AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2007 arrow Vol.37- No.8 arrow Editorial: An Unpleasant Surprise
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An Unpleasant Surprise

The delays that Taiwan will face in pursuing a Free Trade Agreement (FTA) with the United States due to expiration of the U.S. President's fast-track authority only increases the importance of the ongoing U.S.-Taiwan trade negotiation process known as the Trade and Investment Framework Agreement (TIFA). Dramatic progress on the TIFA agenda would greatly increase the likelihood of Washington negotiating an FTA with Taiwan when that again becomes feasible. If the TIFA talks go well, in fact, they can lead to bilateral agreements on such subjects as investment and IPR that could serve as key chapters of a future FTA.

As a result, the most recent TIFA discussions - held in the U.S. capital on July 10 and 11 - were closely watched to gauge their degree of success, and the initial assessment was highly positive. Taiwan's Ministry of Education presented a concrete plan to curb on-campus IPR violations, fruitful exchanges occurred to prepare for an investment agreement, and a new mechanism was created to promote bilateral agricultural cooperation. With Minister Hou Sheng-mou of the Department of Health in attendance, the two sides also agreed to form two task forces to study sensitive issues regarding the pharmaceutical-pricing policies of the Department's Bureau of National Health Insurance (BNHI).

 

Just a week later, however, that atmosphere of good will was suddenly obliterated when the BNHI announced a new round of steep cuts in the reimbursement prices offered to hospitals for drug purchases. Not a word about them had been voiced during the TIFA talks, and even the usual advance notice to the pharmaceutical industry was absent. As AmCham's Pharmaceutical Committee wrote in a letter of complaint to Premier Chang Chun-hsiung, the BNHI decision was wrong in terms of both substance and process. With regard to content, the Bureau's stated goal is to end the gap (commonly known as "the black hole") between hospitals' actual purchase prices after discounts and the amount of government reimbursement. But in the absence of a standard-contract system or other long-term solutions to prevent it, that gap keeps reappearing after each round of price cuts. As it is, the major impact of the price cuts is to keep many innovative drugs out of the market, depriving Taiwanese patients of the chance for the most effective treatment.

Further, the way the cuts were carried out was - intended or not - a slap in the face to both the pharmaceutical industry and the U.S. negotiators. It had appeared that the TIFA process would forge an opportunity for productive consultation among all the stakeholders to find real answers to some thorny problems. Instead, the BNHI opted for a flawed "quick fix" and in so doing undermined the trust that was being rebuilt among U.S. trade officials.

In the interest of both the U.S.-Taiwan economic relationship and the soundness of the healthcare system, Premier Chang should now move swiftly and decisively to have the BNHI revoke its hasty announcement and sit down with industry representatives to seek creative alternatives.
 
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