‘Hypertension·hyperlipidemia generics are pricier in KOR'

“Hypertension·hyperlipidemia generics are up to 10 times more expensive in Korea than other countries"

“For 20 or more simultaneously listed same-ingredient generics, price should be set at 85% of the lowest drug price"

MOHW reveals results through the final report on measures to improve the generic drug pricing system

According to a government study, generic drugs for some indications, such as those for the gastrointestinal system, hypertension, and hyperlipidemia, are more expensive in Korea than in major overseas countries other than the United States, such as the United Kingdom, Switzerland, and Japan.

 

As of 2022, Korean generic hyperlipidemia drugs were more than 10 times more expensive than those in the UK and 3 times more expensive than those in Japan, while those for hypertension were 2 times more expensive than those in the UK and 3 times more expensive than those in Japan.

 

Based on such findings, the study concluded that the government may directly reduce the price of hypertension and hyperlipidemia drugs with more than 20 generic listings.

 

The researchers proposed the government consider a policy that collectively reduces the price of hypertension and hyperlipidemia drugs to 85% of the lowest price when 20 or more items are listed at the same time.

 

In addition, it was suggested that the domestic generic drug price system should be converted to an indirect price reduction structure, in which the drug price is reduced when the number of listed items increases above a certain level.

 

"Domestic generic drugs for gastrointestinal system-hypertension-hyperlipidemia are more expensive than in overseas" The Ministry of Health and Welfare compared the generic drug prices in South Korea with the "A8" countries (the United States, the United Kingdom, Germany, France, Japan, Italy, Canada, and Switzerland) for 323 ingredient-dose drugs that contain 160 ingredients in 5 efficacy groups Specifically, the study compared the Price-to-Consumer (PTC) price rather than the Price-to-Pharmacists (PTP) price as PTPs in countries abroad include pharmacy dispensing fees and are not comparable to domestic prices.

 

When comparing the PTC price based on the buying power index, the A8 countries' drug price index in 2022 ranged between 0.52 to 0.86 and was lower than Korea's index except for diabetes drugs and antibiotics which were 1.66 times and 1.81 times higher, respectively.

 

Excluding diabetes drugs and antibiotics, generics for gastrointestinal drugs, hypertension drugs, and hyperlipidemia drugs were about 14% to 48% more expensive in Korea than in the A8 countries.

 

In particular, the study looked at the drug prices of the 7 individual countries other than the U.S., given that the U.S.

 

has a relatively high drug price among the A8 countries.

 

Results showed that generics in 3 out of 5 therapeutic classes in Canada were more expensive than in South Korea, while in Germany antibiotics, in Switzerland antibiotics, and UK gastrointestinal drugs and antibiotics were more expensive than in South Korea.

 

Except for these, the price of hyperlipidemia drugs in most countries was 0.09 to 0.41 times less expensive than those in Korea.

 

This means that hyperlipidemia drugs were priced at 9% to 41% of the price of the same in Korea.   In addition, the ratio of original to generic drug prices was below 0.5 in most countries, whereas it was closer to 1 in Korea.

 

"20 product criteria for differential pricing of generic drugs is adequate" The study analyzed the market share of the top products by drug market segment and found that the top 20 products accounted for more than 90% of the market in most cases, and 60% in the lowest cases, indicating that the top 20 products dominate the market.

 

This means that the current threshold of 20 products set for differential pricing of generics is sufficient to motivate companies to enter the generic market and to maintain the generic market within an ingredient.

 

In addition, the researchers added that the market share of the top 10 products ranges from 50% to 80%, which accounts for a significant portion of the market but is not considered sufficient to maintain the market.

 

Therefore, according to market logic, the price of ingredients with multiple products should be allowed to be reduced, and policy mechanisms should be put in place to compensate for the market failure of ingredients that no longer enter the market.

 

"For drugs that have 20 or more generics listed simultaneously, setting its price at 85% of the lowest drug price should be reviewed" The study concluded that the comparison of domestic generic prices with those of A8 countries showed price differences by drug class and ingredient and that there are limitations to applying a one-size-fits-all approach.

 

Since the domestic generic drug price level is not unilaterally higher or lower than foreign countries across all efficacy groups and varies by efficacy group, the research diagnosed that the generic policy currently in place should be observed so it could show effect, then be reviewed again and modified.

 

Nevertheless, in terms of maintaining the appropriateness of the generic drugs’ price level, the study suggested the government introduce price-reducing measures for multiple listed ingredients.

 

                                In particular, the study pointed out that hypertension and hyperlipidemia drugs have many products listed and are expensive compared to foreign countries, so the price of items with more than 20 listed products can be directly reduced.

 

The study suggested the government consider a policy that unilaterally reduces the price of hypertension and hyperlipidemia drugs to 85% of the lowest price when “20 or more products are listed at the same time.”