Speech by Mr Ong Ye Kung, Minister for Health, at Singapore Cancer Society's Gala Dinner, 2 September 2022, 7.30pm, at The Ritz-Carlton, Millenia Singapore

Mr Wee Leong How, Chairman of Singapore Cancer Society

Mr Albert Ching, CEO of Singapore Cancer Society

Donors

Ladies and gentlemen

1.     It is my great pleasure to join you here at the Singapore Cancer Society’s (SCS) Gala Dinner. Tonight, we recognise the tenacity of cancer patients, and express our appreciation to those who have supported them through all their difficult journeys.
2.     These include the doctors and medical personnel who take care of patients; donors who play a big part to defray the cost for patients; and also the relentless efforts of the SCS in advancing cancer prevention and screening over so many years.

Good Work of SCS
3.     For example, currently, about 89,000 women have benefitted from SCS’ Mammogram Funding Assistance, which made the cost of each mammogram as low as $25 at selected screening centres. This is with government subsidies plus SCS’ help.

4.     In February this year, SCS and Temasek Foundation launched the Temasek Foundation human papillomavirus immunisation programme to prevent cervical cancer for young girls from low income families. To date, over 2,600 girls have benefitted from this initiative.

5.     SCS provides physical and emotional support for cancer patients and survivors, who face challenges with diet, joint pain, fatigue, discomfort and side-effects. However, cancer patients are currently not systematically assessed for such needs during and immediately post-treatment.

6.     To make it more convenient for patients to access such services, SCS will open two rehabilitation centres at the National Cancer Centre Singapore and National University Cancer Institute, Singapore. This brings treatment and rehabilitation – both of which patients are in great need of – under one roof.

7.     To continue its good work, SCS needs your support. The rehabilitation programmes and psychosocial services I just mentioned takes up $2 million of donors’ funds every year. In the last three years, the Cancer Treatment Fund, which funds the treatment costs of cancer patients with affordability issues, has disbursed about $1 million annually to help about 200 patients every year.

8.     I hope you will bestow SCS with your kind generosity, so that it can continue to ease pain, and save and restore lives.

Latest Policy on Cancer Drug Prices
9.     Donations ensure the costs that befall a few can be shared by broader segments of society – donors essentially – and the patient does not face the full brunt of cancer and the cost alone. Subsidies and insurance work the same way, except that the cost of treatment is spread out or socialised to all taxpayers and insurance policyholders respectively. Such arrangements are needed to help individuals weather the uncertainties of life.

10.     However, I have come to realise that healthcare is a far more complex system than say education, transport or housing. Subsidies and insurance, which are designed to help lower costs for individuals, can produce perverse and unintended effects that harm patients in the longer term. That is why some countries can spend a large part of their gross domestic product (GDP) on healthcare, yet healthcare continues to be inaccessible and unaffordable, and health outcomes are also not that satisfactory.

11.     That has led the Government to make some adjustments to policies pertaining to cancer drugs, which came into effect yesterday, on 1 September 2022.

12.     I know this must be an issue on the minds of many of you. It is a rather technical, rather detailed subject, and different people understand the subject differently. Since I am standing before donors who have a heart for cancer patients, let me try tonight to explain the situation, the problem we are facing, and how the latest policy change can address these problems.

Reining in Cancer Drug Prices
13.     The central issue is the cost of cancer drugs, and it is driven by two factors.

14.     First is how the pharmaceutical industry prices drugs. Pharmaceutical companies spend a lot of money to research and develop new drugs. Many of these efforts fail. When an effort succeeds, the new drug is typically protected by a patent. This means the new drug will have no competition for a defined period of time, several years.

15.     During this period, pharmaceutical companies set the prices of new drugs, taking into account all the costs they spent in development and clinical trials – not just for the drug that succeeded, but also the drugs that failed.

16.     At the same time, pharmaceutical companies often adopt differential pricing for different markets in order to maximise their revenue, recover their high cost. One factor is the size and income levels of the market. All else being equal, big markets with more marketing power can negotiate down the price. But for small countries – like Singapore, a small market and perceived by others to be more affluent – drug prices here can be higher.

17.     We do not like this situation, but it is the reality of the global pharmaceutical industry.

18.     The second factor is the specific policies adopted by Governments on subsidies and insurance. Here, we have unintentionally put ourselves at a further disadvantage where it comes to cancer drugs.

