In response to criticism that the national health insurance system pays too much for drugs, the Executive Yuan yesterday approved a plan to lower refunds paid to hospitals on drugs with expired patents.
Opposition lawmakers claim the government has been allowing hospitals to make extortionate claims from the Bureau of National Health Insurance for refunds on the drugs they buy.
According to Chang Hong-jen (
"Our study shows that high-priced drugs are responsible for the high annual expenditures of the scheme. We also discovered that 80 percent of the high-priced drugs have expired patents," Chang told a press conference held after the weekly closed-door Cabinet meeting.
Pharmaceutical companies can charge higher prices for patented drugs and have been reluctant to lower the prices of these drugs after the patents have expired.
"It's like the prices of CDs. While a counterfeit CD costs about NT$30, the original one costs as much as NT$300, mainly because of the cost of the intellectual property right [IPR]," Chang said.
The same theory applies to drugs as well, Chang said.
"However, while it's a universal practice for record labels to lower the prices of CDs with expired IPR, local pharmaceutical companies refuse to do the same with drugs with expired patents," Chang said.
According to Chang, the period of the IPR on a CD is good for 50 years, while for patented drugs it is 20 years.
Following a hike in national health insurance premium rates and outpatient fees at the start of September, opposition lawmakers have attacked the way the Bureau of National Health Insurance operates, including the bonuses paid to its employees.
But a key criticism has been the drug refunds.
For example, hospitals pay between NT$27 and NT$38 for each tablet of Prozac to the pharmaceutical companies but receive a standard refund of NT$44 per tablet from the bureau.
In response, the bureau has started investigating drug prices.
Twu Shiing-jer (
The bureau started to adjust drug prices and lowered its drug refunds for hospitals in 1997, two years after the national health insurance scheme took effect.
The bureau managed to reduce its drug expenditure by NT$600 million in 1997, NT$650 million in 1998, NT$1 billion in 2000, and NT$4.6 billion last year, bureau statistics show.
The Cabinet will publish the new prices of about 20,000 drugs next month and hopes to implement the new prices at the beginning of next year.
The money saved will be used on refunds for new patented drugs and subsidies for inpatients and patients with chronic diseases.
The bureau hopes to cut its annual expenditure on drugs by more than NT$10 billion after the implementation of its new drug refund standards.
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