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The Development of the Traditional Chinese Medicine Industry in Taiwan: A Welfare Challenge in Access to Medicines for the Elderly?
Jerry Hsiao, Doctorate Associate
Queen Mary Intellectual Property Research Institute, University of London
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Paper for the EASP Second Conference-“Pressure, Policy-Making and Policy Outcome Understanding East Asian Welfare Reforms” 30th June-2nd July, 2005.
University of Kent
The Development of the Traditional Chinese Medicine Industry in Taiwan: A Welfare Challenge in Access to Medicines for the Elderly?
Jerry Hsiao, Doctorate Associate
Queen Mary Intellectual Property Research Institute, University of London Email:
Abstract
Traditional Chinese Medicine (TCM) has a richhistory and is widely used in Taiwan. As Taiwan’s aging population grows, medicines that will meet their particular needs are in high demand. TCM appeals to elder people because of its superior effect in treating chronic diseases that plague this age group (those aged 65 or older) for which it produces significantly fewer side effects than its Western counterparts. Since 2002, the Taiwanese government has aimed to spend $1.5 billion dollars over the next five years to build up and modernize its TCM industry. This modernization process will lead the pharmaceutical industry of Taiwan to prosperity, but it will result in research results being protected by intellectual property rights and will thus change the status of TCM from dietary supplements to prescription drugs. This could raise the price of TCM significantly and may lead to a reduction in welfare for elderly members of the society. The National Health Insurance (NHI) currently covers TCM and a price hike will surely contribute to a heavier financial burden on the already financially tight NHI scheme. This paper explores the trade-off between local industrial growth and the welfare of the elderly in accessing essential medicines.
Introduction
Traditional Chinese medicine (TCM) has a rich history and is widely practiced around East Asia. Today, following the success of the electronics industry, the government of Taiwan aimed to achieve the same in the biotechnology and pharmaceutical sector, a sector believed to be the star industry of the 21st century. However, to invest in the biopharmaceutical industry, a high level of human resources is required and large sums of money must be spent on conducting research and development. Currently, Taiwan does not have any multinational biotechnology or pharmaceutical companies like those of Western Europe or the United States. Instead, the industry is comprised of mainly Small and Medium Enterprises (SMEs) without much significant R&D. Because of the long history of use of TCMs in Taiwan, the country is well suited to exploiting this potential niche sector in the global biopharmaceutical market.
To promote innovation, intellectual property serves an important role in today’s business world. For example, a patent helps a company to gain a monopoly right in the invention in order to recoup its expenses in developing the product or process. The dilemma here is that traditional medicines are the products of traditional medicinal knowledge that has been around for thousands of years. Thus, they consist of knowledge that is in the public domain which is freely available to everyone. Therefore, the application of IPR will secure the knowledge in the hands of a few for a limited period of time. Prof. Carlos Correa has argued in his article that a tension arises between those who exploit knowledge or who share in the benefits of such commercialization but at the cost of limiting access to traditional medicine by those who need the medicines and treatments[1]. The purpose of this article is to test that statement to find out whether industry building in TCM might affects people’s ability to gain access to medicines, especially the elder people with chronic diseases in Taiwan who are most likely to be affected.
