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.

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.

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.

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.

Two new triterpenoids from Lysimachia heterogenea Klatt and evaluation of their cytotoxicity.

Two new 13,28-epoxy oleanane-type triterpenoids, namely heterogenoside E and F, were isolated from Lysimachia heterogenea Klatt, together with the eight known compounds: palmitic acid, ß-stigmasterol, kaempferol, quercetin, hyperin, isorhamnetin, isorhamnetin-3-O-galactopyranoside and anagallisin C. Heterogenoside F possesses acetoxyl groups at the unusual C-21 and C-22 positions of its oleanane skeleton. The cytotoxic activities of anagallisin C, heterogenoside E and F were weak.

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.