Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

When Healthcare Budget Cuts Are Not the Answer: Lessons from Taiwan

14 September 2012 Jing Zhang

While attending the ISPOR 5th Asia-Pacific Conference at the Taipei International Convention Center in early September, I was impressed by Taiwan's calm and tranquility. The people there are enjoying universal health insurance coverage, with a single payer ensuring low-cost but quality healthcare for all the citizens. Everyone seems to be happy: the healthcare consumers "can afford to be sick," while the pharmaceutical companies enjoy steady growth. Looking forward, I expect the healthcare market to keep growing, driven by the momentum unleashed by the universal coverage.

At the conference, I also joined heated discussions over the challenges faced by many Eurozone countries-quite a contrast to Taiwan. The Eurozone governments' austerity policy has led to budget cuts on public healthcare expenditure with adverse consequences.

Like Nobel Prize winner Professor Krugman, I question the wisdom of budget cutting at the height of recession-whether it was during the Asian financial crisis of the late 1990s or the global financial crisis of 2008-it delays economic recovery and hurts the healthcare market.

To be specific, on the demand side, the governments' cost-cutting policy has led to reduced healthcare expenditure and payments by the governments, while the private sector has not picked up the slack. Consumers burdened with higher co-payments have reduced medical treatment. As a result, the demand for drugs has fallen, thereby driving down pharmaceutical sales.

On the supply side, pharmaceutical companies-already facing post-patent-expiry price competition from generics and biosimilars-have responded to Governments'reduced reimbursement and drug prices with reduced investment or even withdrawals, thus reducing drug supplies.

The interweaving of demand and supply factors has led to a net reduction in prices, drug sales and patients' access to drugs. In the end, no one is happy: the pharmaceutical companies end up with reduced revenue, while the consumers end up with reduced access to drugs and healthcare. Against such a backdrop, I expect the Eurozone to have negative growth in health spend in 2012.

As I was about to leave the conference, someone asked me: "When will the Eurozone start to have strong growth in drug sales and health spend again?" My answer: "when the economy is fully recovered and that will be many years away."

Explore

RELATED INDUSTRIES & TOPICS

Follow Us

Filter Sort