‘Bioequivalence tests rather intensified price cuts'

Even though generic companies conducted them to follow government policy

Generic drugs that maintained their insurance price by demonstrating bioequivalence are at a ‘disadvantage’ in price-volume agreement negotiations

The lowered average price of substitute drugs results in larger price cuts during PVA negotiations than using the reference formula

Companies that cooperated with government policies and demonstrated bioequivalence should not be harmed by post-marketing control measures

The pharmaceutical industry is calling for improvements as their drugs that have completed bioequivalence tests per the government’s insurance price ceiling reevaluations may face larger price cuts under ‘Type C’ of the Price Volume Agreement negotiations this year.

 

Generic drugs that have completed bioequivalence tests during the insurance price ceiling reevaluations have maintained their existing prices.

 

On the other hand, the price of a number of drugs that were unable to demonstrate bioequivalence was cut, leveling the weighted average price of the same ingredient drugs (substitutes) downward.

 

The higher the price of the drug in negotiations as compared to the weighted average price of its substitutes, the greater the price reduction, putting the bioequivalent drugs at a relative negotiating disadvantage.

 

According to industry sources on the 11th, the price difference between the weighted average price of the negotiated drug and the weighted average price of the equivalent drugs became larger and is expected to increase the price reduction of the respective drugs during PVA negotiations.

 

According to the government’s Detailed Operating Guidelines for PVA Negotiations, the weighted average price of substitute drugs is one of the considerations used to adjust the reference price used in negotiations.

 

According to Article 11 of the guidelines, considerations for adjusting the negotiated reference price include: ▲ the impact of the increase in claims of the negotiated drug has on the reduction or increase in insurance finances ▲ the impact of the negotiated drug on the weighted average price of the entire market, which includes substitute drugs.

 

The substitute drugs for ‘Type C’ PVA are drugs with the same ingredient and route of administration as the negotiated drug.

 

As the weighted average price of same-ingredient drugs has been leveled downward due to price ceiling reevaluations, their impact on the weighted average price of negotiated drugs whose prices have been maintained by demonstrating biological equivalence is bound to increase.

 

"As the weighted average price of substitute drugs has been leveled downward, the bioequivalent drugs may be regarded to have an adverse effect on national health insruance finances, resulting in been larger price cuts than that made using the reference formula during PVA negotiations.” said a pharmaceutical industry representative.

 

In other words, the greater the price difference is between the negotiated drug and the weighted average price of its substitutes, the greater the price reduction may become with increased usage.

 

The generic drugs that have demonstrated bioequivalence will be losing out because their price was maintained during the previous negotiations, rendering the price difference greater compared with the weighted average price of its substitutes, which were leveled downward.

 

The pharmaceutical industry has been expressing frustration as the bioequivalence tests they conducted to comply with government policy are being used against them.

 

The insurance price ceiling reevaluations on generics took place last year and this year to improve the quality of generic drugs.

 

The government pulled out the bioequivalence card to improve quality after a number of generic products were found to contain NDMA and other carcinogens in their ingredients, including the hypertension drug valsartan.

 

Generics that have proven their bioequivalence were allowed to maintain their prices, while generics that were easily approved through contract manufacture had their prices reduced.

 

The government’s intention at the time was to save only those drugs that took the time and expense to prove their viability from penalties, but instead, the bioequivalent drugs are being penalized through the post-marketing control system.

 

In response, the industry is calling on the government to find a way to improve the system so that those who cooperated with government policy are not disadvantaged during PVA negotiations.

 

For example, the government plans to negotiate PVA drugs to reflect the contribution of items that increased production or were used to treat infectious diseases through information cooperation to address the unstable drug supply and demand issue last year.

 

The pharmaceutical industry believes that the PVA guidelines should also reflect the drugs’ contribution to improving drug quality.

 

"The more the items that have not demonstrated bioequivalence there are, the lower the weighted average price of substitute drugs, and the more expensive the bioequivalent drugs may appear to be, resulting in a larger negotiated price cut," said an industry official.

 

"It is unreasonable to try to further cut drug prices just because they are relatively expensive during PVA negotiations, even though they are being well sold for abiding with government policy."