Taiwan as a Regional Hub for New Drug Discovery? Here’s What the Industry Needs

The COVID-19 pandemic has presented Taiwan with a unique opportunity to gain a lead in the Asia-Pacific’s new drug discovery sector. But for Taiwan to excel, the biomedical industry is calling for a change of policies.

Taiwan has been striving for many years to position itself as a regional biomedical hub and an attractive location for conducting clinical trials. In 2011, the Taiwan Clinical Trial Consortium (TCTC) was established with government funding to streamline patient recruitment and connect clinical trial centers to hospitals. President Tsai Ing-Wen’s 5+2 Innovative Industries Plan, which included biomedical as one of its key components, further conveyed the industry’s importance to Taiwan’s economy.

Thanks to its solid IPR protection, well-run hospitals, excellent healthcare professionals, and favorable government policies, Taiwan has a distinct chance to become an Asia-Pacific center of excellence for clinical trials and new drug discovery. But to beat out stiff competition from countries like South Korea and Singapore, some changes in regulations and mindset are required.

Whereas clinical trials have traditionally been conducted mainly in the U.S. and EU with mostly Caucasian participants, there has been a notable increase in trials performed in the Asia-Pacific region in recent years. Novartis Taiwan Chief Scientific Officer David Lee says that this trend reflects the industry’s need for more diverse representation in clinical trials.

Novartis Taiwan Chief Scientific Officer David Lee says that more diverse representation among participants in clinical trials is needed.

“As a pharmaceutical company, we really need to understand efficacy and safety of medicines within a diverse population, hence the need to do more clinical trials in Asia,” he says.

Lee commends Taiwan for its outstanding healthcare, world-class hospitals, and COVID-19 management, all of which have made Taiwan an attractive place for clinical trials. Another big factor in the island’s success is the reimbursement policy set by its National Health Insurance Administration (NHIA) to help hospitals cover the cost of most drugs, says Lee.

He notes that the state of a market’s reimbursement system is an essential consideration for Novartis when launching a new drug or conducting clinical trials and making investments, and that Taiwan’s policies in this area make it one of the company’s advanced markets.

“We’re really fortunate that in Taiwan, we enjoy excellent healthcare where most drugs are reimbursed, and this extends to rare diseases,” he says. “In addition to a lot of the primary care oncology products we provide, we also have innovative medicine for rare diseases such as spinal muscular atrophy and multiple sclerosis. The Taiwan reimbursement system does cater to these patients, which is very attractive for Novartis because it covers all of our development needs.”

Pfizer Taiwan, which has maintained operations on the island for almost 60 years, echoed Lee’s sentiment in a written statement to TOPICS.

“Taiwan’s high-quality care systems, comprehensive health data collected and maintained by the NHIA, and solid ICT foundation are conducive to establishing a solid infrastructure for upgrading healthcare systems in Taiwan,” the statement emphasized. “These advantages provide Taiwan with the potential to excel in many healthcare areas in the Asia-Pacific.”

One of Taiwan’s significant competitors, South Korea, is also pushing to become a center of excellence for clinical trials in the Asia-Pacific region. Its government-run Korea Drug Development Fund, operated by three health-related ministries, has invested the equivalent of US$30-60 million annually over the last nine years to finance a national new-drug development project.

South Korea is, however, losing ground in the biopharmaceutical race. In research consultancy Pugatch Consilium’s 2019 Emerging Markets Biotechnology Competitiveness and Investment (BCI) Survey, Taiwan and Singapore were ranked as Tier 1 markets in the APAC region, meaning the two economies were considered most likely to secure investment. Meanwhile, South Korea dropped to Tier 2 standing, indicating that it is losing out on investment. The report cited the country’s more recent protectionist policies, which deter foreign companies from investing there.