19.     In Singapore, we aim to achieve affordability of cancer drugs mostly through insurance. So MediShield Life provided a flat $3,000 per month coverage for all cancer drugs.

20.     Integrated Shield Plans (IPs) offered by private insurance companies cover costs over and above MediShield Life. In fact, they generally covered costs on an as-charged basis – meaning for what is incurred, they will cover them, albeit sometimes with a small co-payment.

21.     The combined effects of pricing practices and our policies did not help make cancer drug prices more affordable and in fact had the opposite effect. Let me explain how.

22.     MediShield Life coverage was $3,000 per month, regardless of treatment cost. So if a treatment costs less than $3,000 per month, say $500, and there are many cancer drugs of that price range, there was no incentive for the supplier to charge anything less than $3,000.

23.     As a result, we ended up paying higher prices for many cancer drugs in Singapore, compared to markets like Australia, New Zealand, South Korea, Taiwan and the United Kingdom.

24.     To give an example, a drug for colorectal cancer (Lonsurf) is known to cost patients around $2,500 in Australia. But in Singapore, it costs patients over $4,500 in public hospitals, and up to sometimes $10,000 in private cancer clinics. As a small market, it is difficult for us to summon enough negotiating power to bargain the price down.

25.     For treatments that genuinely cost more than $3,000 per month, public hospitals and many private oncologists will try to keep the cost to the patients as low as possible. But prices in certain private clinics can be much higher, especially if the patient has an IP that covers expenses almost in full.

26.     The Ministry of Health (MOH) cannot rule out too that there may be some buffet syndrome at play here – since insurance coverage is generous, and patients with cancer want to do whatever it takes to save their lives, we can afford to charge higher prices.

27.     What is the outcome of all these factors? Cancer drug spending has more than doubled from about $110 million, to around $275 million over the past five years. Increased incidence alone cannot explain this. If left unchecked, it is expected to grow at another 20% every year, which means cancer drug prices will further double every three to four years. 

28.     One may ask: what is the problem even if cancer drug prices increase sharply? After all, I am fully covered by insurance and the drugs are still almost free to me if I am covered by MediShield Life and IP.

29.     Except nothing is really free. Ultimately someone still pays for it. In this case, rising cancer drug prices will feed into insurance premiums. Private hospital IP premiums have already gone up by around 20% over the past few years. At this rate of increase, in five years’ time, someone in their 50s probably have to pay about $300 more in annual premiums. 

30.     Rising premiums mean two things. One, those who did not fall sick will have to pay more premiums to cover those who unfortunately fell sick. Two, those who find rising IP premiums too expensive and unaffordable may choose to drop IP coverage. And if they fall sick, they are left in a lurch.

New Policies
31.     The new policy that will be implemented in phases from yesterday will be able to address most of the problems today. 

32.     First, we will no longer allow a flat $3,000 monthly claim for MediShield Life for cancer treatment. It will be differentiated by cost of the treatment, ranging from $200 to $9,600 per month. This is a straight-forward solution.

33.     Likewise, we will also require treatment-differentiated IP claim limits. Together, they will provide greater incentive for drug companies and providers to price cancer drugs more competitively.

34.     Second, we have expanded cancer drug subsidy for cost-effective cancer drugs at public hospitals, to lower the price to patients. We are subsidising more drugs than before, and also expanded the eligibility criteria.

35.     Specifically, we have raised the qualifying per capita household income threshold from $2,800 to $6,500 per month. With these changes, subsidy for cancer drugs is expected to increase from $12 million this year to about $80 million from next year onwards. 

36.     The question is, which treatments will get covered by MediShield Life and IPs? This leads to the third important policy change. 

37.     We will maintain a Cancer Drug List (CDL), where only those treatments in the list are eligible for MediShield Life and IP claims. To get into the list, pharmaceutical companies must jump through two gates.

38.     They must first apply to register the drug with the Health Sciences Authority (HSA). Then, they submit evidence on its clinical value to the Agency for Care Effectiveness (ACE), which is under MOH.

39.     Once HSA registers the drug after confirming its safety and effectiveness, and ACE assesses that the price offered is at a reasonable price compared to its clinical benefits, the drug can be listed on the CDL.

40.     It may appear counter-intuitive as some people may think this means no financing, no insurance claim for expensive drugs, and subsidy coverage is only for cheaper drugs. But that is not the case. The approach really means no financing for over-priced drugs, and financial coverage for reasonably priced drugs.

