Cablegate: Taiwan Doh Agrees to Regular Meetings with Phrma

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A

1. (U) Summary: Country managers from PhRMA companies
joined AIT in a meeting with Department of Health (DOH)
Deputy Minister Chen Shih-chung to discuss pharmaceutical
pricing issues and the DOH proposal to extend National Health
Insurance (NHI) reimbursement caps (commonly refered to as
the "global budget") to all hospitals and medical centers in
Taiwan. Chen insisted that health and safety were DOH's
primary concern and offered that actual transaction pricing
and the separation of prescribing and dispensing were part of
Taiwan's long term health plans. Chen explained that the
Bureau of National Health Insurance (BNHI) had learned
valuable lessons from its previous experience in implementing
a limited global budget scheme and was proposing creating a
two-tier system that would reduce incentives for hospitals to
dump high-cost patients. In response to concerns that DOH had
not done enough to share information with industry, Chen
promised to support regular meetings between the BNHI and
PhRMA companies to discuss any industry concerns. End

2. (U) AIT Econ officer and country managers from PhRMA
members Eli Lilly, Merck, and Pfizer met with DOH Deputy
Minister Chen November 21 to discuss pharmaceutical pricing
issues and a new BNHI proposal to extend global budgeting
nationwide in early January 2006. PhRMA members had only
been made aware of the BNHI proposal in early November and
expressed serious concerns that not only would such a move
lead to increased incidents of patient dumping -- the
practice of refusing to treat patients with difficult,
chronic, or expensive-to-treat illnesses -- but would lead to
increased pressure from hospitals and medical centers for
pharmaceutical companies to provide even deeper discounts on
pharmaceutical products.

The root of the problem

3. (U) Chen began by insisting that DOH was concerned only
by how to provide the most effective and efficient treatment
for Taiwanese patients, and that cost did not enter into
DOH's policy considerations. He praised the manufacturers of
innovative medicines and offered that DOH was always willing
to work with them to improve the safety and effectivness of
Taiwan's health care system. Eli Lilly country manager and
PhRMA's Taiwan representative Melt van der Spuy noted that
Taiwan's current system actually encourages over-prescribing
and that moving to actual transaction pricing (ATP) would
reduce incentives for doctors and medical centers to view
prescriptions as a cash cow. BNHI needed to cut costs but
would be better served by taking steps to cut generic
reimbursement prices, discourage over-prescribing and reduce
doctor visits, he said. Chen acknowledged BNHI's financial
difficulties but pointed to the lack of a transparent
hospital accounting system as a reason ATP implementation
would be difficult. BNHI needed to maintain stability to
best serve the people of Taiwan, he said. Changing doctor
and patient behaviors, Chen responded, would require
education over a long period and if forced on the system
would lead to instability.

4. (U) Merck's regional Executive Director Mark Tennyson
suggested the U.S. had implemented an ATP system without
generating instability. Chen responded that Taiwan's low
service fees made it difficult. He suggested Taiwan did not
want to experience doctor strikes as in Korea when the
government tried to implement changes to the prescription
system. Chen said he understood the concerns of the
pharmaceutical industry, but that Taiwan needed time to
develop the expertise and ability to make successful any
necessary changes in the current system. In the long term,
Taiwan would want to move towards separating prescribing and
dispensing and would also want to improve accounting
standards. But before these pieces were in place, Chen
thought enforcing ATP would be very difficult. Chen told AIT
that BNHI would propose unspecified measures in 2006 that
would try to address over-prescribing. He acknowledged that
previous attempts to reform NHI finances had not focused on
this part of the problem.

Universal Global Budgets

5. (U) When asked about the proposal to implement a
nation-wide global budget system by January 2006, Chen
replied that this new proposal would not lead to the same
kind of problems seen when global budgeting was first
implemented in several of the larger hospitals and medical
centers in July 2004. At that time, reports of patients
being denied treatment for expensive illnesses or being
shunted from hospital to hospital led DOH to threaten to
impose fines on any facility found to be engaging in this
kind of patient dumping. The new proposal would actually
create a two-tier reimbursement mechanism with one part
capped, and another part more flexible. He promised BNHI
would closely monitor the standard of patient care.

6. (U) AIT Econoff offered that there had been no
consultation or efforts to inform industry about these
prospective changes and suggested that early sharing of
information could help to avoid misunderstandings, noting
that industry had useful experiences to offer. Chen first
suggested there was no point in consulting until DOH had
decided the details of its plans, but when reminded that
consultation is most effective before decisions have been
finalized, volunteered to arrange a bimonthly meeting between
the PhRMA companies and BNHI to discuss plans and concerns,
beginning with a detailed explanation of the BNHI universal
global budget proposal.

7. (SBU) Comment: Deputy Minister Chen's assertion that cost
is not a concern for DOH policy-makers is disingenuous and
directly contradicts the message from others in Taiwan's
health care policy establishment, including DOH Minister Hou.
His offer of a bimonthly consultative meeting with PhRMA
companies is very welcome, even at this late date, but is a
good illustration of a serious weakness in the DOH
decision-making culture. DOH is led by Taiwanese doctors.
Like most doctors in Taiwan they are confident in their
ability to diagnose and prescribe the best medicine, and
dismissive of the need for consultation and discussion.
Engaging BNHI in a more regular manner is bound to be
positive, but we suspect that changing the behavior of Taiwan
patients will be a quicker and easier task than changing the
culture of the DOH. End Comment.

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