Parallel to the growth of other sectors within the National Health Insurance (NHI) in Taiwan, the drug expenditure has always accounted for one fourth of the total NHI expenditure annually. While most people pay attention to expensive drugs with the intention of cost control, a unique phenomenon within the pharmaceutical sector of the NHI in Taiwan should not be overlooked: the market is abundant in low-priced drug items. Among oral pills, 60% of drug items is cheaper than 2 New Taiwan dollars per unit and some even cheaper than 0.1 dollar. The seemingly unreasonable low prices might not guarantee the quality of pharmaceutical care in the period of transition and the sustainability of a healthy pharmaceutical industry in the long run. The phenomenon of low-priced drugs involves not only health policy and health care management but also the policy setting in pharmaceutical industry. In the current three-year project, we plan to both quantitatively and qualitatively analyze the phenomenon of low-priced drugs. In the first year, we will estimate the most recent pattern of the pharmaceutical market within the NHI, specifically stratified by drug unit price and drug grouping, after the construction of a time-sensitive data table of the complete historical drug prices within the NHI. In the second year, we will finish: 1. the threshold setting for low-priced drugs within the NHI, either wholly or by drug group, 2. the international comparisons in drug prices, and 3. the trend analysis of the market of low-priced drugs within the NHI from 1997 to 2010. In the third year, we will perform questionnaire, interviews or meeting with those partners involved in low-priced drugs, from pharmaceutical manufacturers, pharmacists, physicians to health insurance and industry authorities. The team members of the current project, including an economist, a physician and a pharmacist holding both academic and administrative positions, believe our professional experiences and research adeptness with the National Health Insurance Research Database will guarantee in-depth studies about the unique phenomenon of drug prices in Taiwan, have continuous international publications, and contribute to the field of healthcare management in Taiwan.