Adverse pharmaceutical payment incentives and providers' behaviour: The emergence of GP-owned gateway pharmacies in Taiwan

Yue Chune Lee*, Kuang Hua Huang, Yu Tung Huang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Scopus citations


Objectives: We investigated whether a 2002 pharmaceutical payment reform policy, which provided adverse incentives, fostered an increase in market share of 'gateway pharmacies' (G-pharmacies - pharmacies owned, operated and located by the same clinics that prescribe medicines); what the financial impact of G-pharmacies to the clinics is; and what factors determine whether a clinic decides to open a G-pharmacy. Methods: Using the database of the National Health Research Institutes, we collected secondary data on all of Taiwan's National Health Insurance prescription claims from pharmacies and clinics between 1997 and 2003. A G-pharmacy was defined as a pharmacy in which more than 70% of the prescriptions it filled came from the same clinic, which prescribed at least 900 prescriptions monthly, more than 70% of which were released to the pharmacy. Trend plot and frequency were used to analyse the distribution of G-pharmacy data. Logistic regression was used to explore what factors determined whether a clinic decided to open a G-pharmacy. Results: After the 2002 reform, the percentage of total prescriptions filled by G-pharmacies reached 78.71%, the increase in percentage (15.23%) was the highest ever and significant (P < 0.01). The reform's adverse payment incentives resulted in a loss of NT$1.86 billion New Taiwan dollars to all clinics and resulted in a reduction in Taiwan's 2003 fee schedules under the global budget payment system. The decision to establish a G-pharmacy was associated with a clinic's being located in less urbanized areas, being a group practice, having higher patient volumes, being a general practitioner, and being privately owned. Conclusion: The 2002 reform's adverse incentive fostered a significant increase in the market share of G-pharmacies, and reduced the earnings of clinics which did not own them. It is necessary to break the link between profits from pharmaceutical sales and physician prescribing behaviour to prevent the conflict of interest in how medicines are prescribed.

Original languageEnglish
Pages (from-to)427-435
Number of pages9
JournalHealth Policy and Planning
Issue number6
StatePublished - Nov 2007


  • Dispensing policy
  • Drug prescribing
  • Gateway pharmacy
  • National health insurance
  • Pharmaceutical costs
  • Provider payment


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