Taiwan’s tax incentives for clinical trials may not be as generous as those offered by Australia, where companies undertaking certain R&D projects can receive a 43.5% refundable tax credit. On the other hand, Taiwan does offer a 35% reduction in corporate income tax on the total funds annually invested in research and development during the first five years of a company’s operations on the island. And companies that employ R&D teams in Taiwan are eligible for subsidies of 40-50% of funding for themed projects that adhere to government programs, and up to 40% of the financing for projects independently conducted by applicants.

Tax incentives are an effective strategy for attracting foreign investment. However, AstraZeneca Taiwan Company President Justin Chin notes that while attractive, tax benefits are not the most effective measure for increasing investment in R&D in Taiwan. Instead, Chin says, time-saving measures would be more beneficial for all parties involved.

“Of course, tax benefits and subsidies would be helpful, but at the moment, as an industry, what we are advocating for is a more streamlined institutional review process,” he says.

AstraZeneca Taiwan Company President Justin Chin says that Taiwan must streamline its review process for clinical trials.

Calling for reform

The R&D investments made by international pharmaceutical companies in Taiwan are mainly in clinical trials. In 2020, the Ministry of Health and Welfare (MOHW) approved 355 Investigational New Drug (IND) applications, 78% of which were multinational trials.

The standard review procedure for a clinical trial application in Taiwan takes 45 days, similar to other countries. But in order to attract more companies to include Taiwan in their multi-center clinical trial projects, the MOHW has shortened the application review procedure to 15 days for trials that include at least one of the A10 countries (U.S., France, Sweden, Canada, Belgium, Italy, Germany, Switzerland, Australia, and New Zealand) as well as medical centers in Taiwan.

However, Novartis’ Lee says that further measures are needed. “To be globally competitive in any clinical trial, you need two success factors,” he says. “One is delivery on quality, and the other one is delivery on time.” He adds that for the past decade or so, Taiwan has been strong in terms of quality, but needs to find ways to reduce the amount of time to complete the trials.

“This is important for bringing innovative medicine to the market, but if you can cut down on time, you can also cut costs, and that’s a win-win for society and industry,” says AstraZeneca’s Chin.

He says that implementing a centralized system of Institutional Review Boards (IRB) – committees that review clinical trial applications and oversee their execution in hospitals – would help increase the number of trials in Taiwan. “It would also streamline the approval for clinical trials to be conducted, making it more attractive for drug companies and manufacturers to do clinical trials in Taiwan,” he says.

Another way to speed up the introduction of new drugs in Taiwan would be to improve the approval process. Currently, Taiwan requires a Certificate of Pharmaceutical Product from key regulatory reference markets to initiate the process of approving a new drug. If a drug has already been approved in the U.S., Japan, or at least two countries from the EU, the time needed for the review procedure can be halved. However, Chin says that if Taiwan were to also recognize local studies in providing exceptions to its approval process, it would send a powerful message to the industry and increase the island’s appeal for conducting clinical trials.

Additionally, Lee suggests conducting the drug review process simultaneously with or shortly following that of the U.S. Food and Drug Administration (U.S. FDA) or the European Medicines Agency (EMA).

“We’re seeing this practice being used in some other countries, where instead of waiting for FDA approval, we can pretty much go in parallel with them,” he says. “So instead of waiting for a year to see what happens, we immediately adopt their findings. This would cut down on the time for R&D and the time to get new drugs on the market in Taiwan.”

In Taiwan, new drugs can receive reimbursement through Managed Entry Agreements (MEA), which provide for risk-sharing between companies and healthcare payers by allowing new medicines to be covered as long as their financial impact or performance meets certain standards. Under Taiwan’s MEAs, reimbursement for new general medicine typically takes 15-18 months, while new oncology treatments can take between 18-24 months.

AmCham Taiwan’s Pharmaceutical Committee in its 2020 and 2021 White Papers praised the MOHW and NHIA’s adoption of MEAs as an additional tool in the new drug reimbursement and negotiation process. Yet it also pointed out that Taiwan’s current MEA provisions and practices at times deviate from their original purpose, for example noting that many MEAs do not adhere to the principles of confidentiality, flexibility, and voluntary participation.

