JAPANESE HEALTH INSURANCE REFORM BILL
The Japanese Health Insurance Reform Bill was enacted at the end of July 2002. This reform will shift health care cost burdens towards the active workers and the elderly. The main changes as a result of the bill are as follows:
• Co-payment for medical services for active workers will increase from 20% to 30% of total fees beginning in April 2003.
• Insurance premium rates for government controlled health insurance will increase from 7.5% to 8.2% in April 2003.
• Co-payment for medical services for elderly people will be set at 10% of total fees beginning October 2002.

CHINA CONSIDERS TAX BREAKS TO ENCOURAGE DRUG DEVELOPMENT
The Ministry of Science and Technology as well as other governmental bodies in China are considering the implementation of a tax break or exemption for companies that invest in new drug development. Up to this time, China has not been a major player in international drug development. Excluding Chinese traditional medicines, of the 3,000 pharmaceuticals manufactured in China since the 1950s, only 1% was developed within the country. 99% are copies of foreign products. However, the Chinese government is aiming to change this by introducing tax benefits as an incentive to attract capital to this industry. The tax breaks or exemptions will be applied to both domestic and foreign companies. Discussions regarding the tax breaks or exemptions are unlikely to occur until next year. Li Sujing, head of the policy division at the Law and Regulation Department of the Ministry of Science and Technology said, “I hope we’ll start surveys next year and work out plans then.” By first analyzing the current situation of new drug development in China, the Ministry hopes to tailor its regulations to induce more R&D investment.

Pharmaceutical development by local companies has been steadily increasing in China about 18% over the past five years. However, drugs manufactured in China are mainly produced through the use of foreign technology. The government hopes that within the next 3-5 years, and with the establishment of the proposed tax breaks or exemptions, China will be able to produce drugs using research and technology developed within the country.

FOREIGNERS-ONLY HOSPITALS IN SOUTH KOREA’S SEZS
South Korea’s Ministry of Finance and Economy recently announced their plans to develop five Special Economic Zones (SEZs) throughout the country. The plan is part of the Korean government’s endeavor to attract greater foreign investments into the country. Besides special tax incentives as well as one-stop administrative services, the plan will also allow the establishment of hospitals and pharmacies solely for foreigners.

The Ministry will allow foreign hospitals and pharmacies to set up operations within the five SEZs that are to be located in: Yongjong Island, Songdo, Gimpo, Pusan Port, and Gwangyang Port. The first three of the SEZs listed are located west of Korea’s capital city, Seoul. In order to make the lives of foreigners living in Korea more comfortable, foreign hospitals and pharmacies will also be able to form joint ventures with local health care providers. These foreigners only hospitals will not be subject to the Korean medical insurance system.

The establishment of these special facilities for foreigners will go far in alleviating concerns regarding living in South Korea for foreigners. According to a recent survey by the Korea Research Institute for Human Settlements (KRIHS), 70.7% of 208 foreign respondents expressed discontent toward Seoul’s medical services due to difficulty in communication, 16% due to high prices, while 12% claimed low quality.

BUILDING A VIRTUAL DRUG DEVELOPMENT LABORATORY IN JAPAN
In an effort to strengthen Japan’s drug development capabilities, a group of about 20 public, academic, and private organizations are together forming the Kansai Bio-Information Highway Project. The project comprises of an extensive computer-networking endeavor that will allow participants of the project to freely exchange information and research, establishing a “virtual drug development laboratory.” The project aims to utilize the computing capabilities of the network to push forward genome medicine research in Japan.

Some of the participants of the project include: Osaka University, Kobe University, NEC Corporation, Compaq Computer, and Japan Atomic Energy Research Institute. Scientists involved in the project will be granted access to the network and will be able to conduct experiments from their own computers and laboratories. The Ministry of Education, Culture, Sports, Science and Technology will be funding the project. It is planned to run for 5 years with approximately ¥500 million (US$4.3 million) set aside for this fiscal year.

Japan’s current drug development capabilities are extremely limited when compared to their Western counterparts. This project hopes to spark new innovation through collaboration as well as help raise Japan’s visibility in genome research. Future plans are already underway to expand the Bio-Information Highway to include other major research institutions.

MORE STRINGENT REGULATIONS ON CHINESE PROPRIETARY MEDICINES IN SINGAPORE
The Singaporean Ministry of Health (MOH) announced on August 20, 2002, that they are implementing new regulatory controls over Chinese proprietary medicines (CPMs). Due to the rise of recent health related problems as a result of CPM consumption, the Ministry is tightening its control of the marketing and testing of Chinese traditional medicines. The new regulations will include additional labeling requirements for CPMs as well as more comprehensive test reports issued by accredited laboratories.

In recent years, CPMs have been marketed in packaging similar to Western medicines. For example, a weight loss medicine called Slim 10 is a CPM, however, its quality of packaging is similar to a Western product. This has led to a great deal of confusion when consumers purchasing these products believe that Western companies manufactured them. Unlike Western medicines, CPMs cannot be easily tested due to the natural ingredients it contains. These ingredients with complex chemical constituents are far from the synthetic chemical based substances that are found in Western medicines. Thus, in order to prevent consumer confusion and to better inform the public of the difference between Western medicines and CPMs, the Ministry is requiring all CPMs to prominently display “Allowed for sale as a Chinese Proprietary Medicine” on its packaging. This additional labeling will help distinguish CPMs from Western medicines regardless of the type of packaging. All CPMs must display this label beginning January 1, 2003.

CPMs will also be subjected to more rigorous testing requirements. Beginning January 1, 2004, all CPMS must be tested by accredited laboratories. The Health Sciences Authority (HSA) of Singapore will help to establish a panel of local and foreign accredited laboratories that will be able to issue test reports. The more stringent testing requirements are to ensure the reliability of the test reports issued.

The HSA will also be implementing an audit program to ensure that overseas CPM manufacturers intending to sell their products in Singapore will be subjected to regular Good Manufacturing Practice (GMP) audits.