Speech on motion debate “Drug Formulary and Drugs Subsidy System” (Translation):

President, I have analyzed the criticisms on the Drug Formulary (the Formulary) of the Hospital Authority (HA), and identified three major shortcomings in the system, namely, first, drugs expenditure as a share of total public healthcare expenditure is not high enough; second, the HA lacks an objective method to assess the "cost-effectiveness" of drugs; third, the threshold adopted by the HA's Samaritan Fund (the Fund) for providing subsidies on drugs purchase is too high. I will explain these points one by one.

First, drugs expenditure as a share of total public healthcare expenditure is not high enough. Just now, Miss Alice MAK also pointed out that at present, drugs expenditure only accounts for 10.5% in the HA's overall expenditure, while staff expenditure accounts for 71.6%. I am sure the Secretary will say that healthcare services is a labour intensive industry; but no matter how labour intensive it is, we cannot possibly allocate all resources to manpower, not to mention that I have no idea in what areas the HA has allocated the other resources because there are still 20% of resources left other than drugs and staff. Where have they gone?

We can look around globally and consider what should be the suitable level of drugs expenditure. In fact, it varies from country to country because the situation in each country is different. Some countries may have relatively more manpower, while others may be particularly affluent. Of the 34 member countries of the Organization for Economic Co-operation and Development just mentioned by Miss Alice MAK, the expenditure on drugs is the lowest in Norway (5.1%) ― it is in fact very strange that the share of drugs expenditure is lower in the relatively affluent countries because they are affluent; the share of drugs expenditure is the highest in Greece (32.5%) ― the share of drugs expenditure turns out to be greater in the relatively poor countries. What is the average percentage of these 34 countries? It is 14.4%.

Hence, in my amendment, I suggest that Hong Kong should strike a balance by setting the target at 15%. In respect of service provision, besides manpower, medication is equally essential; by the same token, it is improper to have medication without manpower. Hence, on balance, I suggest that the target should be set at 15% because as such, all self-financed drugs in the current Formulary of the HA could be reclassified as subsidized drugs. By increasing the share from 10.5% to 15%, drugs expenditure will be increased by over 40%, which can adequately solve the problem.

The second shortcoming of the Formulary is the absence of an objective method to assess the "cost-effectiveness" of drugs. Let us picture this: no matter the share of drugs expenditure is 10% or increased to 15%, there is a cap after all; but if an expensive drug at a cost of $500,000 can extend a patient's survival rate by one month, say, from 10 months to 11 months, should we use this drug?

The use of drugs also involves the competition for resources. For example, one drug can reduce the pain of rheumatoid arthritis patients, while another can treat cancer patients and extend their average survival rate from 12 months to 18 months. If the budget allows, both drugs should be provided to the patients in question. However, there are hundreds of illnesses, and hundreds of new drugs. If we can only afford seven out of 10 similar drugs, what should be done? Perhaps the HA could appoint Miss Alice MAK as Chairman of the relevant drugs committee so that she can make the decision. How would she decide? Ultimately, there should be an objective method for making decision.

Talking about "cost-effectiveness", Members may have some negative feelings about the term because the HA has always used "cost-effectiveness" as an excuse to reject the inclusion of expensive drugs into the Formulary. Let me tell Members a secret: the several committees under the HA in fact rarely conduct any "cost-effectiveness" assessment on drugs, or perhaps even the members do not know not how to conduct an assessment. If they do not know about it, how can the meeting proceedings be made public? Then how do the members make the decision now? Basically, it depends on how much funding is involved, which member in the committee is more bossy or vocal, and how many patients would be affected by the relevant drugs. If it is a very expensive drug that is used by only several tens of patients, it may be approved. But if it is a cheaper drug that is probably used by nearly 1 000 patients, it will be rejected for the members consider it unaffordable.

Internationally, how is a formal "cost-effectiveness" assessment on drugs conducted? Generally speaking, the effectiveness of a drug means its efficacy in the most direct sense, for example, the survival rate of cancer drugs. But if we are considering two different types of drugs ― one to reduce the pain of rheumatoid arthritis patients, and the other to treat cancer patients ― how should a comparison be drawn? It is like comparing oranges to apples. One method for assessing effectiveness is by evaluating the quality of life of patients. How to evaluate the quality of life? A questionnaire survey would be conducted to see how well the patients have been sleeping, how painful they are, how affected they are in their daily activities, and so on. As different diseases have different impacts on the quality of life of patients, the benefits of different drugs for treating different diseases can be compared by evaluating the quality of life of different groups of patients.

According to the standard adopted by the World Health Organization (WHO), the score on the quality of life, if considered in parallel with its validity period, will produce an indicator called "quality life years". According to the standard adopted by WHO, if the value of "quality life years" as expressed in monetary terms is less than three times the local per capita income, it is cost-effective. In Hong Kong's situation, if the value of "quality life years" of a drug is less than $430,000, the drug can be considered as cost-effective. Hence, no matter what change is made to the system, we need an objective standard to assess how funds should be allocated when resources are insufficient.

Third, the threshold adopted by the HA's Fund for providing subsidies on drugs purchase is too high. Just now, Miss MAK has already pointed out how unfair it is to calculate the income of all family members of a patient in the same household, particularly for elderly patients who live with their children. As the incomes of their children are also calculated, the elders concerned would often doubt whether they should live separately from their children.

Moreover, I want to talk about several points. As a matter of fact, the Formulary arrangement is extremely unfair to middle-class people given their significant contribution in terms of tax payment. As the provision of public healthcare services should be guided by the principle that the same service be provided to all people no matter they are rich or poor, there is no reason why middle-class people without affordability should have to pay more when they go to public hospitals for treatment since they have already paid their taxes, while the poor can get subsidies through the Fund.

Second, many public healthcare services are actually very expensive. For example, the cost of each liver transplant operation ― a surgery we are familiar with ― can be as high as $500,000-odd, or even $1 million. When these services are provided by public hospitals, the patient pays a fixed amount of $100 per day which includes the cost of all medication. Then why is Glivec ― the drug just mentioned by Miss MAK ― which incurs an annual cost of $200,000 not included in the Formulary? Why are some drugs included in the Formulary but not others?

Third, Members may not know there is a principle underlying the Formulary and the Fund, that is, if a drug is efficacious but very expensive, it will be covered under the safety net supported by the Fund. But I can tell Members that there is such a highly efficacious but extremely expensive drug for treating Mucopolysaccharidoses ― it is an extremely expensive drug which costs a patient $4 million each year. The authorities have included this drug as a special drug so that patients need not make any co-payment. Why is that so? Had this drug been covered under the safety net supported by the Fund, even if a patient has assets worth $20 million, given the present arrangement of patients making co-payment capped at 20% of their disposable financial resources, his entire saving will be exhausted by this drug in five years' time even though he has assets worth $20 million. Hence, as a policy, the system of the Formulary and the Fund is basically unfair to the middle class, and this policy has not been applied consistently.

I suggest that only income and not assets should be included in the calculation because generally speaking, a person's wealth should be commensurate with his income; otherwise, it would be a case for investigation by the Independent Commission Against Corruption. I suggest that when a patient's drugs expenditure exceeds 10% of his own income or his household income, the shortfall in the drugs fees should be paid by the Fund. Why do I suggest the cap at 10%? I suggest the 10% cap because in many countries with a compulsory healthcare insurance system, the relevant contribution rate is about 8% to 10%.

Thank you, President.