Effect of air pollution on health care expenditure: Evidence from respiratory diseases.

Recent reports show that at least 95% of the world's population is breathing polluted air. However, the impact of air quality on air pollution-related medical expenditure and utilization is sparse. This study estimates the short-term health care cost impacts of air pollution using a meteorological phenomenon-thermal inversion-as an instrumental variable for air quality. Using information on outpatient care for respiratory diseases from universal health insurance claim data in Taiwan during 2006-2012, our estimates suggest that a one-unit reduction in the air quality index (AQI) leads to NT$2.3 billion (nearly US$74 million) of savings in respiratory-related outpatient expenditure per year. Given that the average AQI is equal to 32 during our study period, completely removing air pollution would reduce the national health expenditure by approximately 8% annually. Our results provide the important implication that the cost of controlling air pollutant emissions can be offset by curtailing health care expenditure.

Understanding profit margins of medical providers from prescription drugs: evidence from Taiwan.

BACKGROUND: This study empirically estimates the magnitude and associated determinants of profit margins that medical providers earn from prescription drugs based on Taiwan's pharmaceutical market. METHODS: Our main data set is from the population-based claims data compiled by the National Health Insurance Research Database covering three waves of price adjustment: July-December 2004, October 2007-September 2008 and October 2009-September 2010. Only drugs whose reimbursement prices were adjusted using the R-zone formula were used as samples for this study. By calculating the difference between retail and wholesale prices for 796 pharmaceutical products, we can estimate the profit margin determinants using the regression model. RESULTS: We found evidence that suppliers of generic drugs tend to offer larger discounts to medical providers than suppliers of brand-name drugs. In addition, the countervailing power of wholesale pharmaceuticals, as measured by the discount rate offered by pharmaceutical manufacturers, is positively associated with the degree of competition within the pharmaceutical market and the size of the market itself. CONCLUSIONS: Our findings imply that the profit-seeking behaviour exhibited by medical providers is the engine of competitive forces in Taiwan's prescription drug market. This creates financial incentives for them, which in turn influences their choices of prescription drugs.

Population Aging, Technological Innovation, and the Growth of Health Expenditure: Evidence From Patients With Type 2 Diabetes in Taiwan.

OBJECTIVES: As populations are growing older, the prevalence of chronic diseases such as diabetes mellitus is rapidly increasing. Meanwhile, many new drugs are introduced each year as a result of technological advances. This study uses diabetes as an example to investigate the relative importance of population aging and technological innovation in accounting for the growth of health expenditures. METHODS: The retrospective cohort study was conducted based on claims data covering 1997 to 2006 taken from Taiwan's National Health Insurance. Patients were selected based on whether they received antidiabetic drugs. Growth in health expenditure was decomposed into 3 parts: number of patients, mean treatment cost, and the interaction between the change in the mean treatment cost and the change in the number of patients. RESULTS: The results indicated that 75% of the growth in expenditures for treating diabetic patients is attributable to the effect of population aging, as reflected by the increase in the diabetes prevalence rate (45%) and disease severity (30%). Technological innovation, in the form of treatment substitution (10%) and treatment expansion effects (15%), accounted for only about 25% of the growth in expenditures for treating diabetic patients. CONCLUSIONS: Population aging plays a more significant role than technological innovation in driving up health expenditures for the treatment of diabetic patients. This suggests that population aging may contribute significantly to the future growth of the healthcare sector in Asian countries such as Taiwan.

Exploring the relationship between nursing hours per patient day and mortality rate of hospitalised patients in Taiwan.

AIM: To investigate the relationship between nursing hours per patient day and the inpatient mortality rate in Taiwan. BACKGROUND: Nursing hours per patient day has been associated with better patient outcomes. The literature is inconclusive on the relationship between nursing hours per patient day and the inpatient mortality rate, and no studies have yet examined this issue in Taiwan. METHODS: A retrospective longitudinal study analysed data from the 'Nursing Utilization of Resources, Staffing and Environment on Outcome Study: NURSE-outcome study'. Hierarchical regression estimated the relationship between nursing hours per patient day and in-hospital mortality rate after controlling for confounding variables. RESULTS: The mean nursing hours per patient day in Taiwan was 2.3, while the mean inpatient mortality rate was 0.73% higher nursing hours per patient day was associated with a lower inpatient mortality rate after controlling for confounding variables. The total explained variance of this study in inpatient mortality rate was 19.9%. Significant relationships to inpatient mortality were found in levels of hospitals, seasonal variation and nurses' work experience. CONCLUSION: Nursing hours per patient day affects the mortality rate among hospitalised patients in Taiwan. IMPLICATIONS FOR NURSING MANAGEMENT: According to the results, we suggested the government and managers in Taiwan double the nursing hours per patient day so that the inpatient mortality rate will decline by 1.1%. This might be the optimal nurse configuration that could provide a balance between cost-effectiveness and patient safety.

Comparative cost-effectiveness of metformin-based dual therapies associated with risk of cardiovascular diseases among Chinese patients with type 2 diabetes: Evidence from a population-based national cohort in Taiwan.

