VZCZCXYZ0016
PP RUEHWEB

DE RUEHIN #1730/01 1391055
ZNR UUUUU ZZH
P 191055Z MAY 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 0270
INFO RUEHBJ/AMEMBASSY BEIJING 5223
RUEHHK/AMCONSUL HONG KONG 6432

UNCLAS AIT TAIPEI 001730 
 
SIPDIS 
 
STATE PLEASE PASS TO AIT/W AND EAP/RSP/TC 
 
STATE PASS USTR/WINELAND 
 
USDOC FOR 4430/ITA/MAC/MBMORGAN 
 
 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON TW
SUBJECT:  BNHI DECLINES TO DELAY PHARMACEUTICAL PRICE CUTS 
 
REF:  A) TAIPEI 1289, B) 05 TAIPEI 4685 
 
¶1.  Summary.  AmCham Pharmaceutical Committee members and AIT/T met 
with Bureau of National Health Insurance (BNHI) officials on May 15, 
2006 as part of regular bimonthly consultations between U.S. 
industry and BNHI.  AmCham members shared points that will be raised 
in its soon to be released White Paper.  AIT/T listed concerns to be 
raised in the May 25-26 Trade and Investment Framework Agreement 
(TIFA) consultations. AIT/T proposed that BNHI postpone impending 
reimbursement price cuts, but BNHI President Liu Chien-hsian 
declined to do so, citing pressure from the Legislature to reduce 
expenditures.   End Summary. 
 
AmCham White Papers on Pharmaceutical Issues 
-------------------------------------------- 
 
¶2.  Melt Van Der Spuy, Chairman of AmCham Pharmaceutical Committee, 
opened the meeting by praising BNHI's success in reducing outpatient 
visits to medical research centers by introducing a co-payment 
mechanism, adjusting premiums based on household income, providing 
data exclusivity protection for patented drugs, and readjusting 
reimbursement pricing of generics to 80 percent of originals.  This 
last measure would weaken generics' ability to offer discounts to 
hospitals and thus partially address the "black hole" problem. 
However, U.S. pharmaceutical industry representatives continued to 
express their concerns over the high number of outpatient visits and 
improper over-prescription of drugs. AmCham members urged BNHI to 
consider further reducing the reimbursement price of generics to 70% 
of that of innovative drugs.  Finally, the U.S. pharmaceutical 
industry encouraged Taiwan to implement actual transaction pricing 
(ATP) and to separate prescribing and dispensing (SPD). 
 
TIFA Theme I -- Price Volume Survey (PVS) 
----------------------------------------- 
 
¶3.  U.S. pharmaceutical companies questioned the accuracy of the 
price volume survey information collected by BNHI.  Firms noted that 
the local press reports cases of drug wholesales filling false 
pricing information with BNHI.  According to the reports,  Taiwan 
authorities have begun investigating 9,800 local drug wholesalers, 
accounting for nearly 45 percent of pharmaceutical firms in Taiwan, 
for filing false information in order to get a higher reimbursement 
price. 
 
¶4.  U.S. industry also asked BNHI to adopt a more transparent and 
predictable pricing mechanism in order to create a workable 
operational market environment for U.S. firms.  Industry asked BNHI 
to suspend the PVS and subsequent reimbursement price cuts pending 
completion of the investigations and creation of a more transparent 
survey system.  BNHI President Liu responded that BNHI is obligated 
to follow established legal procedures, and cannot suspend the price 
volume survey.  Liu suggested that BNHI was willing to consider any 
proposals from industry that would improve implementation of the 
PVS, but repeated that BNHI could not suspend or postpone the 
planned price cuts. 
 
TIFA Theme II -- Universal Price Cuts 
------------------------------------- 
 
¶5.  BNHI Vice President Lee Cheng-hwa asked what U.S. firms would 
think of a universal price cut.  U.S. industry representatives 
responded that such a proposal could be considered but would require 
additional specifics to ensure that generic drug reimbursements are 
subject to deeper cuts. 
 
 
TIFA Theme IV -- Official Notification of IPR Infringement 
--------------------------------------------- 
 
¶6.  U.S. industry representatives and AIT asked BNHI to support 
plans to protect patented drugs from infringing generics by 
establishing a patent linkage system modeled on the U.S. system. 
BNHI Chairman Liu responded that IPR concerns were best handled by 
the Department of Health, but promised to pass the concern to DOH. 
Liu noted that current regulations require BNHI to approve 
reimbursement prices for DOH-approved generics without consideration 
of patent infringement. 
 
Need additional Pressure to Move BNHI on PVS Price Cuts 
--------------------------------------------- ----- 
 
¶7.  Comment:  AIT/T has successfully assisted U.S. pharmaceutical 
industry to establish a regular communication channel with Taiwan's 
health care administration offices.  This has been a useful tool to 
improve communication between the Taiwan authorities and 
international industry and minimize misunderstandings.  The TIFA 
meetings May 25 and 26 are another opportunity to press the Taiwan 
authorities to deliver concrete results to meet industry concerns 
about pharmaceutical pricing.  BNHI Chairman Liu is feeling pressure 
from Taiwan's legislature to cut costs; he was insistent that the 
PVS price cut would take effect in July as planned.  End Comment. 
 
YOUNG