Issues: Not the Right Way to Contain Costs
Anticipating a new regimen of fixed budgets, many hospitals have begun to replace high-quality imported drugs with low-priced substitutes.
A proposed method for controlling national healthcare costs is presenting a threat to the continued viability of international pharmaceutical companies' business in Taiwan. More pointedly, it is raising the public-health issue of whether patients will have access to the drugs best able to treat their conditions, or only to cheaper drugs that may be less effective.
To restrain the mounting burden on the National Health Insurance (NHI) program from reimbursing hospitals for the cost of treatment, a "hospital global budget" system was introduced in July 2002. For each region in Taiwan, a ceiling was set for NHI reimbursements to hospitals. But that system ran into problems as each hospital sought to expand the volume of its services in an effort to claim a larger slice of the reimbursement pie.
The proposed solution has been a shift to a Hospital Autonomous Management Scheme under which each hospital is assigned a fixed budget. In March of this year the Hospital Association of the Republic of China won a tender (it was the only bidder) to administer the program, but official implementation is still pending the signing of a contract with the Department of Health. The AmCham pharmaceutical committee, together with the International Research-based Pharmceutical Manufacturers Association (IRPMA) as well as various consumer and healthcare advocacy organizations, have been cautioning the Department about the serious pitfalls posed by setting global budgets by hospital.
Already, anticipating implementation of the proposed new scheme, many private hospitals -- particularly in central and southern Taiwan -- have been chopping costs by shifting from use of high-quality imported pharmaceuticals to lower-priced, locally made substitutes, as well as by rejecting certain patients and reducing some services such as evening clinics. In another move to cut costs, the Hospital Association has asked the NHI Bureau to freeze reimbursement approval for new drugs.
"What we are seeing is a conflict of interest between the patients' benefit and the hospitals' finances," says Carol Cheng, IRPMA's chief operating officer in Taiwan. Her organization notes that the new scheme is having "a dire impact on all healthcare-industry stakeholders," diminishing the quality of healthcare, creating a hostile environment for innovative drugs, and damaging the foreign-investment climate in the pharmaceutical industry. If the situation is not redressed, an IRPMA position statement warns, "sooner or later, international businesses will withdraw from Taiwan and divert their investment to other countries that acknowledge and encourage the value of innovation." Besides the effect on healthcare and the pharmaceutical industry, says IRPMA, the result would also be to put the future of Taiwan's biotech development plans in doubt.
The research-based manufacturers are calling on the government to abandon the hospital-based budget system and return to the original regional global budgets, with the addition of measures governing service quantity and quality. They also maintain that the government should retain control over pharmaceutical management rather than handing that function over to the Global Budget administrator.
