Act: governing pharmaceuticals, medical devices, pharmaceutical companies and related , p paffairs

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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L d R l tiLaw and Regulation of Pharmaceuticals in Taiwan

Rare Disease Control and Orphan Drug Act Controlled Drugs Act/Illicit Drug Hazards and Controlled Drugs Act/Illicit Drug Hazards and

Prevention Act。 National Health Insurance Act: Pharmaceutical National Health Insurance Act: Pharmaceutical

Benefit Scheme, NHI Contract PharmacyS f C l f C i H i A Statue for Control of Cosmetic Hygiene, Act Governing Food Sanitation, Health Food Control Act, tetc.

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Evolution of Drug Regulation in TaiwanEvolution of Drug Regulation in Taiwan New drug approvals usually follow the marketing

authorization of reference countries (such as USA UKauthorization 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 reviewsystem for domestic NDA review.

Requirement of bioequivalent study (BA/BE) for generics in 1989in 1989

Inauguration of Taiwan Food and Drug Administration (TFDA) in 2010.

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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 streamsNHI d i h d l f d i NHI dominates the development of domestic pharmaceutical industry, however, NHI pricing and reimbursement policy inconsistent with national industryreimbursement policy inconsistent with national industry policy

For multinational pharmaceutical companies, a matured p p ,market without much momentum

Double jeopardy of NHI Pricing and PIC/S GMP 2012/12/04 8HWF/YMU

Top 20 Pharmaceutical Companies in Tai an 2011in Taiwan, 2011

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Pharmaceutical Market Structure in TaiwanYear 2003 2004 2005 2006 2007

Local companies 24,866 26,923 27,855 27,009 25,561

Unit: NT$1M

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 26.3% 26.1% 26.7% 25.0% 23.3%local companies

2007 Market Structure Unit:NT$1M

Hospital segment the major market (78%)，Drugstores the next (14%) the rest are3021

100%

2007 Market Structure Unit:NT$1M

the next (14%), the rest are clinics (8%)

Foreign companies: local companies by values - 7:3。

Foreign companies: local70843

10249

3021

60%

80%

Foreign Foreign companies: local companies by quantity - 3:7

147164957

5916

20%

40% Local

10

147160%

Hospitals Clinics

Source：2008 Biomedical industry Almanac 2012/12/04

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Pharmaceutical Benefit SchemePharmaceutical Benefit SchemePharmaceutical Benefit SchemePharmaceutical Benefit Scheme Fee for services in outpatient services Fee for services in outpatient services Claims based on brand price published by the

NHI BNHI Bureau Positive listing and national unified

reimbursement price Daily drug paymentclinics and pharmacies, Daily drug payment clinics and pharmacies,

TCMsF f i d DRG (Di ti R l t d Fee for services and DRGs (Diagnostic Related Groups) for inpatient services

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Pharmaceutical Benefit Scheme for National Health Insurance

Chapter I General PrinciplesGeneral Principles

Chapter II Principles on Drug Reimbursement Listing inNHI

Chapter III Chapter III Principles on Drug Reimbursement Price A l f NHI N d N it f li t dApproval of NHI: New drugs, New item of listed ingredients and dosage forms (Generics)

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Drug Classification under NHIDrug Classification under NHI

A. New drugB New item of listed ingredients and dosageB. New item of listed ingredients and dosage

forms in the PBS.1. Compounding prescription and special potency

drugsdrugs2. Other prescription drugs (Generic drugs)

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Classification of Generic Drugs

2a. Drugs from original R&D pharmaceutical company (including authorized generic drugs)company (including authorized generic drugs)

2b. BA/BE generic drugs.2c. Generics other than BA/BE generics

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NHI Pricing for BA/BE Generic Drugs:g g

1) Reimbursement for newly approved BA/BE drugs shall not exceed the lowest reimbursed price of listed BA/BE drugs with identical ingredients, volume, dosage forms and dosage in the PBS.

2) Generic drugs may re-apply for price approval after BE implementationafter BE implementation.

