Role of Generics in the
Taiwanese Health Care System,
Regulations and Market
Competition Issues
Workshop on Taiwan-Germany Generic Related
Legal Issues, June 3, 2011
Weng-Foung Huang, Ph.D.
Professor
Institute of Health and Welfare Policy
National Yang-Ming University
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Professional Background
Weng-Foung Huang, Ph.D.
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BS in Pharmacy, National Taiwan University (1972); MS in
Pharmacy 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 General
of National Laboratories of Foods and Drugs)
Architect of Taiwan’s GMP and clinical trial regulations; Key
contributor to Taiwan’s NHI pharmaceutical reimbursement
system
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Professional Background
Weng-Foung Huang, Ph.D.
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Academic career (1994 ~ present): Associate Professor,
Director, Professor ; Institute of Health and Welfare Policy,
National 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)
Fields of Specialization: Health Policy Evaluation,
Pharmaceutical Pricing and Reimbursement in Health
Insurance, Health Technology Assessment (HTA) ,
Development Strategies in Health Care Industry
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Outlines
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Evolution of Drug Regulation in Taiwan
Taiwan’s Generic Pharmaceutical Industry
Access to Medicine and Generic Drugs
Pricing and Reimbursement of Generic
Medicines in NHI
Key Issues in Generic Medicine
Future of Taiwan’s Generic Pharmaceutical
Industry
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Laws Relevant to Pharmaceutical
Regulation in Taiwan
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Physicians Act and Medical Care Act: Medical practices
and medical behaviors, Pharmacists violating Physicians
Act in providing prescription medicines without a
physician’s prescription and involves diagnosis, treatment
or therapy
Pharmaceutical Affairs Act: governing pharmaceuticals,
medical devices, pharmaceutical companies and related
affairs
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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Laws Relevant to Pharmaceutical
Regulation in Taiwan
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Rare Disease Control and Orphan Drug Act
Controlled Drugs Act/Illicit Drug Hazards and
Prevention Act。
National Health Insurance Act: Pharmaceutical
Benefit Scheme, NHI Contract Pharmacy
Statue for Control of Cosmetic Hygiene, Act
Governing Food Sanitation, Health Food Control Act,
etc.
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Evolution of Drug Regulation in Taiwan
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New drug approvals usually follow the marketing
authorization 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 review.
Requirement of bioequivalent study (BA/BE) for generics
in 1989
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Government’s Policy on Pharmaceutical
Industry - Past vs. Future
No. of Manufacturers
550
230
120(expected)
168
2005
2007
2013
PIC/s Expected
2001
PIC/S
Advocacy
1st Phase GMP
Completed
1st Phase GMP
1996
cGMP Initiated
1988
Aseptic Validation
1982
Source: PIDC, 2008
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Outlines
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Evolution of Drug Regulation in Taiwan
Taiwan’s Generic Pharmaceutical Industry
Access to Medicine and Generic Drugs
Pricing and Reimbursement of Generic
Medicines in NHI
Key Issues in Generic Medicine
Future of Taiwan’s Generic Pharmaceutical
Industry
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Characteristics of Generic Industry
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Not major league baseball teams, more like little
league or youth baseball teams
Diversified players: Israel, India, Hungary, Korea,
Canada, , etc.
Scale and technology gap are not limiting factors yet,
forthcoming of giant generic companies like Sandoz,
Teva-Ivax, etc.
Generic drugs just like personal computers, more
price competition than brand competition, but it is
changing.
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Current Status
of Taiwan’s Pharmaceutical Industry
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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 streams
NHI dominates the development of domestic
pharmaceutical industry, however, NHI pricing and
reimbursement policy inconsistent with national industry
policy
For multinational pharmaceutical companies, a matured
market without much momentum
Double jeopardy of NHI Pricing and PIC/S GMP
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Top 20 Pharmaceutical Companies
in Taiwan, 2007 (NT$: Million)
百萬元)
(YSP)
(CCPC)
(TTY)
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(Standard)
12
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Public Listing on Stock Market
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18 companies on Taiwan Stock Market, 33
companies on Taiwan OTC Stock Market
12 Pharmaceutical companies
5 Pharmaceutical API companies
15 Medical device companies
8 Biotech companies
4 Distribution companies
7 Others
Nearly all top pharmaceutical companies are listed,
most listed biotech companies are founded over the
past 5-10 years.
