Assessment of Practice where Insurers Offer Additional Coverage for Cancer Treatment through Riders

Mr Yip Hon Weng asked the Minister for Health (a) in the past year, what is the proportion of cancer patients who have exceeded the annual claim limits of $1,200 from MediShield Life and $600 from MediSave for their cancer treatment; (b) what assistance is available for such patients; and (c) whether the Ministry will consider creating a separate claim category for the coverage of elective cancer drug services to avoid exceeding the claim limits for essential cancer drug services.

Mr Yip Hon Weng asked the Minister for Health (a) how will the implementation of enhanced riders offered by Integrated Shield Plan (IP) insurers to offset limits on oncological treatment coverage affect the Ministry's efforts to curb rising costs of cancer treatments in Singapore; (b) whether MediSave will be permitted to pay for premiums of these riders and, if so, whether this will contradict the Ministry's intent to impose limits on cancer treatment coverage; and (c) whether policyholders who opt for these enhanced riders will be required to have a minimum co-payment of their medical bills subject to a cap each year.

My response will also cover the matters raised in the questions by Mr Louis Chua1 and Mr Saktiandi Supaat2 which are scheduled for a subsequent Sitting. I would invite Members to seek clarifications, if need be. If their questions have been addressed, it may not be necessary for them to proceed with the questions for future Sittings.

Let me first provide some facts that have been requested. The annual number of Singapore Citizens and Permanent Residents who received cancer drug treatment and services increased from 22,500 in 2017, to 31,500 in 2021, which is a 40% increase. Eighty-four percent received treatment in Public Healthcare Institutions, or PHIs, and 16% in private medical institutions. This proportion has remained stable over the past few years.

A Member asked about the adequacy of the MediShield Life claim limit for cancer drug services. We have received similar feedback earlier and have recently increased the claim limit for cancer drug services from $1,200 to $3,600 per year. So, it has increased by three times. This is sufficient to cover the essential cancer drug services incurred by more than nine in 10 subsidised patients in our PHIs.

Other Members raised concerns that generous insurance coverage, especially Integrated Shield Plans, or IPs, and IP plus riders provided by commercial insurance companies, will continue to contribute to the rapid escalation of cancer drug prices. I thank the Members for sharing the Ministry of Health's (MOH's) concern which gave rise to the recent policy changes.

But first let me explain the key reasons for the rapid rise in cancer drug prices over the past years.

Firstly, as a small market, Singapore lacks the negotiating power and can pay higher procurement prices. With the Cancer Drug List, or CDL, announced in August 2021, drug companies have lowered their prices in order to include their drugs in the CDL so that they can get financing coverage, namely subsidy, plus MediShield, MediShield, MediShield Life and IP coverage. Since these changes, we have negotiated an average cost reduction of 30% for most drugs, and over 60% for some drugs.

We can plough the money saved on procurement costs into more subsidies. Annual Government spending on cancer drug subsidies increased from about $12 million for about 50 drugs before the CDL announcement in August 2021, to around $80 million for more than 100 drugs from September 2022.

Secondly, because of the high level of anxiety surrounding cancer, high-cost cancer treatments are often prescribed even where costs are not commensurate with the established clinical benefits. Overseas studies have found that about half of new cancer treatments were introduced without evidence of benefit to survival or quality of life. However, patients and their loved ones all hope for a cure.

"As-charged" insurance policies, including IPs and riders, are policies where coverage can be effectively limitless and patients have limited co-payment; they further encourage this practice where non-cost-effective cancer treatments are prescribed. These are "as-charged" insurance policies.

The CDL also addresses this issue. It sends a strong signal to patients and doctors to use clinically proven and cost-effective treatments, which are covered by subsidies and MediShield Life from 1 September 2022 and IPs from April 2023.

There are riders which can still cover non-CDL treatments, but with the policy changes effected by the CDL, the costs of these treatments will have to be reflected in the rider premiums, rather than loaded onto MediShield Life and IP premiums for the broad majority. In other words, the high cost of non-cost-effective drugs will not be socialised.

Thirdly, the mark-up of cancer drugs by some healthcare providers may be quite significant. This is, again, encouraged by "as-charged" IPs and riders, which provided for effectively limitless claims.

MOH had, in 2018, taken steps to moderate this by requiring all new riders to have a minimum co-payment of 5% and typically capped at $3,000 a year, for treatments from panel doctors. From 1 April 2023, we took another step to require IPs to set claim limits for cancer drug treatments, instead of having no limits at all. So, the IPs ceased to be "as-charged".

For cancer drug treatments, most IPs provide coverage of up to five times that of the MediShield Life limit for treatments on the CDL. This is sufficient to cover cost-effective CDL treatments at up to 2.5 times that of unsubsidised PHI prices.

A few Members have also raised concerns that the new CDL limits for riders – such as 18 times of the MediShield Life claim limits – continue to be high and can push up cancer drug prices.

MOH shares the concern. We will review how to improve the transparency of cancer drug prices to help patients make informed decisions and encourage providers to calibrate their mark-ups.

We are also monitoring cancer drug claims and coverage closely and will work with the Monetary Authority of Singapore (MAS) to take further steps to regulate IPs and riders if costs continue to escalate.

