Taiwan to Prioritize Domestic Production of 60 Key Drugs, Plans Fund to Bolster Supply Resilience

To prevent drug shortages, Minister of Health and Welfare Shih Chung-liang stated that the government will target about 60 key drugs, including some for hypertension and diabetes. In the future, upon notification of unstable supply, it will urgently narrow the drug price gap and establish a fund to subsidize losses from expired stockpiles, with the hope of proposing a relevant special law by the end of the year.

The 7th "Health Taiwan" committee meeting was held on March 5, where it was decided to establish a Drug Resilience Promotion Committee to help domestic API and pharmaceutical manufacturers increase the proportion of domestically produced raw materials. The committee recently completed its first meeting, and Shih explained the meeting's resolutions to the media this afternoon.

Shih said that last year the Executive Yuan approved the four-year "National Drug Resilience Initiative" with a budget of NT$24 billion. The Drug Resilience Promotion Committee was established in response and will meet quarterly to track the five major strategies for drug resilience: domestic drug production, domestic drug use, smart allocation, regulatory adaptation, and international cooperation.

Shih stated that for domestic drug production, they will cooperate with the Ministry of Economic Affairs, which will guide businesses to invest in production to enhance drug supply resilience. The Ministry of Health and Welfare has already identified about 60 key drugs from a list of over 500 essential medicines. These will be prioritized for domestic manufacturing because they have fewer drug licenses and less stable supplies.

Shih further explained that the key drugs are divided into three categories. The first category includes drugs commonly used by the public but with few licenses and concentrated supply sources, such as some for hypertension and diabetes. The second category is drugs that have long relied on special project imports, like the antibiotic Penicillin G for treating syphilis. The third category consists of special pediatric dosage forms that have very few licenses due to low usage, which will be prioritized for local manufacturing.

Shih said that promoting domestic production must be coupled with promoting domestic use; otherwise, local production without adoption by the medical community will not help improve resilience. In response to the three-year suspension of the Drug Expenditure Target (DET) system, drug payment standards can be reviewed. For instance, for the reporting system of drugs with unstable supply, the price gap can be urgently narrowed to give manufacturers more profit margin to ensure continuous supply.

The third strategy is smart allocation, which involves planning a national-level smart drug logistics and stockpiling center. It will also integrate data on production, inventory, distribution, and health insurance claims from medical institutions, pharmacies, and pharmaceutical companies to establish a nationwide drug supply and demand monitoring system. In the future, it will promote a secure warehousing mechanism, integrating demand and unified procurement.

Regarding regulatory adaptation, Shih used Penicillin G as an example. This drug still plays a role in critical infectious diseases but lacks a domestic drug license and must rely on special project imports. "This is not a manufacturing capability issue, but a regulatory constraint," he said, adding that a breakthrough in current regulations is needed. Furthermore, ensuring continuous supply may require establishing a fund to subsidize losses from expired stockpiled drugs, and a relevant special law will be proposed by the end of the year.

Shih said that promoting international cooperation is also a key reform focus. No country can completely produce all key drugs and APIs locally. It is necessary to establish regional or cooperative and complementary mechanisms among friendly nations to strengthen the stability of the drug supply. Related measures in recent years have already shown results, with a downward trend in drug shortage reports this year.