Drug expenditures surge due to the use of high-priced drugs

Due to the increased use of high-priced anticancer drugs and orphan drugs

Total drug expenditure in 2023 amounts to KRW 26.196 trillion...8.5% year-on-year increase

Twice high growth rate compared to Korea’s total health expenditures...drugs account for 23.6% of the expenditures

Drug expenditures have risen significantly in 2023 due to the rising cost of high-priced anticancer drugs and rare disease treatments.

 

Due to the aging population increasing the expenditures spent on treating chronic diseases, an urgent need has arisen to come up with a measure to reduce drug expenditures.

 

According to the National Health Insurance Service (NHIS, President: Ki-suk Jung), the total drug expenditure in 2023 was KRW 26.196 trillion, an 8.5% increase from the previous year (KRW 24.1542 trillion).

 

This is twice as high as the 4.7% year-on-year increase in total medical expenses (KRW 110.8029 trillion) in 2023.

 

The proportion of drug expenses in medical expenses also increased by 0.8 percentage points year-on-year to 23.6%, which indicates that the increase in drug expenditures has exceeded the critical level.

 

As of 2022, the proportion of drug expenditures in Korea's current health expenditures was 18.0%, 3.8 percentage points higher than the OECD average of 14.2%, and ranked 7th among OECD countries.

 

One factor contributing to the rapid increase in drug expenditures is the recent increase in reimbursement expenditures for high-priced anticancer drugs and rare disease treatments.

 

Under the Comprehensive National Health Insurance Plan, the government has been expanding health insurance reimbursement coverage for cancer and rare diseases with high drug costs and promoting drug reimbursement for essential drugs needed for treatment in comprehensive consideration of the social and clinical needs, cost-effectiveness, public acceptance, and financial condition.

 

In 2022, 22 drugs, including the acute lymphocytic leukemia drug Kymriah, were covered, and the scope of use was expanded for 7 drugs, including immuno-oncology drugs such as Keytruda.

 

In 2023, 24 drugs, including the spinal muscular atrophy drug Evrysdi, were covered, and the scope of use was expanded for 8 drugs, including those for severe atopic dermatitis.

 

As a result, as of 2023, the cost of reimbursed drugs used to treat cancer and rare and difficult diseases increased by 10.8% and 9.7% year-on-year to KRW 3.8402 trillion and KRW 2.5492 trillion, respectively, outpacing the growth rate of overall drug expenditures (8.5%).

 

By age group, patients in their 60s accounted for the highest proportion (25.2%) of drug expenses at KRW 6.6 trillion, followed by those in their 70s (KRW 5.2 trillion), 50s (KRW 4.4 trillion), then 80s (KRW 3.1 trillion).

 

Those aged 60 and over accounted for 58.1% of all drug expenses.

 

By type of medical institution, pharmacies accounted for the highest amount of KRW 18 trillion (68.9%), followed by tertiary hospitals (KRW 3.8 trillion), general hospitals (KRW 2.2 trillion), and general clinics (KRW 1.1 trillion).

 

By efficacy group, arteriosclerosis drugs (hyperlipidemia drugs) accounted for the largest expenditure of KRW 2.849 trillion, followed by anticancer drugs (KRW 2.7336 trillion), blood pressure lowering drugs (KRW 2 trillion), peptic ulcer drugs (KRW 1.3904 trillion), then diabetes combination drugs (KRW 1.3667 trillion).

 

Due to the aging population and westernized dietary habits, hyperlipidemia drugs have taken the top spot in recent years, followed by drugs for chronic diseases (hypertension, diabetes, and hyperlipidemia).

 

By ingredient group, the top-ranked drug was the combination of ezetimibe + rosuvastatin for hyperlipidemia, an atherosclerosis drug, posting KRW 605.8 billion.

 

This was followed by choline alfoscerate (brain function enhancer, KRW 563 billion) > atorvastatin (hyperlipidemia drug, KRW 558.7 billion) > clopidogrel (antithrombotic drug, KRW 417.9 billion) > rosuvastatin (hyperlipidemia drug, KRW 337.7 billion).

 

The second-ranked drug, choline alfoscerate, has seen a 104.3% increase in spending over the past 5 years (KRW 275.6 billion in 2018 → KRW 563 billion in 2023).

 

The drug is undergoing clinical reevaluation by the Ministry of Food and Drug Safety to prove its therapeutic effectiveness through clinical trials, and for proper prescription management of the drug, HIRA has recommended institutions refrain from prescribing it for diseases other than dementia as a screened item from 2022, but expenditures on the ingredient have not decreased.

 

“Drug expenditures are steadily increasing due to the inclusion of new drugs such as high-priced anti-cancer drugs and gene therapies in the reimbursement list and expansion of reimbursement standards, as well as the increase in chronic diseases caused by the aging population,” said an NHIS official.

 

”We will continue to increase coverage so that people can use the drugs they need for medical treatment on time, but will expand the analysis of drugs that are misused or unnecessarily prescribed to prepare management measures to protect health insurance finances while promoting public health.”