A proposed three-year suspension of Taiwan's annual drug price adjustment mechanism is drawing widespread support from the island's medical and pharmaceutical sectors, with industry leaders praising the move as a crucial step toward stabilizing supply chains and preventing chronic drug shortages.
President Lai Ching-te (賴清德) announced on Jan. 5 that the government is considering pausing the routine price reductions to strengthen the national healthcare system's supply security and pharmaceutical resilience.
To prevent uncontrolled growth in National Health Insurance (NHI) drug expenses, the NHI Administration launched the Drug Expenditure Target (DET) system in 2013. The system sets annual spending caps and routinely lowers the reimbursement prices of medications that exceed those targets—a process the industry colloquially refers to as "drug price cuts."
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Smallest Price Cuts in 13 Years Slated for April
While the three-year suspension is under consideration, the NHI Administration announced its 2026 drug price adjustments on Feb. 25. The upcoming adjustments, which take effect April 1, represent the smallest reduction in both financial value and the number of medications affected since the DET system's inception 13 years ago.
The administration will cut approximately $1.1 billion, down from the previous reduction of $1.5 billion. The price adjustments will affect 2,343 drug items, a significant decrease from the 3,184 items impacted last year.
Pharmacists Call for Systemic Overhaul
The Taiwan Pharmacists Association issued a statement supporting the three-year suspension, noting it will provide much-needed breathing room to alleviate short-term supply pressures. However, the association emphasized that the government must use this period to conduct a comprehensive review of the pharmaceutical supply system to ensure public access to medications regardless of market fluctuations.
The association recommended integrating pricing reform with policies that encourage domestic pharmaceutical companies to enhance their manufacturing and research capabilities, increasing the local supply ratio of critical and commonly used medications.
It also advocated to establish real-time, transparent drug supply monitoring mechanisms to help hospitals and community pharmacies track availability and mitigate the risk of shortages.
Finally, the association called to shift NHI resources from merely "purchasing drugs" to "purchasing professional services." The association advocates for optimizing pharmaceutical service fees, such as establishing a "controlled substance management fee" to cover the actual costs of dispensing and reporting controlled medications, preventing pharmacies from operating at a loss.
Reinvesting Savings into 'Pharmaceutical Resilience'
Hong Tzu-jen (洪子仁), chairman of the Taiwan Association of Medical Administration and vice superintendent of Shin Kong Hospital, noted that the annual price cuts often force grassroots medications out of the market due to razor-thin profit margins.
Suspending the surveys for three years, Hong said, would allow medical institutions to break free from the cycle of pursuing constant cost reductions. This would stabilize management processes and allow hospitals to focus on clinical services rather than dealing with the operational fallout and patient frustration caused by frequent drug substitutions.
Hong also praised Lai's initiative to inventory and classify more than 1,700 clinically used drugs. He stressed that the government must identify medications with a high risk of supply chain disruption and establish strategic reserves of active pharmaceutical ingredients (APIs) in cooperation with democratic allies like Japan. He noted this is crucial for protecting citizens' basic healthcare rights amid geopolitical challenges and infectious disease threats.
Furthermore, Hong suggested that the $930 million saved from the recent drug price adjustments should be reinvested directly into supporting domestic generic drug development, rather than returning it to the general NHI budget. This strategic investment, he argued, would pivot local pharmaceutical companies away from low-price competition toward high-quality production, ultimately securing Taiwan's genuine pharmaceutical resilience.
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