Recommendations for Biosimilar Manufacturers in Taiwan

With an aging population, a pharmaceutical industry worth US$4.6 billion, and a domestic biotech industry looking to play a larger role in the economy, Taiwan may provide opportunities for domestic manufacturers to enter the biosimilar market.⁸⁶ Taiwan‟s universal healthcare system involves heavy government involvement in paying for healthcare, including many high-cost prescription medicines.

Firstly, Taiwan‟s regulations of biosimilars are modeled after EU, which is an abbreviated process; however, these regulations were not found to provide additional incentives to first entry biosimilars unlike the US.⁸⁷ The pricing and healthcare coverage of drugs is determined in a similar process as Japan, where approval for sale equates

64

coverage on national health insurance plans, and prices are also determined at this stage.⁸⁸ However, Taiwan has gone further than Japan to review new drugs based on evidence and cost, relying on a health technology assessment agency similar to NICE in the UK, which provides guidance to the national insurer and develop clinical criteria for drugs. Taiwan‟s National Health Insurance (NHI) is more similar to the UK in being a large single payer able to extract savings from the health care system.⁸⁹ NHI relies on global budgeting, price volume adjustments, and drug expenditure targeting to control costs in the system.⁹⁰

Based on similarities between Taiwan‟s healthcare system and certain aspects of Japan‟s and Europe member states‟ health care systems, the simple analysis of

incumbent strategies (from the previous chapter) suggests that Taiwan‟s future biosimilar market will see the same type of incumbent response to competition.

Biosimilar manufacturers should be prepared to compete against new biologics introduced by brand manufacturers as intended substitutes for biologics losing patent protection, as well as large generic manufacturers like Sandoz whose parent company Novartis will give it an advantage in bringing biosimilars to market.

The recommendations below are divided into recommendations directed toward competing with biologic incumbents (6.2.1) and recommendations directed toward competing with multinational generic manufacturers, which will also be the main competitors in the biosimilar market (6.2.2).

6.2.1 Recommendations for Competing Against Biologic Incumbents

1) Manufacturers may be developing biosimilars of a biologic in which the original manufacturer is still applying for new indications (for example, Roche applying for additional cancer indications in Avastin). The

65

manufacturer should be prepared to apply for all indications in the event that the original biologic is approved for more in the future. The manufacturer may find it beneficial to convince the market regulator (Taiwan FDA) to relax requirements for additional indications, such as automatic approval for new indications if the biosimilar already meets requirements for existing indications.

2) To respond to incumbents developing new biologics as substitutes for biologics losing patent protection, an assessment should be made whether regulators are expected to treat the new biologic as a major innovation, or if they will view the new biologic as more of a „me-too‟ version of the current biologic. Biosimilars may not be able to compete against new biologics that regulators view as significant innovations over current treatment.

Manufacturers may wish to discontinue development in these cases, or postpone development until more evidence comes out of the new biologic in development.

However, in competing against new biologics that regulators view as offering little or no improvement, manufacturers can claim that their biosimilar products will offer significant cost advantages to payers.

Biosimilar manufacturers should ensure that health insurance policy reflects this advantage when determining reimbursement prices for these drugs.

Similar to references pricing found in Germany (see section 4.3.3), Taiwan‟s NHI should also adopt pricing policies that include biosimilar product prices as references for new biologics not found to provide clinical benefit over

66

existing biologics. Manufacturers should also advocate preferential listing criteria in which lower cost biosimilars are prescribed before higher cost biologics. By creating incentives for prescribers to chose biosimilars over higher cost patented biologics, these policies will ensure that biosimilars will gain market share even when new biologics come to market.

6.2.2 Recommendations for Competing Against Multinational Generic Companies 1) In competition between domestic biosimilars and biosimilars developed by

large, multinational companies, domestic companies cannot rely on the government to develop preferential policies for the domestic producers. Any difference in policy between domestic and international manufacturers of the same type of products (biosimilars) may be viewed as anti-competitive and protectionist.⁹¹ For this reason, domestic companies must be prepared to compete with multinational generic companies at an even playing field.

2) Domestic manufacturers should secure market share by becoming

preferential suppliers at Taiwan‟s larger public hospitals and medical centers which were found to be the leading prescribers of biologics in Taiwan.⁹² Because prescribers are unlikely to switch patients between different

biosimilars of the same drug class, there is a clear first-mover advantage for manufacturers entering the supply channel of major health care providers.

Manufacturers must be willing to offer significant price concessions to secure this channel.

3) Biosimilar manufacturers may offer additional incentives to hospital

providers through services such as administering the infusion of the drug (3

67

of 6 case study biologics require intravenous infusion). Under NHI global budgeting, although drugs are subsidized on a fee for service basis, other hospital services such as administering IVs are reimbursed at the end of the budget year, after the relative use of the service is calculated within the global budget. Researchers have found that hospitals substitute fee for service type items such as drugs for non-fee for service items.⁹³ This feature of global budgeting may lead to underuse of drugs requiring in-hospital administration, unless manufacturers can directly cover the administrative costs.

Taiwan biosimilar manufacturers may find an opportunity to share costs by cooperating on the establishment of jointly owned infusion clinics.

Manufacturers of different biosimilars may cooperate in funding infusion clinics, which will avoid appearance of collusion to competition regulators.

This cooperation may also be necessary in order to compete against international companies with much larger funds to afford additional services/incentives for their products.