Abstract:

The existing National Health System is a single-insurer system, with the National Health Insurance Bureau (NHIB) being the sole entity charged with insuring the cost of medical care and prevention services for all citizens (insured persons and their dependents). Medical and pharmaceutical services, moreover, are still generally obtained from one and the same provider. Most of the various major hospitals provide pharmaceutical services, for example, and apply directly to the NHIB for reimbursement. As different medical care institutions procure pharmaceutical products in different volumes and under different transaction terms, the real cost of pharmaceutical products naturally varies, resulting in discrepancies in the amount of reimbursement paid by the NHIB. This has in turn led to questions of whether some medical care institutions are inappropriately profiting from the differences in pharmaceutical costs.

Under the current single-insurer system, the NHIB assumes the role of both player and referee, leading to considerable confusion among the public as to the role the NHIB is expected to play. In addition, the NHIB, as an official government agency, operates in an environment lacking competitive mechanisms. As a result, there is no incentive for medical care institutions to control costs. Patients are thus enticed or coerced into accepting unnecessary medical services, which results in a to introduce a competitive mechanism into the medical services market to ensure fair competition in the marketplace so that the interests of consumers are protected.

The multiple-insurer system that has been in use in the United States and Europe for years provides us with a wealth of experience for reference. There is no national single-insurer system in the U.S., for example, and thus the prices of pharmaceuticals in that country are determined by market forces. Additionally, the U.S. Federal Trade Commission plays an extremely active role in the integrated regulation of that market. The competitive mechanism in the U.S. pharmaceutical market is clearly alive and well. By contrast, Chinese Taipei’s implementation of its national health insurance system has had a serious impact on the structure of marketing channels in the domestic market for Western medicines due to such factors as the single-insurer system and the lack of separation between the medical care and pharmaceutical industries. Large-scale hospital systems are beginning to make use of the advantageous position that they have in their large-scale procurement of pharmaceuticals to dictate restrictive transaction terms with upstream providers, and it will thus be necessary to closely monitor such practices to determine whether they restrict competition or impede fair competition.

Written by:
Gin-Lan Lin, Hsuao-Hung Lin, Chia-Hui Yang, Chia-Ti Lin（Second Department）