On March 1, 2003, the Taiwanese National Health Insurance Bureau (NHIB) slashed as much as 50% of the subsidies it pays to hospitals for prescription medicines. In order to lower the budget deficit currently troubling the National Health Insurance program, the cut in subsidies is expected to save the bureau approximately NT$6 billion (US$172 million) annually. This is the third time that the NHIB has cut subsides and it is the largest cut thus far. The last subsidy cuts occurred in 2000 and 2001.
According to Shen Mao-ting, deputy director of the NHIB, the price cuts will range from 30% to 50% and will mostly affect drugs with expired patents. Some of the medicines which will be included in the subsidy cuts are: antibiotics, anti-depression drugs, as well as drugs to treat high blood pressure, diarrhea, and heart disease.
Although the price cuts are expected to reduce the costs incurred by the government, the lowered subsides on many drugs is expected to affect the decisions made by hospitals and doctors when prescribing medication to patients. In order to ensure that profits are not greatly reduced due to the subsidy cuts, most hospitals are instructing their doctors to prescribe cheaper alternatives. Vice president of Shin Kong Wu Ho Su Memorial Hospital, Hong Ching-fu, said that if the hospital did not adopt any measures, they would stand to lose one third of the hospital profits as a result of the subsidy cuts. To offset any loss in profits, many hospitals are also planning to bargain with their existing suppliers for cheaper prices or look for other distributors with lower prices.
The measures taken by healthcare providers to maintain their profits may adversely affect patients and their well-being. Lowered drug prices may compromise the quality and efficacy of drugs. Patients who are biased against locally manufactured drugs and believe they cause more side effects than imports may also become dissatisfied.