Delayed actual transaction price cuts slash expected savings

Despite completing the investigation last year, the government will not likely implement the system before the upcoming general election

Critics say that the inclusion of drugs in short supply and National Essential Drugs is a “strict measure”

The implementation of the actual transaction price system intended to reduce the drug price has been postponed.

 

Since the system was initially scheduled to take effect in January, the price monitoring investigation reached conclusion.

 

However, the price adjustments are being delayed for various reasons.

 

Pharmaceutical companies may benefit from the delay, but it results in financial loss for the National Health Insurance Service (NHIS) due to reduced effects of financial savings.

 

According to industry experts on the 22nd, the price cutting of the actual transaction prices of drugs has been repeatedly delayed.

 

It is unlikely to be implemented in March as it has not been included in this year’s Health Insurance Policy Review Committee agenda.

 

Since the post-listing price cuts following the re-evaluation of the upper price limit are scheduled to begin in March, price cutting of the actual transaction prices of drugs is expected to be postponed.

 

This delay is intended to allow the payer to take effective management of returns and budgets into account.

 

However, it is unclear whether the policy changes will take effect in April.

 

Financial savings may be negatively affected due to the delay in policy implementation.

 

The government implements an actual transaction price system biannually.

 

This system investigates the actual prices of drugs distributed in hospitals, except for national and public hospitals.

 

If a drug’s actual price distributed is lower than the upper limit price, it is subject to a discount rate of 10%.

 

The investigations exclude low-priced drugs and drugs that have been listed as shortage prevention drugs (SPD).

 

The NHIS can expect financial savings through the system.

 

The 2019 actual transaction price investigation resulted in price cutting of 3900 drugs, leading to annual financial savings of 42.1 to 112.9 billion won in 2020 and 2021, according to ‘Research on the comprehensive improvement of the actual transaction price system based on the effectiveness evaluation (P.I: Professor Kim, Jinhyun of Seoul National University).’ According to government data, adjusting the upper limit price of 3829 drugs based on the actual transaction price investigation resulted in a net estimated financial savings of 79.6 billion won in 2022.

 

Since a price cutting of drug prices based on the actual transaction price investigation saves a minimum of 40 billion won annually, 10 billion savings in the first quarter are estimated to be lost due to delays in the implementation.

 

The Ministry of Health and Welfare (MOHW) stated that the price cuts of the actual transaction price have been delayed because their review of National Essential Drugs and drugs in short supply is incomplete.

 

The implementation timeline will be decided later, according to the MOHW.

 

Every month, the price of drugs on the drugs shortages list has been increasing.

 

In March, The prices of 49 items of tulobuterol patch are expected to increase by an average of 13.9% of the upper limit price.

 

An additional designation of National Essential Drugs is planned for the first half of the year.

 

However, critics argue that the NHIS is causing financial losses by delaying the price cuts not only for drugs under investigation but also for those where investigations have already concluded.

 

The point is that the drugs in short supply or National Essential Drugs represent only a small fraction of the items investigated for actual transaction prices, and these can be adjusted during post-management.

 

Another point is that the government is refraining from taking risks before the upcoming general election.

 

The government may proceed with implementation cautiously because price cutting of drugs in short supply may lead to public criticism.

 

“Is the government reluctant to take risks before the upcoming general election, despite their goal of efficiently managing finances by assessing the financial structure of national insurance?” a pharmaceutical industry representative emphasized.

 

“If the government continues to delay the implementation, their expected financial savings will be reduced,” a representative added.