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Taiwan Spends a High Percentage of its Healthcare Budget on Pharmaceuticals, but Second Generation Healthcare Reform is Transforming the Market Landscape

BURLINGTON, Mass., Dec. 23, 2013 /PRNewswire/ -- Decision Resources, one of the world's leading research and advisory firms for pharmaceutical and healthcare issues, finds that the high level of pharmaceutical expenditure in Taiwan is being reined in by Second Generation Healthcare Reform enacted in January 2013. Taiwan has one of the highest levels of pharmaceutical spending in the Asia-Pacific region, accounting for approximately 24 percent of total healthcare expenditure, which is higher than neighboring countries such as Japan (about 20 percent) and South Korea (about 21 percent). However, drug prices in Taiwan remain relatively low at about 28 percent of average U.S. prices, due to biennial price revisions.


According to the Taiwan Market Access Tracker, several policies introduced as part of the healthcare reform could significantly impact the pharmaceutical industry. A two-stage drug review mechanism, an annual drug expenditure target and the official introduction of health technology assessment will cause delays to new product launches and will tighten control over pricing and reimbursement. Given that around one-quarter of healthcare expenditures in Taiwan are spent on pharmaceuticals, there is substantial pressure from the government to contain costs and ensure the financial sustainability of the country's health insurance system.

"The National Health Insurance Administration has been running at a financial deficit since 2006. Several recent developments such as the establishment of the National Institute of Health Technology Assessment and the introduction of biosimilar guidelines for monoclonal antibodies underlines the government's determination to contain costs," said Decision Resources Analyst Michael Yeung, M.Sc. "One of the main goals of the second generation healthcare reform in 2013 is to increase the financial sustainability of the health insurance program. Drug manufacturers must be prepared to expand their capacity to conduct health economics evaluations as the government is expected to more closely scrutinize the cost-effectiveness of new drugs in the future."

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Decision Resources ( is a world leader in market research publications, advisory services and consulting designed to help clients shape strategy, allocate resources and master their chosen markets. Decision Resources is a Decision Resources Group company.

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