41.     By taking this approach, the CDL now gives us negotiating leverage to bring down prices of cancer drugs based on available evidence.

42.     To illustrate, if a pharmaceutical company charges us a very high price that cannot be justified, we say the treatment cannot be in the CDL, cannot be subsidised and cannot be eligible for insurance claims. If the company lowers the price to a cost-effective level, we will include it in the CDL and make it eligible for subsidy and insurance claims.

43.     The policy’s announcement in 2021 has had an immediate effect. There are 190 HSA-approved cancer drugs in Singapore. More than 90% of them have made it into the CDL. Most of the drug prices were reduced, on average by 30% and some as high as 65%, in order to get into the CDL.

44.     In the coming months or few years, we expect more, hopefully almost all, to enter the list. By then, we would have almost achieved status quo ante, with almost all approved cancer drugs in the CDL and eligible for MediShield Life and IP claims, except that they would all be at reduced prices, for the benefit of patients and insurance policyholders. 

Assurances
45.     The challenge is that in this transition process, while we are negotiating, there will be patients and other stakeholders who are affected, and we need to address their concerns.

46.     I will start with concerns from pharmaceutical companies. We have had conversations with them, and they understand why we had to make this policy change, and are prepared to improve the prices and other terms of some of their HSA-registered treatments.

47.     For certain treatments, say newly developed ones, we may be in the process of negotiations, and pharmaceutical companies would like to have them in the CDL in the interim, while we negotiate, so that they are eligible for insurance claims. We can accommodate that request, if they agree to lower prices and other terms, while we conduct further negotiations on the details.

48.     The second concern is from oncologists. They also understand the need for the policy but are concerned that if insurance no longer covers treatments outside the CDL, their ability to prescribe these treatments will be very severely curtailed.

49.     They feel that at least, IP riders and other private insurance plans which are purely commercial products should continue to cover treatments not on the CDL.

50.     MOH understands their concerns. We do not have objections for purely commercial insurance products covering treatments not on the CDL.

51.     In fact, the Life Insurance Association Singapore (LIA) has announced today that all IP insurers intend for their riders to provide coverage beyond the CDL. They will adopt a common drug classification framework with clear definitions. The framework was developed by LIA, in consultation with the Chapter of Medical Oncologists and Singapore Society of Oncology.

52.     These products’ premiums will reflect the additional coverage, and those who can afford them can buy them. The difference is we no longer socialise the additional costs of treatments not on the CDL amongst all MediShield Life and IP policyholders.

53.     The third concern is from insurers, who are increasingly feeling that the current escalation in drug costs is not sustainable. Recently, there were some newspaper reports saying insurers intend to raise premiums for IPs.

54.     All these policy moves are to make cancer treatment accessible and affordable to patients, and these will in turn moderate rising insurance claims. The insurers understand this, and they have pledged not to review IP premiums for two years. The details have been announced by LIA today.

55.     Fourth, and most important, is the impact on patients. We hope with this move, we can make effective cancer treatments more accessible and affordable to all future patients. But there will be mid-flight patients, meaning those who are in the middle of their treatment, using cancer drugs not on the CDL.

56.     We should avoid the situation where they will find the cost of their cancer drugs shoot up suddenly. We should make provisions, so that the impact on them should be minimal, if not, zero.

57.     Hence for patients who commenced treatments not on the CDL before 1 September 2022, we will provide additional support to them, to complete their treatment with no or minimal impact to their out-of-pocket expenses after MediSave withdrawals and MediShield Life claims.

58.     If these patients have IPs, insurers have committed to continue their current IP coverage at least until September 2023.

Closing
59.     I feel bad for bringing such a heavy topic into this Gala dinner. But it is important for me to explain what MOH is doing, and how we are minimising the impact on stakeholders during this necessary transition. After all, tonight we have a gathering of important stakeholders.

60.     In particular, we need to assure our donors that we are doing whatever we can, however difficult and complex, to ensure that their gifts are put to the best possible use, and go further in helping patients. I hope my explanation tonight has elevated your generosity by a notch or two.

61.     Thank you all once again. SCS has touched many lives. With all its education, financial and welfare services, and rehabilitation initiatives, SCS helps more than 100,000 individuals every year. Please continue to support them. I wish everyone an enjoyable evening.