Changes in prescribing behaviors after implementing drug reimbursement rate reduction policy in Taiwan: Implications for the medicare system

Prescription drug costs are the fastest rising component of health care spending worldwide. To control drug costs, the Bureau of the National Health Insurance in Taiwan has taken a series of actions over the years to reduce drug reimbursement rates. The purpose of this study is to investigate changes in physicians' prescribing behaviors after initial implementation of drug reimbursement rate reduction policy in Taiwan. For the study, variance cost analysis was used to investigate how physicians reacted after implementation of a policy that reduced selected drug reimbursement rates. The results indicate that the existence of financial benefits from prescribing drugs seems to create an incentive for physicians to increase prescription duration and drug items per prescription. In addition, differences in drug reimbursement rates may create incentives to prescribe drugs with higher revenue instead of lower revenue. From Taiwan's experience, we know that price is merely one of the many factors that influences drug expenditures. Taiwan's experience may offer lessons for the future of the Medicare system, as well as for non-US health policy officials when they design similar policies for their own countries.