VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #0428/01 0430127
ZNR UUUUU ZZH
R 120127Z FEB 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 8484
INFO RUEHBJ/AMEMBASSY BEIJING 4655
RUEHUL/AMEMBASSY SEOUL 7598
RUEHKO/AMEMBASSY TOKYO 7418
RUEHGZ/AMCONSUL GUANGZHOU 8964
RUEHHK/AMCONSUL HONG KONG 5857
RUEHOK/AMCONSUL OSAKA KOBE 0357
RUESLE/AMCONSUL SHANGHAI 8364
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AIT TAIPEI 000428 
 
SIPDIS 
 
SIPDIS 
 
DEPT PASS USTR 
DEPT FOR EAP/TC AND EB/MTA 
USDOC FOR 4430/ITA/MAC/MBMORGAN 
USTR FRO TIM WINELAND AND G BLUE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KPRP KTDB TW
SUBJECT: TAIWAN INVITES COMMENTS FROM DRUG COMPANIES 
 
REF: 05 TAIPEI 4685 
 
¶1. SUMMARY. Joseph Damond VP International Affairs of the 
Pharmaceutical Research and Manufacturers of America (PHRMA) 
met with Bureau of National Health Insurance (BNHI) and Dept 
of Health (DOH) officials Jan 19-20 to discuss PHRMA market 
access concerns in Taiwan. They discussed separation of 
prescribing and dispensing of drugs, public expenditures on 
health care and the high number of prescriptions per doctor 
visit, the high percentage use of generic drugs, and 
transparency in drug pricing. PHRMA also voiced concerns that 
new regulations were being adopted without adequate 
consultation with the drug industry. DOH and BNHI officials 
agreed to allow private sector comments earlier in the 
regulatory process and to hold regular consultations with 
industry and AIT. Damond later met with AIT Director and 
conveyed similar points. END SUMMARY 
 
MARKET ACCESS, AND DRUG PRESCRIBING 
----------------------------------- 
 
¶2. In a meeting with BNHI Vice President Huang San-Kuei, 
PHRMA representatives Joe Damond and Heather Clark raised the 
limited market access U.S. drug companies have in Taiwan, the 
lack of separation between drug prescribing and dispensing in 
Taiwan hospitals (i.e. hospital pharmacists dispense drugs 
prescribed by hospital doctors encouraging over-prescribing 
to augment hospital revenue), the high number of 
prescriptions per doctor visit (seldom under six), the high 
rate of generic drug reimbursement which encourages the use 
of generics, and low health expenditure in Taiwan. BNHI noted 
that even in the U.S. there is a "black hole" effect due to 
the discount that state governments demand from the drug 
companies. (Note: black hole refers to the excess 
reimbursement over the real cost of the drug-the extra money 
is kept by the hospitals). 
 
¶3. PHRMA stated that Taiwan reimburses generics at 80 percent 
of cost versus only 20-30 percent in the U.S. Generic drugs 
are 50 percent of the U.S. market by volume but only 12 
percent of market by value. This gives U.S. drug companies 
more incentive to develop new drugs. BNHI stated that because 
drug prices are set according to Pharmaceutical Affairs Law 
article 49 implementation rule 67.1 there is little 
flexibility. 
 
¶4. PHRMA also opposed a plan to classify new drug 
reimbursement into three categories and hoped the authorities 
would adopt a more transparent pricing system in-line with 
international practice. 
 
AGREED: MORE DIALOGUE 
--------------------- 
 
¶5. PHRMA met the following day with DOH Vice Minister Chen 
Shi-Chong to request a delay in the implementation of 
regulations and procedures to allow the drug industry more 
time to comment. PHRMA VP Damond reiterated the same points 
he brought up with BNHI VP Huang earlier concerning 
separation of prescribing and dispensing and the high 
reimbursement rate for generic drugs. Chen said that drug 
prices take up 26 percent of healthcare costs and the 
government had put a 5 percent cap on national health 
insurance expenditure growth. He re-affirmed DOH's intent to 
hold regular meetings with industry and AIT as proposed by 
AIT in November 2005. 
 
¶6. Chen then said he would welcome industry comment under the 
following conditions: 
a. when new drugs are introduced to Taiwan 
b. when looking for ways to minimize NHI budget and prices 
for drugs already on the market 
c. when looking for suggestions that would encourage proper 
drug prescribing by physicians. 
 
 
PHRMA PRESENTS AIT DIRECTOR SAME 
-------------------------------- 
 
¶7. Following their meeting with DOH vice minister Chen, PHRMA 
reps met with AIT Director and requested his support on the 
above mentioned issues. 
 
¶8. COMMENT. The positive feedback from DOH and BNHI and the 
fact that heads of both agencies will remain after the latest 
cabinet shuffle improves the chances for continued dialogue 
with PHRMA and the drug industry. However, the entrenched 
interests both in the pharmaceutical industry and medical 
field make it unlikely that either BNHI or DOH will move soon 
to separate drug prescribing from dispensing or to correct 
the overuse of generic medicines.  END COMMENT 
 
 
DAVISON 
 
 
 
DAVISON