‘Exclude GER and CAN or cut price by 50% less'

during external reference pricing reevaluations

Industry proposes two options regarding the government’s plan for external reference pricing reevaluations…government will deliberate and make the final decision

As the government is pushing for external reference pricing reevaluations, the pharmaceutical industry has proposed two alternatives: excluding Germany and Canada from the A8 countries used for comparison or reducing the drug price cut rate by 50%.

 

The government is reportedly reviewing the proposed options.

 

The industry has taken a hardline stance, stating how it will not go through with the government’s external reference pricing reevaluation plan as is in its current state.

 

According to industry sources on the 12th, the industry officials that participated in the 10th meeting for the external reference pricing reevaluations that was held on the 5th proposed the options above.

 

The industry suggested that 6 countries (the U.S., Japan, the U.K., Switzerland, France, Italy, and the U.K.) should be used as reference, excluding Germany and Canada, which have different drug pricing systems from Korea and will inevitably render significant losses when comparing the countries’ public reimbursement benefits.  Germany and Canada use external reference pricing systems.

 

Under the reference pricing system, only generics below a certain price are granted listing, so the reimbursed public price of drugs is significantly lower than that of Korea, which may increase the losses rendered by domestic pharmaceutical companies.

 

The pharmaceutical industry is also reported to have proposed a plan that reduces the drug price reduction amount by 50% when Germany and Canada are included.

 

This is a method that has been applied in past external reference pricing reevaluations.

 

"Including the public reimbursement prices applied in Germany and Canada in Korea’s reevaluation is quite unreasonable on the industry’s part," said an industry insider, adding, "Considering how the reductions in the drug price cut amount were applied in the past, it shouldn't be a big problem this time around.” The insider added, “The government is well aware of the damage that adding Germany and Canada will bring to the industry, so I believe it will accept one of the two options we have proposed today.” The current sources of external reference prices in the MFDS’s regulations are the U.S.

 

Redbook (wholesale prices), the U.K.

 

MIMS (pharmacy prices), the German Rote Liste (pharmacy prices), the French French Public Drug Database (ex-factory prices), the Italian Codifa (ex-factory prices), the Swiss Specialties List (ex-factory prices), the Japanese Ministry of Health, Labor and Welfare's Drug Price Standard (pharmacy price), and the Canadian PMPRB & Ontario Drug Benefit Formulary (ex-factory prices) However, the government's proposal became controversial because it had calculated the external reference price of drugs for reevaluation based on the price that is publicly reimbursed or similarly paid.

 

Therefore, it is expected that the government will soon decide on the issue of applying the drug prices in Germany and Canada or reducing the cut amount by 50% and finalizing its draft.