For multinational pharmaceutical companies, Taiwan has proven itself to be a very attractive investment destination in the Asia Pacific. The island’s sizeable pool of high-quality STEM talent, its extensive expertise in and productive environment for conducting clinical trials, active government-industry-academia cooperation in medical research, and advanced bio-ICT capacity are just a few of the qualities that have led over a dozen major pharmaceutical giants to invest significantly in research and development in Taiwan over the years.

Those firms, represented by the International Research-based Pharmaceutical Manufacturers Association (IRPMA), have also engaged the Taiwan government extensively through public-private partnerships that tackle areas such as talent development, startup cultivation, digital and precision health, and public health. While optimistic about Taiwan’s potential to become a regional hub of biopharmaceutical R&D and innovation, IRPMA and its member companies also see room for improvement in Taiwan’s healthcare system.

One of the main concerns the organization raises on a regular basis is Taiwan’s approach to the reimbursement of new drugs. Under Taiwan’s single-payer healthcare system, reimbursement amounts are determined by the Pharmaceutical Benefit and Reimbursement Scheme (PBRS) Joint Committee, a body composed of government officials and hospital associations, as well as manufacturers and patient groups (which participate only as observers).

Yet reimbursement is generally limited by Taiwan’s Global Budget Payment System, which IRPMA notes is insufficient to support the introduction of the latest cutting-edge drugs and treatments being developed by multinational pharmaceutical companies. Often, the reimbursement price set by the PBRS is too low for these companies to accept, and they instead opt for either a delayed launch in the Taiwan market or forgo launching in Taiwan altogether.

Heather Lin, chief operating officer at IRPMA, says that the reason for such decisions is related to the enormous investment required to develop a new drug. On average, the time it takes for a new drug to go to market is at least 15 years, including 6-7 years spent on drug ingredients exploration and safety and efficacy evaluations, 7-13 years on clinical trials, and one year on applying for market approval. Throughout that process, R&D costs can exceed US$6.9 billion. Excessively focusing on cost-containment in the reimbursement process undervalues the time, money, and effort that goes into developing new pharmaceutical products.

“Taiwan’s National Health Insurance (NHI) system is supposed to put patients at the center,” says Lin. “But currently, Taiwan’s patients are not getting the access they deserve to innovative new drugs or are suffering from a time lag between reimbursement and market access.”

To begin resolving this issue, Lin cites a few approaches that have proven successful in other single-payer countries as possible models for Taiwan to follow. One such method is risk-sharing mechanisms – also known as Managed Entry Agreements (MEAs) – in which pharmaceutical companies agree to certain terms to reduce payer uncertainty regarding innovative new drugs. While Taiwan’s Ministry of Health and Welfare (MOHW) has since 2018 implemented such MEAs, there remains a lack of mutual risk-sharing and equitable treatment in these accords.

Another solution that IRPMA has advocated for many years is copayment reform – increasing the out-of-pocket expenses for patients, with the trade-off being improved access to life-saving treatments and medicines.

Lastly, Lin highlights the decision single-payer countries such as the UK and Australia have made to allow for multiple funding flows, rather than rely on a fixed budget that may not be sufficient to cover all of their healthcare needs, as is the case in Taiwan. Additional funding sources might include entrepreneurs, tax revenue, and IRPMA member companies, says Lin.

Lin notes that the COVID-19 pandemic has significantly elevated the status and perception of multinational pharmaceutical companies, given their role in the global development of coronavirus treatments and vaccines. It is also pushing companies to reconsider how their supply chains are structured, and Taiwan with its world-renowned tech sector and strong R&D capabilities now has an opportunity to be part of that realignment.

In addition, Lin says that the government is now placing much greater emphasis on investing in healthcare and R&D. However, she says IRPMA would like to see a better balance of investment in international as well as local pharmaceutical development. “If Taiwan is going to develop its own drugs, it cannot focus solely on the domestic market,” she says. “You have to launch in markets all over the world. IRPMA member firms can help local companies accomplish this.”