The committee suggests that the budget threshold for existing MEAs be reexamined and include a tiered rebate structure. Additionally, it is calling for a face-to-face negotiation mechanism to be put in place for new MEAs, allowing for the amendment or addition of terms in standard agreements.

Committee members also stress the importance of a continued increase in current health expenditure (CHE) investment to drive innovation. According to a 2020 report from the WHO, Taiwan’s CHE accounts for just 6.1% of its GDP, significantly less than that of most developed OECD countries, including Japan’s 11% and South Korea’s 7.6%. In addition, Taiwan’s CHE-to-GDP ratio has nearly stagnated, with a growth of only 3.3% since 2010, compared to Korea’s 28.8% and Japan’s 19.6%.

Pharmaceutical companies have said that increasing that ratio by allocating a sufficient new drug and new indication budget could ensure the continued availability of innovative medicines and services. This would increase the longevity, wellness, productivity, and economic potential of Taiwan’s population.

In its written statement to TOPICS, Pfizer noted that “an aging population and the COVID-19 pandemic have further proven that investment in public health is a critical policy issue to help the government build a sustainable healthcare ecosystem to combat challenges.”

AstraZeneca’s Chin stresses that the company recognizes that all governments, particularly those that provide comprehensive national health insurance coverage, need to monitor their budget and spending. However, he says gradually increasing Taiwan’s healthcare expenditure would ensure that its competitiveness in the biomedical sciences and healthcare industry is on par with other international players.

“Because this is a reimbursement or insurance-based scheme, and insurance-based healthcare systems don’t always encourage innovation, we also encourage the government to think of alternative funding sources for healthcare,” Chin says. “These can include aggregating what is available within the Ministry of Science and Technology and other government departments, and even coming up with solutions for co-payment by patients or encouraging a more vibrant healthcare insurance industry.”

Changing the mindset

Many patients have experienced difficulty accessing hospitals during the pandemic, either due to lockdowns or fear of contracting COVID-19.  This situation has increased the need to adopt telemedicine, which can help with delivering treatments, implementing at-home nursing, and allowing some clinical trials to take place at patients’ homes.

“In some countries, [telemedicine] has become the norm because really, the hospital is not a nice place to go during a pandemic,” says Novartis’ Lee. “We have this window where everyone else is struggling to adapt to the COVID situation, and Taiwan is doing fantastic, and we can implement these new practices with minimum risk to patients and hospitals.”

Lee says that if Taiwan manages to keep its infection rates low, there is an added potential for companies to allocate more participants to clinical trials in Taiwan, creating a ripple effect.

“In the past, we’ve been allocated very few patients in Taiwan,” says Lee. “If the hospital or the ecosystem around clinical trials changes, we could easily increase the number of patients for clinical trials.” He says that such a shift would improve Taiwan’s reputation and the ability of teams to conduct clinical trials, attract more investment, and benefit patients “by giving them access to the latest cutting-edge technology.”

A common conviction among global pharmaceutical industry leaders is that for Taiwan to excel, a general change of mindset is required. AstraZeneca’s Chin suggests that rather than viewing medical expenditures as a zero-sum game, the Taiwan government could seek different funding sources for healthcare and make it a “win-win-win” situation for industry, society, and government.

“We are advocating a change of mindset from ‘cost-control’ to ‘innovation,’” Chin says. “Taiwan has been eager to promote the biomedical industry and upgrade the R&D system, and [to do this] it’s very important to adhere to international standards and standard procedures.”

Chin says that Taiwan should utilize its strengths in semiconductor manufacturing and the information communications technology (ICT) industry and “couple this with biomedical sciences and the biomedical industry.” By doing so, he says, Taiwan “could play a really unique role globally.”