Newsletter
Planned Suspension of Drug Price Surveys under the "Drug Expenditure Target (DET)" Pending Relevant Regulatory Amendments
Recent news reports have indicated that the Ministry of Health and Welfare (MOHW) is planning to suspend drug price surveys. It is important to clarify that this suspension specifically pertains to the drug price surveys conducted under the "Drug Expenditure Target" (DET) system and does not cover drug price adjustments for off-patent drugs. The details are as follows.
Taiwan's National Health Insurance (NHI) incorporated the DET system into Article 62, Paragraph 4 of the National Health Insurance Act ("NHI Act") through amendments on January 26, 2012. This provision states that after review by the National Health Insurance Administration (NHIA), if the drug expenditure reimbursed to each insured healthcare institution exceeds a pre-set drug expenditure target ratio, the excess amount shall be deducted from the total medical benefit expenses of the current quarter. Subsequently, the NHIA shall revise the relevant drug reimbursement standards in the following year, adjusting reimbursed expenses to align with the expenditure target. This provision, announced by the Executive Yuan, took effect on January 1, 2013, marking the start of the DET system trial. On October 2, 2013, the DET system was further codified in Article 22 of the "National Health Insurance Drug Price Adjustment Guidelines." This article specifies that if the reimbursed drug expenditure for the current year exceeds the pre-set target value from the previous year, payment prices for drugs (excluding those within five years post-patent expiration) shall be adjusted in the following year to remain within the exceeded amount. In other words, drug reimbursement prices are adjusted annually based on the DET system.
Separately, the January 26, 2012 amendment to the NHI Act also introduced Article 46, which mandates that the NHIA reasonably adjust drug prices according to market transaction conditions. Specifically, drug prices should begin to be reduced starting from the first year after patent expiration and be gradually adjusted to reasonable market prices within five years. These provisions are concretely reflected in Articles 2 and 13 of the "National Health Insurance Drug Price Adjustment Guidelines" dated October 2, 2013, which specifically address price adjustments for drugs within five years post-patent expiration.
Currently, the MOHW has clarified that the suspension of drug price surveys applies solely to operations related to the DET system and does not impact price adjustments for off-patent drugs. This suspension is pending the completion of related legislative work, including amendments to the "National Health Insurance Drug Price Adjustment Guidelines," and will be adjusted in conjunction with the review outcomes of the DET system. We will continue to closely monitor developments in related policies and regulations.
Our Life Sciences & Healthcare Practice Group possesses extensive experience in assisting with matters related to these policies. Should you require further analysis, business planning, or consultation regarding these policy adjustments, please do not hesitate to contact our experts.