Identifier
Created
Classification
Origin
06AITTAIPEI1730
2006-05-19 10:55:00
UNCLASSIFIED
American Institute Taiwan, Taipei
Cable title:  

BNHI DECLINES TO DELAY PHARMACEUTICAL PRICE CUTS

Tags:  ETRD ECON TW 
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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

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.

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