OBJECTIVE: To assess the cost-effectiveness of metformin-based dual therapies associated with cardiovascular disease (CVD) risk in a Chinese population with type 2 diabetes. METHODS: We utilized Taiwan's National Health Insurance Research Database (NHIRD) 1997-2011, which is derived from the claims of National Health Insurance, a mandatory-enrollment single-payer system that covers over 99% of Taiwan's population. Four metformin-based dual therapy cohorts were used, namely a reference group of metformin plus sulfonylureas (Metformin-SU) and metformin plus acarbose, metformin plus thiazolidinediones (Metformin-TZD), and metformin plus glinides (Metformin-glinides). Using propensity scores, each subject in a comparison cohort was 1:1 matched to a referent. The effectiveness outcome was CVD risk. Only direct medical costs were included. The Markov chain model was applied to project lifetime outcomes, discounted at 3% per annum. The bootstrapping technique was performed to assess uncertainty in analysis. RESULTS: Metformin-glinides was most cost-effective in the base-case analysis; Metformin-glinides saved $194 USD for one percentage point of reduction in CVD risk, as compared to Metformin-SU. However, for the elderly or those with severe diabetic complications, Metformin-TZD, especially pioglitazone, was more suitable; as compared to Metformin-SU, Metformin-TZD saved $840.1 USD per percentage point of reduction in CVD risk. Among TZDs, Metformin-pioglitazone saved $1831.5 USD per percentage point of associated CVD risk reduction, as compared to Metformin-rosiglitazone. CONCLUSIONS: When CVD is considered an important clinical outcome, Metformin-pioglitazone is cost-effective, in particular for the elderly and those with severe diabetic complications.

Choice of generic versus brand-name antidepressants in a regulated prescription drug market: evidence from Taiwan.

BACKGROUND: A health care system in which there is no separation between prescription and dispensation, combined with a regulated prescription drug market, leads to various generic substitution mechanisms for antidepressants. AIMS OF THE STUDY: We investigated the determinants of generic versus brand-name antidepressant choices in a regulated prescription market where physicians both prescribe and dispense drugs. METHODS: Using data from a sample of one million individuals selected randomly from the registry of National Health Insurance beneficiaries in 2010, and all claims for these one million enrollees between January 1997 and December 2011, we employed logistic regression to examine the choice of generic versus brand-name antidepressants in the Taiwanese prescription drug market. RESULTS: Access to various antidepressant brands varies according to the accreditation level and type of ownership of the healthcare provider. Private healthcare providers and those with lower accreditation levels were more likely to prescribe generic antidepressants compared to their brand-name counterparts. The diversity of products and competition in the molecule market was positively associated with the probability of prescribing generic antidepressants. DISCUSSION: In a regulated prescription drug market with no separation between prescription and dispensation, the substitution of generic antidepressant prescriptions in place of brand-name prescriptions is likely driven by drug and provider market characteristics, rather than by lowering costs. IMPLICATIONS FOR HEALTHCARE PROVISION: The allocation of different types of ownership and accreditation levels of healthcare providers may lead to unequal access to various brands of antidepressants. IMPLICATIONS FOR HEALTH POLICIES: Policies for improving the treatment of depression should take into account the structure of molecule and provider markets as important factors in determining the choice and utilization of antidepressants, in a healthcare system where physicians both prescribe and dispense drugs. IMPLICATIONS FOR FUTURE RESEARCH: Other psychotropic drug classes should be investigated to explore the effect of molecule and provider characteristics on the utilization of various classes of medication.

Endogenous technological change in medicine and its impact on healthcare costs: evidence from the pharmaceutical market in Taiwan.

Although the technological change in medicine has been recognized widely as the major driver of rising healthcare costs, there is very little research that estimates this effect directly. This paper uses both a single-equation and a simultaneous equations approach to investigate empirically the interactive relationship between technological innovation and the growth of health expenditure in the context of the pharmaceutical market in Taiwan. Based on observing 182 therapeutic groups between 1997 and 2006, we find evidence to support the argument that technological innovation and health expenditure are determined simultaneously as technological innovation, and that the growth of health expenditure are endogenous rather than exogenous. Specifically, we find that therapeutic groups associated with higher pharmaceutical expenditure are likely to attract more new products to the market. Meanwhile, therapeutic groups with more new products are associated with higher pharmaceutical expenditures. An important implication of the paper is that cost containment policies will affect not only the growth of health expenditure, but also the progress of technological innovation in the health sector.

Determinants of generic entry in the regulated Taiwanese prescription drug market.

OBJECTIVES: This paper investigates the determinants of generic entry in the regulated Taiwanese prescription drug market, where physicians both prescribe and dispense drugs. METHODS: Using a sample of 29 ingredients and a population claim data set from 1997-2007, we employ the negative binomial regression to empirically examine the determinants of generic entry in Taiwan. RESULTS: This study finds that the lagged number of competitors, market size, and market share of large-scale medical providers affect generic entry. CONCLUSIONS: The negative effect of large buyers on generic entry implies that rent-seeking behavior appears to create a barrier for generic manufacturers to enter into the Taiwanese prescription drug market.

