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Cablegate: Taiwan Pharmaceuticals: Pvs Results Annouced,

VZCZCXYZ0004
RR RUEHWEB

DE RUEHIN #3384/01 2750337
ZNR UUUUU ZZH
R 020337Z OCT 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 2402
INFO RUEHBJ/AMEMBASSY BEIJING 5721
RUEHUL/AMEMBASSY SEOUL 8135
RUEHKO/AMEMBASSY TOKYO 8077
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 1776

UNCLAS AIT TAIPEI 003384

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR
STATE FOR EAP/TC,
USTR FOR BOLLYKY AND ALTBACH,
USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON

E.O. 12958: N/A
TAGS: ECON ETRD EIND TW
SUBJECT: TAIWAN PHARMACEUTICALS: PVS RESULTS ANNOUCED,
WITH NO SURPRISES

REF: A. TAIPEI 3275 TAIPEI 2947

B. TAIPEI 2570

Summary and Introduction
------------------------
1. On September 28, the Bureau of National Health
Insurance announced the results of the fifth Price Volume
Survey, with price cuts effective November 1. Pricing
information for individual companies will be sent out
Monday, October 2, and companies will have two weeks to
ppeal. BNHI President Liu Chien-hsiang briefed AIT on the
results the day before the announcement. The results
mostly reflect changes previously discussed during
consultations (ref A). Generic grouping will be done based
on the 2003 model. BNHI has no plans to implement
therapeutic grouping. According to BNHI, modifications to
the PVS will increase reimbursements to multinational drug
firms by about US$ 186 million. Of course much of this
will be passed back to hospitals in additional discounts.
See action request in paragraph 8.

The Fifth PVS - Mostly Sticking to Earlier Concessions
--------------------------------------------- ---------
2. Many of the announced modifications have already been
reported:

-- Merck Index 1983 will determine patent term for pricing
purposes. Originally BNHI intended to use Merck Index 1984.
Industry and USG had been pushing for Merck Index 1982.

--The R-zone (the amount of "reasonable discount") remains
at 15% for patented drugs.

--Angio-tension receptor blocker (ARB) drugs will not be
subject to groupings, but will be reclassified as patented
drugs for related adjustments - a change that will benefit
15 innovative drugs of six companies.

--Nineteen categories of drugs, including EPO and insulin,
on which the original R&D companies maintain
competitiveness, will not be subject to price adjustments.
This will influence the prices of 188 drugs of 16
companies.

3. In addition to the drugs mentioned in earlier
discussions, BNHI added three other pharmaceutical products
- albumin, blood factor 8, and blood factor 9, which will
not be subject to price adjustments. BNHI is also
establishing floor prices for categories of drugs -
injections at NT$10 per dose, liquids at NT$20, and DOH-
standard packaged tablets at NT$1.5.

4. The following is a complete list of drugs that will be
exempt from price cuts:

Dactinomycin Injection
Phenobarbital Sodium single active ingredient injection
Biperiden Lactate injection
Verapamil HCL injection
Phenylephrine HCL injection
Digoxin tablet
L-Asparaginase injection
Penicillin G injection
Streptomycin injection
Azthioprine tablet
Murine monoclonal antibody CD3 (=Muromonal CD3) injection
Blood products: Immunoglobulin, Blood Coagulation factors
8 and 9 for human use
Atropine single active ingredient products
Insulin Products
Epoetin products
Peritoneal dialysis solution
Drugs for treating T.B.
Compound active ingredients injection containing 10%
Calcium Gluconate and 0.35% Calcium Sacchrate
Protamine Sulfate single active ingredient injection

Generic Grouping
----------------
5. The Fifth PVS reverts to a grouping model akin to that
used in 2003. Off-patent branded drugs are grouped with
BA/BE generics (i.e. generics tested against the original

drug for bioavailability and bioequivalence). In this
grouping, the group weighted average price (or "GWAP" in
industry parlance) for off-patent branded drugs will be
multiplied by a factor of 1.05 to preserve a gap between
these drugs and their BA/BE generic equivalents. Simple
generics will be grouped separately.

Moving on Standard Contract, Thinking about Working Groups
--------------------------------------------- -------------
6. Longer term, BNHI reported that they are moving ahead
on developing a standard contract and are planning meetings
with various stakeholders on the issue. Dr. Liu was
reluctant to give a timeline, stating that he was unsure if
legislation would need to be adopted to implement a
standard contract. He also stressed the importance of
training and education opportunities for the Department of
Health and the BNHI staff as they work towards long-term
reforms. Dr. Liu reiterated his willingness to set up
working groups on the issues of actual transaction pricing,
separation of prescribing and dispensing, and standard
contracts. He asked the USG to provide its views on how
these working groups should be constituted.

No therapeutic grouping for the next 3 years -guaranteed
--------------------------------------------- -----------
7. AIT again expressed interest in the two new drug
pricing cases where therapeutic grouping seems to be a
factor in setting the price, both of which are being
appealed. Dr. Liu stated emphatically that no therapeutic
grouping would be imposed for at least the next three
years. After that, he couldn't promise, since it was
unlikely that he would still be at BNHI.

Action Request:
---------------
8. Post requests guidance on how to move forward on the
working groups suggested by DAUSTR during the September 13
digital video conference.
WANG

© Scoop Media

 
 
 
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