The Aging Trend
Heroes grey and beauty fades. Aging populations are becoming a worldwide trend as people born in the baby-boom years are growing old. According to the population study conducted by the United Nations, when over 7% of a country’s population is aged 65 and older, that country is considered to be an aging society. According to another United Nations study, the world’s elderly population is now growing at a rate 2.4% per year and increasing much faster than the global population as a whole[2]. Aging is a fear for many people and the fight against aging is not a recent phenomenon; it is believed that 2,200 years ago the Qin Emperor, the first man to unify China, sent Xu Fu to what is now the modern day Japan in search of the elixir of immortality. In the Taiwan of 2005, the aged group accounts for 9.56% of the entire population[3]or around 2.16 million people. This aging phenomenon is especially prominent in developed countries such as France, Sweden, Germany, the U.K., the U.S. and Japan. During the past decades, up until the 1960s’ life expectancy increased significantly as a result of improved social conditions, sanitation, hygiene, nutrition and working conditions[4]. Nowadays improvements in medicine and medical technology have helped to prolong people’s life span. This increase of life expectancy is considered to be a mark of successful civilization. Today, Taiwan has approximately 23 million people with comparable living standards to that of many Western countries and the life expectancy is 72.6 for men and 78.3 for women[5]. The aging population brings several new demands and challenges: 1.) an increase in total health expenditure; 2.) a change of disease pattern with a greater concentration on chronic diseases such as cancer, heart diseases and diabetes mellitus[6]; 3.) a decline in numbers in the labor production force; 4.) a heavier burden on society both in terms of social welfare and health care.
Traditional Chinese Herbal Medicines: Definition
In Taiwan, TCM is defined as followed:[7]
“…Chinese medicine encompasses acupuncture, moxibustion, and other components of the Chinese medical system; it relies primarily on the prescription of herbal formulas. As the appeal of “natural” medicines increases all over the world, more efforts have been made to scientifically research on the efficacy and pharmacology of today’s herbal medicines. The popularity of manufactured herbal formulas in the western hemisphere is due to the convenience and quality of dried extracts, the advancements in encapsulation and tableting technologies, and the availability of single herb extracts for making new formulas. Ultimately, the tradition of Chinese herbal medicine can play a valuable role in the modern medicine industry”.
TCM are categorized in three categories:[8]
1.)Traditional formulas: Formulas that have appeared in the traditional text or concentrated products made from those texts.
2.)Non-traditional formulas: Formulas that were not included in traditional text; these ranged from modified formulas, to entirely new formulas that use diverse array of herbs.
3.)Botanical derived drugs or herbal extracts (including mixed or pure compounds).
The occurrence of many non-fatal chronic diseases requires medicines that can handle the prevalence of those diseases. Traditional Chinese herbal medicine appeals to the elder people for its mild therapeutic value and the fact that it has fewer side effects than conventional drugs. It is vital to provide suitable drugs for the chronic diseases, especially for the elderly who as an age group require three to four times more medication than the younger generation. Conventional drugs are chemical drugs that cure the disease based on an active chemical substance. They are far more effective than herbal drugs but, on the other hand, they are also far more poisonous. The differences between TCM and Western medicine is that although both have the same roots in herbal medicines, Western drugs have evolved with the birth of chemistry and industrialization in the 18th Century and now the herbal medicine in the West is based on extracting essences from the herbs. Despite the modern day dominance of Western medicine, TCM is still thriving in East Asian countries like Taiwan, China, Hong Kong S.A.R., Singapore and Malaysia. Nowadays, TCM has gained much popularity in the West, according to research done between 1990-1997 in the U.S. suggesting that a substantial increase in the amount of people seeking alternative medicine and the total amount of out of pocket expenditure for alternative medicines is comparable to the total US physician services in 1997[9]. In order to combat aging, the Taiwanese people have spent a considerable amount of money in purchasing health food products /dietary supplements-NT$20 billion in 1998 alone. This leads us to explore what are traditional Chinese herbal medicines.
