Good pharma companies will receive better drug price

Companies that show good ‘new drug R&D and employment’ performance will receive more preferential drug prices

MOHW promises benefits for companies that drive health security and national economic growth in Korea

Government will expedite the reimbursement listing of innovative new drugs that demonstrate effectiveness and safety, and expand subjects to benefit from the system

Plans to prepare a plan for the reform of the generic drug pricing structure within the year

The government decided to further enhance the preferential drug pricing benefits for pharmaceutical companies that have contributed to public health and economic development in Korea, such as by increasing R&D investment in new and incrementally modified drugs, creating many jobs, and supplying essential medicines.

 

The government will promote innovation in the pharmaceutical industry by overhauling the existing system that only provides preferential treatment – a drug price at the highest level among its substitutes - for companies that supply essential drugs or receive a new drug approval for the drug for the first time in Korea.

 

It will also continue expanding insurance coverage through measures such as reflecting the value of innovative new drugs that demonstrated high therapeutic effects in severe and rare diseases in the drug price, and expediting and expanding the number of targets that benefit from health insurance coverage.

 

Furthermore, the government plans to prepare measures for drug price reevaluations, high-priced drug management, and advancing the generic drug pricing structure.

 

These are the contents of the 2nd Comprehensive National Health Insurance Plan (2024-2028) that was released by the Ministry of Health and Welfare on February 4th.

 

Basically, the ministry will strengthen economic support using health insurance finances for pharmaceutical companies that have made achievements in innovating healthcare, health security, and national economic development.

 

The changes were made as part of the government’s efforts to create a system that reflects the growing public and social demand for innovative medical technologies that provide new treatment opportunities for patients with severe and incurable diseases or are more cost-effective than existing technologies.

 

In terms of health security, the government plans to support the establishment of a basic infrastructure to enable the domestic supply of essential medicines that are directly related to the life and health of the people so that the drugs can be stably produced in Korea even if there is a disruption in the overseas supply chain.

 

Pharmaceutical companies that contribute through drug innovation, or drive national development, etc.

 

will benefit from higher drug prices The Ministry of Health and Welfare will improve policies to strengthen access to innovative new drugs.

 

First, it will continue to expand coverage for highly effective severe and rare disease treatments.

 

The order of the reimbursement listing will be prioritized based on disease severity, availability of alternative drugs, superiority of treatment, cost-effectiveness, and financial burden.

 

It will also continue to expedite health insurance listing of new drugs for life-threatening diseases.

 

The approval, evaluation, and negotiation linkage system that has been implemented will reduce the time required for health insurance reimbursement from 330 days to 150 days.

 

To be eligible for the parallel review system, the drug has to have no alternative and be a treatment for a life-threatening disease, demonstrate a significant improvement in clinical effect compared to existing drugs, and be approved for fast-track review by the MFDS.

 

The MOHW will also expand eligibility for expediting listings.

 

Currently, the expedited listing system is being piloted in 2 rare pediatric disease groups - neuroblastoma and hereditary cholestatic stasis – based on which the scope of diseases eligible for fast-track registration will be expanded from 2025.

 

New drugs that are recognized as innovative will be able to receive expedited listing support by recognizing their economic feasibility even if their incremental cost-effectiveness ratio (ICER) exceeds a certain level.

 

The drug pricing premiums provided for each pharmaceutical company will also be expanded.

 

The MOHW believes that it is necessary to calculate drug prices differently based on the company’s degree of contribution to improving public health, health sustainability, and national economic development.

 

Therefore, the ministry will prepare a mechanism that provides preferential drug prices to pharmaceutical companies that have led healthcare innovation and contributed to building a stable supply chain by investing in R&D for new and incrementally modified drugs, supplying essential drugs, and creating jobs.

 

Currently, only companies that supply essential medicines that received a new drug approval for the drug for the first time in Korea receive a preferential price at the highest price level of its alternatives.

 

The government will improve patient access to drugs by expanding risk-sharing system (RSA) treatments for serious diseases that cause significant and irreversible deterioration in quality of life.

 

Reinforce the system for the stable supply of essential medicines In terms of health security, the MOHW will monitor the supply and demand of national essential medicines as well as frequently prescribed drugs such as cold medicines to immediately respond to any abnormalities that may arise.

 

The price of national essential drugs made with domestic ingredients will receive preferential treatment.

 

First, in the case of newly designated national essential medicines, this drug will be given preferential drug prices over other generics when the main ingredient of the generic drug is produced domestically.

 

Drug prices will also be raised quickly to resolve the issue of unstable drug supply.

 

The MOHW is preparing a procedure to quickly raise drug prices of drugs that have become difficult to produce due to rising costs that arose due to their unstable supply and demand after COVID-19.

 

By simplifying the review process based on the criteria for adjusting the insurance price ceiling and concurrently progressing with the NHIS drug pricing negotiations, the MOHW plans to reduce the time required for drug price increases from '210 days+@' to '30 days+@.’ In addition, the MOHW will continue to improve the adequacy of compensation for drug shortage prevention drugs by reflecting manufacturing costs.

 

It will expand the scope of national essential medicines that are eligible for drug price increases and differentiate support to specific classifications.

 

The upper limit for Korean herbal medicine formulations will also be adjusted.

 

Considering the rising cost of APIs and strengthened manufacturing and quality control regulations, the government will consider raising the insurance price ceiling for herbal medicines based on the results of a field survey.

 

Will reduce drug expenditures through drug price reevaluations, management of high-priced drugs, restructuring of generics, etc. The MOHW will establish an integrated price adjustment mechanism for reasonable drug cost management.

 

First, it will prepare a mid to long-term strategic plan to unify the currently fragmented mechanisms for adjusting the price ceiling.

 

Starting this year, the ministry will conduct policy research on establishing a mid- to long-term strategy.

 

The MOHW will also review patent-expired drugs and adjust the price if their domestic price is higher than their highest price in foreign countries.

 

In the case of reevaluating patent-expired drugs, the government plans to start with chronic disease drugs that have a large number of generics.

 

However, drugs that require a stable supply, such as antidepressants, will not be subject to reevaluations.

 

In addition, the management of high-priced drugs for serious diseases will be strengthened.

 

To reduce the patient’s burden of medical expenses as well as the government’s health insurance finances, various types of risk-sharing systems, including outcome-based reimbursement, will be applied to newly listed drugs.

 

The MOHW will also strengthen follow-up management of high-priced drugs for serious diseases based on patient safety and medical effects.

 

It will also rationalize the price-volume agreement system, improving such as increasing the price cut rate for drugs that have a high claims amount or expanding the subjects that can be excluded from being subject to PVA.