Regulation and competition in the Taiwanese pharmaceutical market under national health insurance.

This article investigates the determinants of the prices of pharmaceuticals and their impact on the demand for prescription drugs in the context of Taiwan's pharmaceutical market where medical providers earn profit directly from prescribing and dispensing drugs. Based on product-level data, we find evidence that the profit-seeking behavior of the medical providers in the prescription drug market transfers the force of competition from the unregulated wholesale market to the regulated retail market and hence market competition still plays an important role in the determination of the regulated price. We also find that the profit-seeking behavior plays a similar role to advertising in that it increases the brand loyalty and hence lowers price elasticity. An important implication of our study is that the institutional features in the pharmaceutical market matter in shaping the nature of pharmaceutical competition and the responsiveness of pharmaceutical consumption with respect to changes in price.

Availability, health-care costs, and utilization patterns of biologics in Taiwan.

OBJECTIVE: To provide an overview of the use of biologics in Taiwan, including the access to new biologics, the impact of this access on the growth of health-care expenditure, and the utilization patterns. METHODS: We first conducted a market-level analysis to investigate the availability of global biologics in Taiwan as well as the growth and concentration of aggregate spending on biologics. We then conducted a patient-level analysis to investigate the costs and utilization patterns for selected new biologics. RESULTS: We found that the concentration index is such that the 20 leading biologics in Taiwan account for more than 90% of the total spending on biologics. In our patient-level study on four biologics, the annual cost of treatment per patient ranged from NT$100,000 to NT$400,000. The prevalence rate of the user was between 6.5 and 37.2 per 100,000 of population. The treatment costs were inversely related to the prevalence rate of users. We also found that physicians in larger and public hospitals were more likely to prescribe new biologics to their patients compared with their counterparts practicing in smaller and private hospitals. In addition, we found that physicians were more likely to prescribe biologics to patients with more severe diseases and higher comorbidities. CONCLUSIONS: We conclude that public spending on biologics in Taiwan is highly targeted toward about 20 products with higher annual expenditures and growth rates and that the utilization of these biologics is targeted at a small number of patients. In addition, the access to these costly biologics is not uniform among patients in a country with universal coverage for prescription drugs.

New drugs and the growth of health expenditure: evidence from diabetic patients in Taiwan.

This paper contributes to the growing body of literature that debates whether the adoption of pharmaceutical innovation increases the overall expenditure on health care. By examining data obtained from Taiwan and focusing on diabetic patients, we use a new class of drugs, namely, thiazolidinediones, as an example to investigate the effect on health expenditure of prescribing new drugs to patients by focusing on the impact of treatment substitution and treatment expansion. Overall, our results indicate that the introduction of new drugs mainly impacts the outpatient drug expenditure and does not give rise to any offsetting effect on other outpatient and inpatient health expenditures. This suggests that the adoption of pharmaceutical innovation in treating diabetic patients is expenditure-increasing. In addition, we find evidence that the treatment substitution channel has a more significant impact on the level of health expenditure than the treatment expansion channel. An important policy implication for our finding is that the justification for increasing health expenditure on the treatment of diabetes is not conditional upon a lowering in the demand for other types of health-care services. By contrast, it is conditional upon the increased health benefits per se.

The determinants of the adoption of pharmaceutical innovation: evidence from Taiwan.

In recent years, a substantial amount of technological progress in medicine has taken the form of pharmaceutical innovation. This paper uses the launch of a series of new drugs designed for treating type 2 diabetic patients as an example to investigate the determinants that affect the diffusion of new medical technology. Based on prescription-level data that are obtained from the national health insurance program in Taiwan, we find that the probability of prescribing new drugs declines as more competing products enter the pharmaceutical market. Meanwhile, physicians are less likely to prescribe new drugs to treat their patients as the provider market becomes less concentrated. These results suggest that the providers' incentives for cost reduction dominate incentives for quality improvement as markets become more competitive and hence an increase in market competition is associated with a decrease in the diffusion of new drugs. As a result, access to new drugs is not uniform among patients in a country with universal coverage for prescription drugs. An important implication of our study is that profit-seeking behavior among providers can become an access barrier to new medical technology.

Financial incentives and physicians' prescription decisions on the choice between brand-name and generic drugs: evidence from Taiwan.

This paper tests the hypothesis of whether or not financial incentives affect a physician's prescription decision on the choice of generic versus brand-name drugs within a system in which physicians prescribe and dispense drugs. By using data obtained from Taiwan and focusing on diabetic patients, our empirical results provide several consistent findings in support of the hypothesis that profit incentives do affect the physician's prescribing decision, suggesting that physicians act as imperfect agents. An important implication of our findings is that rent seeking for profit margin between the reimbursement and the acquisition price instead of reducing costs is the major driving force behind generic substitution. As a result, the providers instead of the payers or consumers reap the financial benefits of generic substitution.