Pharmaceutical News
NHIA drug price adjustment results for the 2nd year of the DET system

NHIA Press Release (2015/2/6)

The NHIA has been carrying out drug price and volume surveys (PV surveys) and price adjustments since 1999.  By law, drug prices should be adjusted once every two years in order to close the gap between the NHI reimbursement prices and the actual market prices.  Savings from the price adjustments are used to reimburse new drugs and new technology, as well as to increase the payment for medical services.  PV surveys and price adjustments help the authority to control the growth of health expenditure while the public are able to enjoy the results of price adjustments.  Price adjustments are carried out based on the drug transaction data declared by drug companies, hospitals and pharmacies.  The NHIA has worked out a formula to determine the “reasonable prices”. 

However, the system arouses different opinions.  There have been criticisms about the price cut, either too mild or too severe, either too fast or too slow, etc.  With a view to reform, the MOHW decided to pilot the “Drug Expenditure Target (DET)” system in 2013 for two years.  Under the DET system, drug prices are adjusted according to the size of the deficits.  The NHIA hopes it would make the drug price adjustment more predictable. 

In the first year of the pilot scheme (2013), the budget had a deficit of NT$5.67 billion.  A follow-up price adjustment was carried out.  In the second year of the pilot scheme (2014), the DET was set at NT$142.56 billion, while the actual spending was NT$150.77 billion.  There was a deficit of NT$8.21 billion.  This called for a price cut with a size of NT$8.21 billion in 2015.  As a result, the NHIA announced the 2015 drug price cut on February 6, 2015.  142 drug items will have a price increase, but 6821 drug items will face a price cut.  The average cut rate is 5.3%.  New prices are to be effective from April 1, 2015.

The NHIA also announces the following two corresponding measures in cases of the shortage of drugs in hospitals after the implementation of new prices:

1.    To set up a window to deal with drug procurement related issues:  The NHIA has constructed a list of contact details of drug companies which are willing to help sort out drug shortage problems.  The list is available on the NHIA’s website. 
2.    Drug companies can appeal to the NHI Drug Dispensing Items and Fee Schedule Joint Establishment Meeting for a price review if the new prices are too low to cover their cost and the companies have no choice but to withdraw the products from the market. 

There was a rumour that research-based drug manufacturers are to withdraw their products from the market in Taiwan.  The NHIA has clarified this issue with industry associations and proved that this rumour is unfounded.