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Pharmaceutical Market Structure in Taiwan
Unit: NT$1M
Year
2003
2004
2005
2006
2007
Local companies
24,866
26,923
27,855
27,009
25,561
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
local companies
26.3%
26.1%
26.7%
25.0%
23.3%
2007 Market Structure
Unit:NT$1M

100%
3021
80%
60%
70843
10249
Foreign 
40%
14716
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Local
5916
20%
0%
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Hospitals
Hospital segment the major
market (78%)，Drugstores
the next (14%), the rest are
clinics (8%)
Foreign companies: local
companies by values - 7:3。
Foreign companies: local
companies by quantity - 3:7
4957
Clinics
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Source：2008 Biomedical industry Almanac
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Outlines

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Evolution of Drug Regulation in Taiwan
Taiwan’s Generic Pharmaceutical Industry
Access to Medicine and Generic Drugs
Pricing and Reimbursement of Generic
Medicines in NHI
Key Issues in Generic Medicine
Future of Taiwan’s Generic Pharmaceutical
Industry
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2. Affordable Price
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4. Reliable Health
and Supply System
3. Sustainable Financing
Access
1. Rational Selection
Four Elements
in Access to Essential Medicines
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Four Elements
in Access to Essential Medicines
1. Rational Selection
3. Sustainable
Financing
Access
2. Affordable Price
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4. Reliable Health
and Supply
System
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Public Rights in Medicine Access
 Access
to medicines：
1. Rational Selection and Use
2. Affordable Price
3. Sustainable Financing
4. Reliable Health and Supply System
 Access to medicines in Taiwan’s NHI system
has different connotations from international
narratives
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Public Rights in Medicine Access
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Quality, Price and Rational Use
Quality and price in Pharmaceutical Benefit
Scheme of Taiwan’s NHI, including drug product
coverage and copayment, are not major issues
Rational use of medicines is an abstract issues
without consensus, it is much affected by health
professionals, NHI payment mechanism, patient
behaviors in medical visits, and cultural factors.
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Outlines
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Evolution of Drug Regulation in Taiwan
Taiwan’s Generic Pharmaceutical Industry
Access to Medicine and Generic Drugs
Pricing and Reimbursement of Generic
Medicines in NHI
Key Issues in Generic Medicine
Future of Taiwan’s Generic Pharmaceutical
Industry
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Pharmaceutical Benefit Scheme
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Fee for services in outpatient services
 Claims based on brand price published by the
NHI Bureau
 Positive listing and national unified
reimbursement price
 Daily drug payment clinics and pharmacies,
TCMs
DRGs (Diagnostic Related Groups) for inpatient
services
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Trends of Pharmaceutical Expenditure
in Taiwan (1997~2009)
1,800 億
30%
1,600 億
25.3%
24.5% 24.8% 25.4% 25.4% 24.8% 24.4% 24.6% 24.9% 24.8% 25.0% 24.7% 25.1%
25%
1,400 億
1,170
1,094 1,121 1,141
1,200 億
1,000 億
800 億
640
600 億
723
804
12.9%
829
847
11.3% 調
906 945
調
價
調
價
調
價
調
價
15%
6.9%
6.9%
3.1%
20%
10%
400 億
200 億
1,322
調
價
調
價
價
15.8%
1,250
4.4%
2.2%
2.5%
1.8%
0億
5.8%5%
2.5%
0%
1997年 1998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年 2009年
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International Comparison of Per Capita
Outpatient Pharmaceutical Expenses, 2007
1000
PE Per Capita (US$)
900 871
800
725 719
700
600
689 666
650 636 628
604
569 568 547
539 526 525
456 427
402 397
500
400
318 318 301
300
200
273
234
191 172
136
100
0
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
Sources： 1.OECD Health Data 2009
Pharmaceutical expenses include Prescription, OTC, and TCM
2.DOH(Taiwan)
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International Comparison: Cheaper
Original Products in Taiwan
Top 20 Original Products in Taiwan’s NHI)
450%
409%
400%
350%
300%
250%
250%
224%
212%
203%
201%
200%
160%
144%
150%
139%
130%
116%
100%
100%
50%
0%
美國
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德國
瑞士
日本
加拿大 比利時
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法國
瑞典
英國
澳洲
韓國
台灣
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Issues in NHI Pharmaceutical
Benefit Scheme
1.Payment Gaps (Blackhole Issue)
2. Waste in Medicines
3. Unfair Drug Pricing
4. Coverage of OTC Drugs
5. Pharmaceutical Budget in Global Budget
6. Trade Negotiation Issues
7. Containment Strategies: Price/Volume Survey and
Price Cutting, Claw-Back Contract on New Drugs
Reimbursement, Pricing New Drugs, Health
Technology Assessment (HTA), etc.
