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September 20, 2017

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Rising costs, overprescription head list of setbacks in Asian health care

HONG KONG--Plagued by cost overruns and a US$4.2 billion deficit, Taiwan's National Health Insurance set out in 2012 to find out what lay behind the problem.

The results were a mixture of the expected and unexpected. Other cities, it turned out, were not paying their fair share, so the entire cost fell on Taipei. At the same time, patients were visiting hospitals more than anywhere else in the world and being prescribed many more drugs than they needed or could ever take.

In one instance, a patient who suffered from a range of ailments from high blood pressure to heart disease and asthma was given enough pharmaceutical products to last him 22 years, said Lee Chun-fu, an official with the Bureau of National Health Insurance that runs Taiwan's healthcare system.

The issue of over-prescription of pharmaceuticals is visible not only in Taiwan but around the world.

The World Health Organization (WHO) estimates that as many as half of all medicines are inappropriately prescribed, dispensed or sold. Overprescription of medicine and overtreatment is emerging as a significant problem across Asia, one that governments are working to address.

For the WHO, the concern is health related. Medicines that are not prescribed properly can lead to health problems. Take antibiotics, for example. If not properly prescribed and taken, they can lead to the emergence of resistant bacteria.

This is already a problem with diseases such as tuberculosis, of which there are resistant strains emerging globally.

"Antibiotic resistance is rising for many different pathogens that are threats to health," said Tom Frieden, director of the U.S. Center for Disease Control and Prevention.

Another problem is fiscal. Improper or overprescription of drugs leads to huge cost overruns. This may be most visible in Taiwan.

Taiwan's healthcare system operates through a national health insurance, which covers the entire population. Hospitals buy drugs directly from drug companies and sell them on to patients, although the National Health Insurance covers most of the cost.

The larger hospitals have the clout to negotiate steep discounts with the pharmaceutical companies and can make a tidy profit in the difference between what they pay for a drug and the fixed price that the government pays them.

It benefits doctors to prescribe as much as possible. A spokesperson for the National Health Insurance Civic Surveillance Alliance said the system puts a cap on prices for medicines but not on the quantities that are prescribed or distributed.

This "black hole" costs around US$340 million a year. In the last 15 years or so, Taiwan's healthcare system has racked up some US$4.2 billion in deficits.

The problem is hardly unique to Taiwan.

Japan, which also has a well-established system of universal care under its national health insurance, has been under severe stress for several years, notes McKinsey & Co. Ltd., a management consulting firm.

Part of the problem is that rising wealth across the country encourages people to seek more care that combines with a lack of centralized controls over the allocation of resources.

Japan's system of healthcare, known as kaihoken, was established in 1961. But in the past few years, a shortage of doctors has emerged. McKinsey's 2011 findings note that some doctors see as many as 100 patients in a single day. Under such high levels of turnover, they tend to overprescribe drugs. This also helps the clinics that own in-house pharmacies.

Limit Services to Reduce Cost in Japan

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