The price of Class 1 and Category 3 drugs should be adjusted every two years on the basis of the PV survey, while Class 2 drugs should be adjusted annually for five years following the expiry of the patent concerned, with the carelessness of categories 1 and 3 applying to a less favourable formula than that of Class 1 and 3 drugs. NHIA also implemented the Drug Expenditure Target (DET) from January 1, 2013 to the present to improve the transparency and predictability of prices and refunds in the marketplace. Under the TED, the price of all drug categories is adjusted each year. Price reductions were made at regular intervals in accordance with price adjustment guidelines. Because of NHIA`s strong opinion as to whether a drug can be considered protected by compound or pharmaceutical composition patents, price reduction decisions have been widely challenged by market authorization holders. In February 2016, the NHIA amended the price adjustment guidelines to relax the criteria for patent-protected drugs. The Pharmaceutical Benefit Scheme was replaced on January 1, 2013 by the Drug Performance and Reimbursement Plan. Compared to the Pharmaceutical Benefit Scheme, the current new system emphasizes stakeholder engagement (including insurer and relevant authorities, experts and scientists, policyholders, employers, health care providers, etc.) in discussing and designing the list of drugs and reimbursement prices for certain products. In addition, an evaluation of health technology (taking into account human health, medical ethics, product cost-effectiveness and the financial viability of the NNT) for new drugs was required before being covered by national health insurance in this new phase. In 2007, the Center for Drug Evaluation (CDE) was established to evaluate health technologies (HEALTH Technology Assessment), the comparative effectiveness, cost-effectiveness and budgetary impact of new drugs. The CDE only provides NHIA with HTA reports, it does not participate in pricing. The NHIA considers HTA evidence to be part of the information used for list and refund decisions .
The NHI was established in March 1995 and is a mandatory social security program. All Taiwanese citizens and foreigners living in Taiwan with a foreign residence certificate are legally required to participate in the program. The NHI covers about 90% of the market. The NHI`s insurer is the National Health Insurance Administration (NHIA), a junior agency of MoHW. The NHIA is responsible for collecting the insured`s premiums. When policyholders use medical benefits, they do not have to pay any other medical expenses other than co-payment and registration fees. Health care providers will seek a refund from the NHIA. The National Health Insurance Act (National Health Insurance Act) was completely amended in January 2010 (then slightly amended in June 2011 and November 2017).
Although pharmaceutical companies played no role in the first-generation NHI, an article was added to the amended NHI Act, which allowed pharmaceutical companies to express their views on the rules for the inclusion of drugs on the NHI reimbursement list and on setting reimbursement pricing standards. Berndt ER: Drugs in the U.S. health care system: determinants of quantity and price. J Econ Perspect 2002, 16 (4): 45-66. Due to the extensive coverage of NHI drugs on the market, pharmaceutical companies have an unfavourable position in negotiating drug supply contracts with health care providers.