Traditional Chinese Medicine: The History and Art
The origins of Chinese medicine are thought to date back to 2910 B.C. It is said that the first emperor Hu Hsi advocated the doctrine of Ying and Yang which became the philosophy for Chinese medicine[10]. The second emperor compiled the Shen Nong’s Herbal (Shen Nong Ben Cao Jing), the earliest material medica in which 365 drugs were categorized into three categories: superior, medium and inferior. Nowadays the mainstream knowledge is based on The Yellow Emperor’s Classic of Medicine (Hunag-Di Nei Jing)written in the 2nd century B.C and the Treatise on Febrile Diseases (Shang Han Lung) written in the 3rd century A.D. It developed in the following centuries, was fully documented and could show its safety and efficacy by drawing on the experience of thousands of years. TCM is an art as well as a science. It exists not simply as medicine or therapy but it also represents Chinese philosophy, describing how humans interact with the natural world. The knowledge centers on the balance of Ying and Yang inside a human body. TCM practitioners argued conventional medicine focused on the Ying part of the body the substance of the body cells and chemicals, whereas TCM works more on the Yang part on the energy that animates those cells[11]. Unlike Western medicines which aim to identify a particular chemical, hormonal or biological imbalance and to treat the symptom with a counteracting medicine, TCM seeks to cure the disease through achieving a point of equilibrium in the human body. TCM focuses on health maintenance and in the treatment of diseases emphasizes the enhancement of the body’s resistance to diseases[12]. According to Lee from Natural Products Laboratory, University of North Carolina-Chapel Hill, different herbs used in TCM have different properties and effects, leading to different results in the body. Such properties include the 4 essences( cold or cool drugs for Yang diseases, warm or hot drugs for Yin diseases), 5 flavors( pungent, sour, sweet, bitter, salty), 4 directions of action( ascending, floating, descending, sinking), and 7 effects( single, additive, synergic, antagonistic, inhibitive, destructive, opposite)[13]. Thus, many different herbs with different pharmacological actions are typical in TCM. Those terms together with knowledge regarding to “Qi” in the human body, and pulse analysis in diagnosis are however, not easy to define such concepts in modern- day Western scientific terms. This has caused to the near abandonment of TCM in early 20th century China in a time of turmoil when many Asian arts and sciences were discriminated against and categorized as unscientific by the dominant Western thinking.
Traditional Chinese Medicine: Utilization in Taiwan
TCM has been practiced in Taiwan since the 16th Century. It was first introduced by the early Chinese immigrants and all the TCM practitioners gained their knowledge through apprenticeships. After Taiwan was ceded to Japan by China in 1895, the Japanese government began to replace TCM with Western medicine. The status of TCM declined gradually and by the time Japan left Taiwan in 1945 there were less than 20 TCM practitioners left. After the Nationalist government took over Taiwan in 1945, they adopted a dual approach of recognizing both TCM and Western medicine, but under the modern dominance of Western medicine TCM served more in a complementary than as an integral role( in other words, it was not in the mainstream of medical practice)[14]. TCM was used to treat chronic conditions like back problems, anxiety, depression and headaches in the U. S. In Israel, TCM is used to cure musculoskeletal and respiratory problems. In Taiwan, according to a research conducted by Dr. Chou et al from the Institute of Public Health at National Yang-Ming University, people’s approaches to TCMs can be divided into two categories: 1.) single treatment method( seeking help either from Western medicine or TCM only); 2.) dual method approach (seeking help from both Western medicine and TCM[15]).
Dr. Chou et al found that within the single treatment approach, there were adherents of folk-religion, farmers and businessmen; and patients who suffered from musculoskeletal, sensory organs or skin disease disorders favored TCM. Amongst patients who adopted a dual-treatment approach, patients with folk-religion beliefs or respiratory diseases favored TCM. So, what knowledge, attitudes and behavioral intentions do TCM users in Taiwan have regarding TCM? According to Dr. Chou et al, TCM users believed that TCM was herbal drugs made in different forms according to drug character and effect. They favored TCM over Western drugs because the side effects of Western drugs are more pronounced than those of herbal drugs, the nature of herbal medicine is bland and the sustained effectiveness of Western medicine is shorter than that of TCM. In the year 2003, the total number of TCM clinic outpatients aged 65 or above was 512,892 and the top three disease categories were: 1.) musculoskeletal system and connective tissue diseases; 2.) signs, symptoms and ill-defined conditions; 3.) diseases of the respiratory system[16].
