Global healthcare systems are noticing a shift towards value-based healthcare with an increased focus on managing rising expenses. Innovative contracts, also known as value-based contracts or managed entry agreements, are attracting payers and providers who are relentlessly looking for ways to expand access and contain costs. Finance- and outcomes-based arrangements comprise the essential categories of value-based contracts with outcomes-based gaining more traction. In developed markets, oncology has witnessed the highest number of these agreements. Although the uptake has gradually secured momentum, the pace is still labored. Most South East Asian markets are yet to follow in the footsteps of the more developed nations of Europe and North America. At present, South Korea appears to be the sole country in the region negotiating risk-sharing agreements with pharmaceutical companies.

While Taiwan has yet to engage in innovative contracting for pharmaceuticals, it appears to be not far behind. The National Health Insurance Administration (NHIA) has proposed outcomes-based reimbursement for new cancer drugs and is in the process of discussing the opportunities and challenges with industry stakeholders.

The Taiwanese National Health Insurance (NHI) program is a government-run single payer program that covers 99.9% of the population with zero co-payment for catastrophic illnesses such as cancers, renal failure, and rare diseases. The program has been in place for over two decades and enjoys an 80% public satisfaction index. However, with comprehensive coverage, exhaustive access, and a lack of gatekeeping mechanisms, NHI has been running a budget deficit as of late. As of 2017, the shortfall stood at NT$8.8 billion (US$299 million). Consequently, effective and sustainable cost-containment measures are a top priority for Taiwanese payers.

The proposal to implement outcomes-based reimbursement in Taiwan is aimed at moving toward a more value-based health system that makes more effective use of financial resources. For instance, initial NHIA recommendations suggest that new cancer drugs not meeting the predicted survival term— the median value observed in clinical trials—will not be reimbursed. When the survival term of the originator is superior to the currently available therapeutic alternative but falls short of the predicted term, only 10% of the drug cost would be reimbursed.

This policy shift raises some key questions for drug makers. For one, accurate assessment of survival term in real-world practice is sometimes imprecise. Pharmaceutical companies argue that a shorter survival term could be affected by various factors over and above the impact of the drug under evaluation. In response, the NHIA has invited industry professionals to formulate a course of action and the Ministry of Health and Welfare (MOHW) is expected to roll out a resolution by the end of 2018.

Concerns remain about ambiguous payment criteria for managed entry agreements set by the NHIA. In Taiwan, it takes over two years to list new cancer drugs on the NHI reimbursement list and most innovative and immuno- therapies fail to make the cut. If value-based contracts can contribute to an expedited and inclusive approval process, pharmaceutical companies as well as patients stand to benefit which allow payment until death in some cases but in other cases reject payment even when the quality of life has improved. A few patient groups have also urged the NHIA to require pharmaceutical companies to share more of the risk involved in payment in return for improved reimbursement rates. Higher reimbursement rates would not only boost Taiwan’s attractiveness as a pharmaceutical market but also support speedier access for patients. Whichever course of action taken, the government is likely to continue to focus on the need for a sustainable financial plan.

Limited NHI resources and the incentive to include innovative drugs has led Taiwan closer to value-based contracting. Oncology is the pilot focus area but expansion to other therapy areas is inevitable. With an increasingly aging population, demand for cardio and cerebral-vascular drugs would be high. These drug categories thus might be next in line to be suitable candidates for innovative contracts.

Taiwan is progressively revamping its healthcare policies and regulations to be on par with its more developed counterparts. Be it modifying market authorization review processes, introducing patent linkage and data exclusivity, or contemplating innovative contracts, Taiwan shows a good amount of market potential. It is making its presence increasingly felt in the international pharmaceutical market with increased openness, flexibility, and ability to adapt new ideas.


About Global Market Access Solution (GMAS)

DRG’s Global Market Access Solution (GMAS) allows global teams to monitor and assess the evolving market access environment—through a country, indication or therapeutic lens. Commercially focused data and insights support strategic activities with global revenue implications by helping businesses to scope global opportunities, shape relevant messaging, calibrate go-to-market planning assumptions, and achieve and maintain maximum access & reimbursement. Find out more: Global Market Access Solution


Molina's hunt to grab small MCOs expands growth into new markets

View Now