3) Prices of BA/BE drugs shall not exceed prices of i i l R&D d h i h id i loriginal R&D company drugs that with identical

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NHI Pricing for Common Generic Drugs

1) Reimbursement for newly approved drugs shall not exceed the lowest reimbursed price of listed commonexceed the lowest reimbursed price of listed common generic drugs with identical ingredients, volume, dosage forms and dosage in the PBSdosage forms and dosage in the PBS.

2) Reimbursement for common generic drugs shall not d h i b d i f BA/BE d lexceed the reimbursed price of BA/BE drugs, also

shall not exceed 80% of reimbursed prices of original R&D dR&D company drugs.

3) Reimbursement for common generic drugs shall not exceed the 3 folds of 50 percentile reimbursed price of general generic drugs.

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Trends of Pharmaceutical Expenditure in Taiwan (2000~2012/6)

25 4% 25 2% 25 4%

30.0%1,800

(2000~2012/6)

1,236 1,301 1,313

1,424

25.4%24.8% 24.4% 24.6%

24.9% 24.8% 25.0% 24.8% 25.2% 25.4% 25.0% 25.8%25.0%

20 0%

25.0%1,400

1,600

調

829 847 906 945

1,094 1,115 1,130 1,156

15.8%15.0%

20.0%

800

1,000

1,200

調價

調價調

價調

調價

調價

693

6.9% 6.9%5.3%

8.4%

5 0%

10.0%

400

600

800 調價

調價調

價

3.1% 2.2%4.4%

2.4% 1.4%2.3% 0.9%

-1.5%0.0%

5.0%

0

200

400

-5.0%-200 89年 90年 91年 92年 93年 94年 95年 96年 97年 98年 99年 100年 101年1-6

月

藥品費用 藥費占率 成長率

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2020 2011 2012/6

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Expenditure ($) Share (%) Growth Rate (%)2012/12/04 19HWF/YMU

International Comparison of Per Capita Outpatient Pharmaceutical Expenses, 2007Outpatient Pharmaceutical Expenses, 2007

P 8719001000

PE Per C

725 719 689 666 650 636 628 604 569 568 547 539600

700

800

apita (US

547 539 526 525456 427 402 397

318 318 301400

500

600

S$)

301 273234

172136

191

100

200

300

S ： 1 OECD H lth D t 2009

0

100

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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Sources： 1.OECD Health Data 20092.DOH(Taiwan)Pharmaceutical expenses include Prescription, OTC, and TCM

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Market Share by Type of Pharmaceutical Sources

120%

31.5% 29.7% 29.9% 30.1% 29.2% 28.8% 29.5% 28.3%26.6% 25.9% 26.1% 24.7% 25.1%

100%

13 8% 13 8% 13 3%12.2% 11.8%

%

80%

60 6% 63 1% 63 1%

17.9%17.5% 16.5% 15.3%

14.1% 13.7% 13.5% 13.7% 13.8%13.8% 13.3%

40%

60%

50.6% 52.8% 53.6% 54.6% 56.7%57.5% 57.0% 58.0% 59.7% 60.3% 60.6%

63.1% 63.1%

20%

0%88 89 90 91 92 93 94 95 96 97 98 99 100

1研發廠 2代理商 3國產廠

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1研發廠 2代理商 3國產廠 年度R&D Companies Agents National Generics 2012/12/04HWF/YMU

International Comparison: Cheaper Original Products in Taiwan (Top 20 Original Products)

450%409%

350%

400%

250%224%

250%

300%

224%212% 203% 201%

160%144% 139% 130%

116%150%

200%

116%100%

50%

100%

0%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

USA German Swiss Japan Canada Belgium France Sweden UK Australia Korea Taiwan

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USA German Swiss Japan Canada Belgium France Sweden UK Australia Korea Taiwan

Issues in NHI Pharmaceutical Benefit Scheme

1.Payment Gaps (Black-hole 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 HealthReimbursement, Pricing New Drugs, Health Technology Assessment (HTA), etc.

