Tue, Jan 09, 2007 - Page 2 News List

Action planned on hospital profits

CRACKDOWN NHI CEO Chu Tzer-ming vowed to reclaim backdoor profits made by pharmaceutical companies and hospitals stemming from drug pricing differentials

By Angelica Oung  /  STAFF REPORTER

The issue of National Health Insurance (NHI) drug pricing again dominated discussions at the Legislative Yuan's Health, Environment and Social Welfare Committee (立法院衛環會) meeting yesterday.

Most of the legislators agreed that hospitals ought to be allowed some bargaining power, but thought the profits currently made at the expense of the NHI, often through backdoor measures, are far too high, while trust in the NHI as guardian of the process has plunged.

"The NHI's basic pricing guideline is inflexible and price adjustments are often out of date by the time they are enacted," said Democratic Progressive Party Legislator Huang Sue-ying (黃淑英). "This amounts to administrative price protection for drugs."

"You're treating Taiwan's 23 million people as ATMs," berated People First Party legislator Lin Hui-kuan (林惠官), referring to oft-raised fears that the NHI will need to hike rates to stay solvent.


After the Tainan District Prosecutors' Office started investigating improprieties related to drug pricing differentials, the NHI cracked down on the practice under which pharmaceutical companies and hospitals collude to keep the drug price they claim to the NHI high while trading kickbacks under the table.

NHI CEO Chu Tzer-ming (朱澤民) called upon all hospitals and pharmaceutical companies to self-report any irregularities before Jan. 22 in return for lenient treatment from the law.

"We're going to make them give that money back," said Chu, while pointing to the form in which hospitals are supposed to detail any "donations," "research funds" and "gift packs" of drugs they might have received from pharmaceutical companies.

Chu also promised to revise the process used to generate basic pricing outlines and set a "claw-back" system in place so that the NHI and hospitals can split any profits from bargaining.

However, a number of observers believe that a more fundamental way of fixing the system is to move away from paying hospitals for every pill or treatment and towards paying for the number of patients with different conditions they take care of.

Underground profit

"Because you have groups with different purchasing power in the market, you're going to have problems with price differentials, trying to close or eliminate the gap will only drive the profit underground" said Lee Yue-chune (李玉春), assistant professor at the National Yang Ming University Institute of Health and Welfare Policy.

"It is better to pay providers to produce good medical outcomes for patients rather than by the amount of medical resources they consume," Lee said.

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