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Outlines

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Evolution of Drug Regulation in Taiwan
Taiwan’s Generic Pharmaceutical Industry
Access to Medicine and Generic Drugs
Pricing and Reimbursement of Generic
Medicines in NHI
Key Issues in Generic Medicine
Future of Taiwan’s Generic Pharmaceutical
Industry
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Key Issues in Generic Medicines
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GMP-cGMP-PIC/S GMP
Quality of generic medicines
Price barriers and generic medicines
Reimbursement on API basis
There is no incentive mechanism in NHI to
encourage the use of generics by the public
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QUALITY of National Generics
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There should be no argument about the quality of national
generics when two thirds of the drug quantity consumed
by the public are actually manufactured by national
generic manufacturers.
At least, the quality of national generics are equivalent to
the quality of medical care, otherwise, why there has very
limited evidence based criticism on generic quality.
DOH license is only the minimal criterion, generic
industry needs to gain the quality recognition and support
from the public.
Core Issue: Quality Commitment to consumers
(Physicians, Patients, and the Public), not to regulatory
agency only
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National Medicine Policy Conference,
2008/12/31
Resolution 4:
To elevate quality incentives, same price issued for the
products with the same API and the same quality in order to
encourage 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 quality.
 Pricing measures will take into consideration and
incentives 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
without any mistakes; in the case that pharmaceuticals are
not available or in short supply, pharmacists shall inform
the prescribing physician for change, and shall not omit
or substitute other pharmaceuticals at will.
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Generic Substitution
Article 19, Enforcement Regulation of Pharmacist Act
‘Other pharmaceuticals’ in Article 17 refer to
drug products having different active
pharmaceutical ingredients, content, dose, or dosage
forms.
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Generic Substitution
Article 40, Regulations for NHI Medical Care
For any medication, if the doctor has not indicated that it
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
ingredients, same dosage form and same dosage at an equal
or lower price.
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Price Barriers in
Pharmaceutical Benefit Scheme (PBS)
Reimbursement on brand basis: preference of
physicians and patients, brand equity and business
operation margins
 Principles of NHI PBS:
 Price-Volume Contract for new drugs
 Reimbursement on Brand Basis
 No balancing billing on drugs
 Graduate phase-in to reimbursement on API Basis
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Price Barriers of
Reimbursement on Brand Basis
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Reimbursement on brand name basis: preference of
physicians and the public, profit and brand equity
concerns of pharmaceutical companies
Principles of Pharmaceutical Benefit Scheme in NHI
Price setting and claw-back agreement on new drugs
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
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Payment Gap (Drug Procurement Profit) is the prime
factor of purchase, the public confidence in drugs also
imbedded in brand equity.
There is no solidarity concept in Taiwan’s society as a
whole: why using cheaper generics when premium
products are available！?
Drug profit is a key element in hospital and physicians’
choice of drug
Why it is so difficult for paying by API instead of brand?
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Price Barriers in
Pharmaceutical Benefit Scheme (PBS)
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Price barriers increasing amid pharmaceutical expenditure
structure
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 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 product.
Pharmaceutical payment should be based on active
pharmaceutical ingredient instead of brand name.
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Price Barriers Increasing
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Premium pricing products increasing rapidly: annual
claims >NT$500M, one product in 2000 to 17 products in
2006, representing 16.8% of total drug bill; annual claims
>NT$300M, 11 product in 2000 to 48 products in 2006,
representing 27.5% of total drug bill; annual claims
>NT$100M, 85 product in 2000 to 199 products in 2006,
representing 52.6% of total drug bill;
New drugs under patent represent 32% of total drug bill,
much lower than USA and EU, yet patent expired
originals still enjoy lucrative market share.
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The Future of Generics
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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
more Taiwanese generic companies will penetrate into
international market.
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The Future of Generics
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A regulatory agency can only establish its credential for
protecting public health in dealing with the quality, safety,
and efficacy of drugs when public confidence in
regulatory agency is assured.
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
medical 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 some content of this presentation available
Thank you for your kind attention
huang@ym.edu.tw
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