Improving Taiwans Healthcare R&D Environment Requires Reform

Taiwan is a highly attractive investment destination for multinational pharmaceutical companies. The islands sizeable pool of high-quality STEM talent, its extensive expertise in and productive environment for conducting clinical trials, active government-industry-academia cooperation in medical research, and advanced bio-ICT capacity are just a few of the qualities that have led over a dozen major pharmaceutical giants to invest significantly in research and development in Taiwan over the years.

These companies, represented by the International Research Based Pharmaceutical Manufacturers Association (IRPMA), engaged extensively with the Taiwan government through public-private partnerships that address areas such as talent cultivation, startup cultivation, digital health, precision health, and general health. While optimistic about Taiwans potential to become a regional hub of biopharmaceutical R&D and innovation, IRPMA and its member companies also see room for improvement in Taiwans healthcare system.

The organization regularly raises concerns about Taiwan’s reimbursement policy for new drugs. Taiwan’s single-payer healthcare system means that reimbursement amounts are determined and paid by the Pharmaceutical Benefit and Reimbursement Scheme Joint Committee (PBRS). This committee is made up of government officials and hospital associations as well as manufacturers and patient groups.

IRPMA points out that Taiwan’s Global Budget payment system, which IRPMA does not recognize as sufficient to cover the cost of new drugs and treatments developed by multinational pharmaceutical companies, limits reimbursement. These companies often refuse to pay the PBRS reimbursement price and opt instead for a delayed launch on the Taiwan market or forgoing launching in Taiwan.

Heather Lin, chief operating officers at IRPMA, said that such decisions are due to the large investment required to develop a drug. It takes a minimum of 15 years for a new drug on the market. This includes 6-7 years for drug ingredients exploration and safety evaluations, 7-13 year for clinical trials, and 1 year for applying for market approval. Throughout that process, R&D costs can exceed US$6.9 billion. Over-focusing on cost-containment during the reimbursement process is a mistake. It undervalues the effort, time, and money that goes into the development of new pharmaceutical products.

Lin says Taiwan’s National Health Insurance system (NHI), is supposed to place patients at the center. However, Taiwanese patients are not receiving the innovative new drugs they need or suffer from a delay between reimbursement and market access.

Lin cites several successful approaches in single-payer countries that Lin believes can help Taiwan resolve this issue. One such method is the risk-sharing mechanism, also known by Managed Entry Agreements (MEAs), in which pharmaceutical companies agree on certain terms to reduce payer uncertainty about new drugs. Although Taiwan’s Ministry of Health and Welfare has implemented such MEAs since 2018, there is still a lack of equitable treatment and mutual risk-sharing in these agreements.

IRPMA has also advocated copayment reform over the years. This would increase the out-of pocket expenses for patients. However, the trade-off is improved access to lifesaving treatments and medicines.

Lin also points out the decision single payer countries like Australia and the UK have made to allow multiple funding streams, rather than relying solely on a fixed budget to cover all their healthcare costs, as is the case with Taiwan. Lin suggests that entrepreneurs, tax revenue and IRPMA member businesses could be additional funding sources.

Lin says that the COVID-19 epidemic has significantly raised the profile and perception of multinational pharmaceutical corporations, due to their involvement in the development of coronavirus vaccines. It is also pushing companies to reconsider how their supply chains are structured, and Taiwan with its world-renowned tech sector and strong R&D capabilities now has an opportunity to be part of that realignment.

In addition, Lin says that the government is now placing much greater emphasis on investing in healthcare and R&D. Lin says that IRPMA would like to see greater investment in international and local pharmaceutical development. She said that Taiwan cannot focus on its domestic market to develop its own drugs. Launching in international markets is essential. Local companies can benefit from the assistance of IRPMA members.