Traditional Chinese Medicine Industry Building in Taiwan
The wide spread enthusiasm for herbal remedies in the West has sparked an interest among the East Asian countries as well. Former Hong Kong S.A.R.’s Chief Executive Tung Chee Hwa has laid down a 10-year plan to make Hong Kong the foremost international center for Chinese herbal medicine. Likewise, China’s Ministry of Science and Technology has made the modernization of traditional Chinese medicine one of the 12 focal points in the current Five-Year Plan with $3.6 million being allocated to screening both conventional chemical compounds and medicinal herbs for potential drugs.
Taiwan’s pharmaceutical industry began in the 1930s and was greatly stimulated by Japan’s invasion of northern China and the end of World War II. By 1990, Taiwan’s pharmaceutical industry accounted for $1.1 billion or 0.7 % of world total pharmaceuticals manufactured[17]. In 2001, the production value of Taiwan’s biopharmaceutical industry amounted to NT$100.9 billion. Out of this total, the pharmaceutical industry accounted for NT$51.4 billion, pharmaceutical raw materials /or active pharmaceutical ingredients (API) NT$4.1 billion, the production value of western drugs reached NT$43.1 billion and Chinese herbal medicine valued at NT$4.2 billion. Taiwan has 490 pharmaceutical manufacturers with an average production value of NT$100 million. This accounts for 0.5% of the total production in global pharmaceutical industry[18][19]. Taiwan’s pharmaceutical industries are comprised largely of SMEs[20] with little R&D in developing new drugs. Instead, their businesses are based primarily on the production of generic versions of patent-expired Western drugs. As part of a national policy to boost the biotechnology industry, starting from 2002, Taiwan aimed to spend US$1.5 billion in complying with the Ministry of Economics’ proposal to build up Taiwan’s herbal medicine industry over the next 5 years[21] and the research focus will be on asthma, anti-aging, liver-related diseases and immune-related diseases. Taiwan has the potential to become the world’s largest supplier of herbal medicines in the future. Currently it ranks in the top three, alongside Japan and Germany for R&D, manufacturing and quality control of herbal medicines[22].
The herbal medicine industry building is aiming to make TCM scientific through rigorous clinical studies to prove the safety, efficacy and quality of the medicines, thus transforming TCM from the mere production of different delivery models obtained from ancient texts to high quality clinically proven drugs for which patent protection can be obtained. Currently, the herbal medicine industry in Taiwan is structured as followed: dietary supplements make up 70% of the market, scientific herbal medicines 13%, functional foods 10% and traditional Chinese medicine 7%.[23] The local Traditional Chinese herbal market is estimated to be around NT$ 15-25 billion dollars[24]. In the EU, annual sales have been estimated at $ 7 billion and annual sales in the U.S. in 1997 to have increased to $ 5.1 billion from $200 million in 1988[25]. The value of global herbal medicine market value is predicted to reach $40 billion in 2006.
Graph 1 Global Market
Source: Information Center of the herbal medicine industry, DoIT, MoEA
Graph 2 Domestic Market
Source: Information Center of the herbal medicine industry, DoIT, MoEA
However, unlike its Western counterparts whose pharmaceutical industries began in the 19th century, Taiwan was a late starter in this pharmaceutical race and as seen above Taiwan’s herbal medicine market is still relatively small. Currently dietary supplements are the major market targeted by the herbal industries due to the difficulties in passing drug regulatory tests like the U.S. Food and Drug Administration (FDA)[26]. However, recognizing the growing popularity of TCM in the U.S., the FDA introduced Guidance for Industry Botanical Drug Products which lowers the stringent drug regulatory requirement for these products, potentially enabling the transfer of dietary supplements into new drugs. In 1998, Taiwan spent almost 6.0 % of GDP on health of which pharmaceuticals accounted for 25% of the amount, in which foreign pharmaceutical firms had 70% of the market share[27]. The TCM industry is being developed as a niche market that the Taiwanese government wishes to succeed in this well-established global pharmaceutical sector.