In the meantime, we urge individuals to consider the long-term cost of the insurance products they purchase against the level of protection they need. The fact is that our CDL is more extensive than similar listings in most developed countries, including South Korea, Australia and the United Kingdom.

MAS also requires insurance intermediaries to properly assess if a health insurance product is suitable for a customer's needs and financial situation before recommending the product to the customer.

Mr Speaker, Sir, I thank the Minister for his reply. I have two supplementary questions. First, would the Ministry be prepared to work with the Ministry of Trade and Industry (MTI) and the Competition and Consumer Commission of Singapore (CCCS) to develop a platform like Price Kaki, which will allow patients to compare cancer drug prices across the public, as well as the private hospitals and clinics? Second, pharmaceutical companies may be selling the same medications to Singaporeans at higher prices than other countries with comparable economic situations. Would the Ministry be prepared to work with MTI and CCCS to investigate this?

Thank you. The first question is a good idea. I think MOH can work on this together with the Singapore Medical Council and the medical community, without involving the CCCS. Such price transparency itself will be quite useful. So, it is something that we will study and I had mentioned that in my reply.

On the Member's second question, differential pricing across countries, this is widely practised by many global suppliers, including by pharmaceutical companies. I should first say that pharmaceutical companies are our close partners in healthcare. During the COVID-19 pandemic, they are the ones who provided us with vaccines and a way out of the COVID-19 pandemic crisis. So, they are our partners.

But we also understand that they incur quite a lot of research costs which have to be recovered through drug costs when something is approved and able to be distributed. In so doing, they too, maximise their revenue by pricing the drugs in different markets differently. So, differential pricing is commonly done. Internationally, this is not considered something illegal; neither can MTI or CCCS do anything about it, because they do not have the extraterritorial power.

But what we have done through the CDL, is that it gave us some negotiating leverage to talk to the pharmaceutical companies, to say, "Please lower the prices for the drugs that you supply to Singapore. If you do so, it crosses our cost-effectiveness threshold, it can be in the CDL, and therefore, it can be subsidised and enjoy MediShield Life claims."

So far, we have been quite successful. I should reiterate a point raised in my former reply just now. Today, our CDL is actually quite extensive and, in fact, longer and more comprehensive than many similar listings in many developed countries around the world.

Thank you, Mr Speaker. Just one supplementary question for the Minister. I understand that the CDL is a positive development for our healthcare system. But at the same time, a lot of the insurers are responding very quickly to this legislation and introducing various riders. I understand from the Minister's response that the Ministry is looking into this. So, my question is whether the Ministry will look into whether insurance companies are profiteering from this. And eventually, the concern is whether or not this could all end up as higher premiums for the various policyholders as a result.

I thank the Member. Before I directly answer the question, let me explain what is happening now.

In the past, as we know, MediShield Life provides the basic level of protection. Above that, there is IP; and above whatever IP does not provide, riders would provide. So, you look at the cake as three layers.

In the past, what happens is, an IP has limitless claims. We call this "as-charged". But it requires some co-payment and riders to sit on top of IPs to cover part of the co-payment. But with the recent changes, that relationship has been flipped. Because an IP now has quite a strict coverage of four, five times of MediShield Life. So, IP has lower coverage; it also does not cover so many drugs because non-CDL drugs are no longer covered; IP coverage has shrunk. But now, the ballon is squeezed out into the rider space. Insurance companies now come in with riders with 18 times coverage – so, not "as-charged" but 18 times or a very high absolute number.

I think there is an impact now where it is no longer "as-charged" but the entire IP plus rider is now capped, albeit a very high cap. I think we need to monitor this. The way consumers respond will be quite key. If consumers heed our advice, that if you just look at our CDL which is quite comprehensive and that IP coverage is actually quite adequate; and if they stick to just buying IP, then I think the problem can be addressed.

When it comes to the riders, they should look at the price. Riders have to price in higher coverage plus more drug coverage, so they will be priced higher; and you cannot use MediSave – you can only use cash.

So, if rider demand goes down and most people think IP is enough for them, I think we have addressed the problem. But if consumer behaviour does not change and consumers continue to buy riders, notwithstanding high premiums, then, I think I agree with the Member, we may have a problem. In which case, as I had mentioned just now, together with MAS, we will be prepared to regulate IPs and riders.

The Member mentioned the word "profiteering". I am not sure I would describe the insurance sector that way. I think they are competing. I am not sure they are profiteering from it. But because they compete, they try to fight for market share, they offer a wide coverage – sometimes, it is, in the long term, not very sustainable for their business.

In healthcare, it is a very complex system. Regular market economics do not quite work and if need be, if we have to regulate, we will do so.

Speaker, can I ask the Minister one supplementary question: will the payout, the claims on the rider, affect the MediShield Life greatly?

Based on the current design, our sense is "no", because now, we have isolated MediShield Life and IP with the CDL, with a limit. So, the rider itself is an outlet; and we can cover more drugs and higher limits, and it should be priced accordingly.

So, we will observe. My sense is that based on today's design, the answer is "no". In the past, the answer is "yes", and it is not fair to the great majority who do not use non-cost-effective drugs.