Pharmaceutical News
Careful calculation vs. drug price black-hole? A live report on hospital’s promotion of generic drugs

Reported by Chang Cheng-An and Lin Shang-Yun


Have hospitals been forced to adopt austerity measures as a result of NHI price cuts on drugs, treatment fees and nursing fees? What are the secrets of the NHI drug price black-hole which is worth tens of billions?  According to a TVBS’s investigation, doctors in the Chang Gung Memorial Hospital are advised by its computer system to give priority to generic drugs when issuing prescriptions, because generic drugs offer bigger price differences.    If doctors insist on prescribing original drugs, the computer system will ask a series of questions for confirmation and explanations.  The Chang Gung Hospital explained that the design of the system is to allow doctors to rethink their prescriptions and to pressurize drug companies into reducing prices.  Does such practice affect patients’ rights? 

About 800,000 bottles of antidiarrheals are prescribed to children by paediatricians every year.  “Pecolin”, an effective antidiarrheal for children, is no longer available in Taiwan due to NHI drug price cuts.  Instead of taking just 5c.c. suspension syrup, children now need to swallow 50c.c. solutions with dissolved drug powders.  Pecolin’s withdrawal from the market in Taiwan marks the greatest impact from NHI drug price cuts on the paediatrics.


Dr Zhan Chien-Jun, a paediatrician said: “The TFDA said that there are plenty substitutes for Pecolin.  But, they just don’t realize how stressful it is for parents to feed medicine to kids.”


Miss Hung is now in a pharmacy to collect antihypertensive drugs for his father who needs to take a tablet of Norvasc every morning.  But, does she know whether the drugs her father is taking are original drugs or generics?


Reporter: “How many out of the four packets are original drugs?”

Pharmacist: “Two packets are original drugs and the other two are generics.”

Reporter asks Miss Hung: “Are you aware that some are originals and some are generics?”

Miss Hung: “No.  I don’t usually pay attention to it.”


Patients usually take whatever their doctors prescribe to them.  So, it is a worry when doctors’ prescription rights are restricted.  Hospitals are subject to a major accreditation this year.  For the first time, the MOHW includes “prescription behaviour” into the evaluation.  Hospitals have to work in accordance with the government’s policies of promoting the use of generic drugs.  Hospitals will be accredited for using higher proportion of generic drugs.  Therefore, various measures have been formulated and implemented in hospitals to promote the use of generic drugs.  In the Chang Gung Hospital, a computer system was introduced to remind doctors to prescribe generic drugs by popping out a reminder on doctors’ computer screens. 


Our reporter has witnessed how the system works.  A window pops out on the computer screen, suggesting using a cheaper generic drug manufactured by Sandoz (NT$12) rather than prescribing the more expensive original drug of Nexium (NT$15.1).  When the doctor insists on prescribing the original drug, the system persistently asks the doctor to confirm his/her decision.  When the doctor finally goes through all the hassles to confirm his/her decision, the system requests a written explanation.  Doctors in the Chang Gung Hospitals secretly complain about this harassment.


Legislator Dr Lin Jing-Yi (DPP) said: “Chang Gung’s management style is gradually penetrating into other hospitals.  Hospital management openly promotes the use of generic drugs and urges staff to help cut down costs.” 


The reason why hospitals are keen to promote generic drugs is that generic drugs offer more rooms for price negotiation.  Taking Novarsc for example, the NHI reimbursement price was NT$23 in 2007 and was cut to just NT$6.8 in 2015 after patent expiration.  The government issued licenses to 21 generic drugs of the same ingredients.  All of them have the same reimbursement price as the original drug based on the government’s pricing policy which gives the same price to drugs identical in ingredients and quality.


However, the TVBS report discovered that the drug price black-hole actually involves huge profits.


According to the information obtained by our reporter, generic Novarsc has been sold to hospitals at just NT$1 per tablet although the NHIA pays NT$6.8 per tablet.  So, who keeps the price differences?  Under the NHI global budget system, hospitals are using the profits from drugs to compensate the financial losses from medical services.  As the reimbursement price is the same, generic drugs which cost NT$1.1 gives hospitals better profits than quality original drug which costs NT$6.8.  The price difference is about 600%.  Can patients expect any drug quality in a cut-through price competition as such?


Chen Shih-Xiong, the Honorary President of the NPCA said: “As drug price is squeezed to a level lower than the floor price, we start suspecting whether the quality is consistent among all drugs.  A hospital’s operation should not be dependent on drug profits.  It should be based on treatments and techniques.  If prescriptions can generate profits, it will affect doctors’ prescription behaviour.”


We start wondering whether the drugs prescribed to patients are based on patients’ needs or just due to price concern.  Hospitals barely make ends meet.  The NHI reimbursements for treatment and nursing services are too low.   It forces hospitals to seek profits from drugs so as to keep their account balanced.


Dr Su Yi-Ning, the CEO of the Dianthus MFM Centre said: “In our hospital, we are doing our best to use original antihistamines and antibodies.”


After leaving the NTUH, Dr Su abandoned the NHI system in order to stick to his principles.  He said: “Price orientation is a dangerous thing, because it makes you ignore the needs of the front-line healthcare professionals and force them to accept whatever is the cheapest.”


As drug prices are cut to the very bottom, the goodwill gesture to support domestic drug industry seems meaningless.  And, when hospitals are forced to use the profit from drugs to compensate medical treatments, it gradually eats away patients’ health.


【2016-04-08/ TVBS News】