New drug expenditure is 13.5% of NHI finance's drug spending

KRPIA has presented research outcome of 'Analysis of pharmaceutical spending on new drugs by disease'

New drug expenditure in the highest costing disease category is relatively lower than the international average

Emphasizes the need to improve the pharmaceutical cost expenditure system and reimbursement for severe disease treatments

It was found that the total expenditure on new drugs listed in the past six years since the Positive List System policy was implemented amounted to 13.5% of the National Health Insurance pharmaceutical spending, which is the lowest compared to the averages of A8 countries and OECD countries.

 

The Korean Research-based Pharmaceutical Industry Association (KRPIA) announced the research outcome of 'Analysis of pharmaceutical spending on new drugs by disease,' conducted by Seung-Rae Yu, a Professor at Dongduk Women's University's College of Pharmacy, on October 22nd.

 

The research evaluated new drugs listed from 2007 to 2022 when the Positive List System policy was implemented to allocate financial resources to drugs.

 

The document compared the performance to 25 OECD countries besides South Korea.

 

The research aimed to set the analysis period to the past 6 years (2017-2022) and to investigate financial analysis reflecting the outcome of the government's policy implementation to strengthen patient access to new drugs.

 

It researched disease types contributing to patient deaths and compared domestic and overseas new drug expenditures in diseases with the highest financial burden, by analyzing pharmaceutical costs by disease.

 

The percentage of new drug expenditures in South Korea (red), OECD countries (green), and A8 countries (blue).

 

The percentage of new drug expenditure in South Korea

Based on the research, the percentage of new drug expenditure in South Korea's total pharmaceutical cost amounted to 13.5%, which was below half of those in A8 countries, 38.0% on average, and in OECD countries, 33.9% on average.

 

The analysis suggests that the figure would be the lowest among 26 countries.

 

The analysis of the trend in the percentage of new drug expenditure from 2017 to 2022 indicates that the differences between Korea and the average for A8 countries grew significantly, amounting to almost a threefold difference in 2022.

 

In particular, the total expenditure on new drugs was merely 15-25% of those in A8 countries, including the U.K., France, Italy, and Canada, which are similar in population and GDP per capita.

 

The research analyzed the financial cost of disease by comparing a weighted index of disease·injury·risk factor, including death·disorder, by country, and new drug expenditure through the analysis of pharmaceutical cost by disease.

 

The percentage of expenditure on new drugs for treating tumors was 46.2% for South Korea, not significantly different from 54.4% in the OECD on average.

 

However, the percentage of expenditure on new drugs for treating cardiovascular diseases was 20.2% for the OECD on average and 2.4% for South Korea.

 

Furthermore, the neurological disease category was 30.1% and 4%, respectively.

 

The respiratory system category was 43% and 6.7%, respectively.

 

They showed that Korea's percentages were merely 1/10th of the OECD countries' average, indicating relatively poor patient access to treatments.

 

In other words, Korea showed significantly lower expenditures in the top-costing disease category, including the cardiovascular system, neurological system, and respiratory system, compared to those of the OECD and A8 countries.

 

The analysis of the trend in the percentage of new drug expenditures in South Korea (red) and the average for A8 countries (blue).

The research pointed out that despite a continuous increase in National Health Insurance reimbursement in the past, reimbursement for severe·high cost diseases started to decrease since 2022.

 

The expenditure index of the number of new drugs and pharmaceutical cost by reimbursement category shows that the number of new drugs listed under the economic evaluation exemption program or essential program amounts to merely 11.6% and 3.6%, respectively.

 

These drugs are needed to enhance patient access to severe disease treatments.

 

The percentages of these drugs in the total pharmaceutical cost were 0.6% and 0.3%, which is relatively low.

 

Additionally, the percentage of new drugs listed after undergoing economic evaluation out of the total number of listed new drugs was 26.8%.

 

Excluding drugs in the antitumor category, it is merely 14.5%, indicating that the percentage of listed new drugs that are found to have values for improving clinical effectiveness is relatively small.

 

"After implementing the Positive List System policy, the percentage of pharmaceutical cost in the total medical cost was aimed at about 24%, and it has been maintained.

 

However, it seems that setting the new drug expenditure in the total pharmaceutical cost lacked specific aim and direction," said Yu.

 

"From a financial viewpoint, we need to consider differences in the percentage of new drugs in Korea to other major countries and set the priority to strengthen reimbursement of treatments, including reimbursement of innovative new drugs, for diseases with high cost." "The percentage of new drugs in National Health Insurance-supported pharmaceutical cost is significantly lower than those of overseas, indicating that Korean patients are not fully benefiting from new drug treatments," Lee Young-shin, vice chairman of the KRPIA, said.

 

"The system may need improvements, including the economic evaluation and expanding economic evaluation exemption and risk sharing agreement system, to enhance patient access to innovative new drugs and to allow them to have a better lifestyle."