Price of 17 items cut 30% during Type C PVA negotiations

17 items that are owned by innovative pharmaceutical companies

36% increase in reductions for drugs with claims over KRW 30 billion annually

64 items were excluded from negotiations due to revised guidelines

The National Health Insurance Service (NHIS) has announced that it has achieved health insurance financial savings of KRW 52.1 billion (USD 52.1 million) through ‘Type C’ Price-Volume Agreement (PVA) negotiations this year.

 

This is an 85.5% increase from the KRW 28.1 billion in the previous year.

 

In particular, the revision of the detailed operating guidelines contributed to a 36% increase in the price reduction rate of high-cost drugs that billed more than KRW 30 billion per year compared to before the guidelines were revised.

 

The National Health Insurance Service (President: Ki-suck Jung, NHIS) announced that it has completed negotiations for 63 product groups (207 items) subject to the 2024 PVA 'type Type c negotiations, of which the price of 162 items will be reduced unilaterally as of September 1, and the remaining 45 items have signed a one-time refund agreement.

 

‘Type C’ negotiation is held once a year, and this year's negotiation was conducted for drugs whose claims amount in 2023 increased by '60% or more' compared to 2022, or '10% or more and the increased amount exceeds KRW 5 billion', and the pharmaceutical companies and the NHIS negotiated to reduce the drug price or make a one-time reimbursement of the claimed amount based on the reduction rate.

 

This year's negotiations were the first to apply the 'Detailed Operating Guidelines for PVA Linkage Negotiations,' which was revised in May after collecting opinions from the 2023 System Improvement Council, which included the Ministry of Health and Welfare, NHIs, and the pharmaceutical industry.

 

The main improvements included ▲differentiation of the reference formula used to link the claims amount ▲raising the exclusion criteria to improve the acceptability of pharmaceutical companies and encouraging R&D ▲one-time reimbursement contract ▲introduction of a reduction rate reduction system, to practically improve the financial savings.

 

As a result, the price reduction rate of high-costing drugs that billed more than KRW 30 billion per year increased by 36%, compared to how guideline revision due to the improvement of the reference formula linked to the amount of charges.

 

The NHIS also reported that the efficiency of system operation was improved by raising the criteria for claims that are eligible for exclusion of pricing negotiation, which excluded 64 items, helping to resolve difficulties faced by small and medium-sized pharmaceutical companies.

 

In addition, the NHIS claimed that it applied a one-time reimbursement contract for 45 items whose usage temporarily increased due to unavoidable reasons, such as the COVID-19 pandemic crisis, instead of reducing drug prices to ensure a stable supply of medicines.

 

In addition, the NHIS explained that it enhanced the sustainability of the pharmaceutical industry ecosystem by setting a price reduction rate of 30% for 17 items that had undergone negotiations 3 times within 5 years among innovative pharmaceutical companies.

 

As a result, this year's 'type c’ negotiations resulted in health insurance financial savings of KRW 52.1 billion, up 85.5% from the 28.1 billion won in the previous year.

 

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“Considering the increasing trend of health insurance drug costs due to the aging population and chronic diseases, the importance of PVA negotiations in the post-management of drug prices is becoming increasingly important,” said Yoo-kyung Yoon, Director of the pharmaceutical management division at NHIS.

 

”We will continue to strive to improve the sustainability of health insurance and reduce the actual burden of drug costs on the public through effective PVA negotiations.”