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Key Issues in Generic Medicines

GMP-cGMP-PIC/S GMP Quality of generic medicines Quality of generic medicines Price barriers and generic medicines Reimbursement on API basis There is no incentive mechanism in NHI to There is no incentive mechanism in NHI to

encourage the use of generics by the public

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Government’s Policy on PharmaceuticalGovernment s Policy on PharmaceuticalIndustry - Past vs. Future

120(expected)550 230 168

No. of Manufacturers

550 30

1982 1988 1996

68

2001 2007

2005

1st

Pha

Aseptic

cGM

P

19881st Pha

Com

ple

1996 20012013

2007P

IC/S

Advoc

PIC

/sase GM

P

c Validati

Initiated

ase GM

P eted

cacy

s Expecteion

Source: PIDC 2008

ed

Source: PIDC, 2008

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PIC/S GMP The Pharmaceutical Inspection Convention and Pharmaceutical p

Inspection Co-operation Scheme (jointly referred to as PIC/S) are two international instruments between countries and

h i l i i h i i hi h id hpharmaceutical inspection authorities, which provide together anactive and constructive co-operation in the field of GMP

Currently, PIC/S has 41 members, including EU countries, USA, Canada, Australia, Singapore, Malaysia, Israel, and South Africa etcAfrica, etc.

Effective January 1st, 2013, Taiwan will officially be was the 43rd member of the PIC/S it is a new milestone for Taiwan’s43 member of the PIC/S, it is a new milestone for Taiwan s pharmaceutical industry

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Quality of GenericsQuality of Generics When two thirds of the drug quantity, consumed by the

public, are manufactured by generic manufacturers, the quality should not be a problem.

TFDA d fi d i d d t h i th TFDA defined generics as drug products having the same API, dosage form, dose, and therapeutic effect.

DOH/TFDA license is only the minimal criterion generic DOH/TFDA license is only the minimal criterion, generic industry needs to gain the quality recognition and support from the public.p

Core Issue: Quality Commitment to consumers (Physicians, Patients, and the Public), not to regulatory agency only

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National Medicine Policy Conference, y ,2008/12/31

Resolution 4: To elevate quality incentives, same price issued for theproducts with the same API and the same quality in order toencourage the generic products and early entry to the marketencourage 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 qualityprice for products with the same API and quality. Pricing measures will take into consideration and

incentives of API Drug Master File (DMF) PIC/S GMPincentives 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 p g p p

without any mistakes; in the case that pharmaceuticals arenot available or in short supply pharmacists shall informnot available or in short supply, pharmacists shall informthe prescribing physician for change, and shall not omit

b tit t th h ti l t illor substitute other pharmaceuticals at will.

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Generic Substitution

Article 19, Enforcement Regulation of Pharmacist Act‘Other pharmaceuticals’ in Article 17 refer toOther pharmaceuticals in Article 17 refer to

drug products having different activepharmaceutical ingredients, content, dose, or dosageformsforms.

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Generic SubstitutionArticle 40 Regulations for NHI Medical CareArticle 40, Regulations for NHI Medical Care

For any medication, if the doctor has not indicated that itcannot be substituted the pharmacist (assistant pharmacist)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 a ot e b a d, oweve , t e subst tute ust be o t e sa eingredients, same dosage form and same dosage at an equalor lower price.p

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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 p y p , p q yconcerns of pharmaceutical companies

Principles of Pharmaceutical Benefit Scheme in NHI Principles of Pharmaceutical Benefit Scheme in NHI Price setting and claw-back agreement on new drugs

R i b b d b i 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 i b dd d i b d itimbedded in brand equity.

There is no solidarity concept in Taiwan’s society as a whole: why using cheaper generics when premiumwhole: why using cheaper generics when premium products are available！?

Drug profit is a key element in hospital and physicians’ Drug profit is a key element in hospital and physicians choice of drug

BNHI gradually phased into pricing by API for patent g y p p g y pexpired products

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Price Barriers in PBS

Price barriers increasing amid pharmaceutical expenditure structureR i f NHI i dj f d 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 pricebarriers 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 productare many generic products in addition to the original product.

Pharmaceutical payment should be based on API (active pharmaceutical ingredient) instead of brand name.

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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 y pmore 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, f t d ffi f d h bli fid isafety, and efficacy of drugs when public confidence in

regulatory agency is assured. For the industry compliance to regulatory requirements is 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 q y g pmedical 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 available of some slides in this presentation

Thank you for your kind attentionThank you for your kind attentionhuang@ym.edu.tw

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