Korean gov. to introduce preferential drug pricing criteria

Focusing on ‘R&D, essential drugs, and jobs’

The 2nd NHI plan includes a revision of the post-management system, “Pharmaceutical companies contributing to the Korean economy will receive preferential drug pricing regardless of their innovative company status.”

Discussion with a public-private consultative body announced…In terms of generic drugs, the government will revise the drug pricing system and the post-management of drug pricing reduction.

Director Chang-Hyun Oh explained the pharmaceutical policy directions in the 2nd comprehensive National Health Insurance plan.

By the first half of this year, the government plans to establish a detailed criteria for ‘National Economic Growth,’ including the research and development (R&D) of new drugs and incrementally modified drugs, essential drugs supply, and new job creations, which will be the basis for preferential drug pricing intended for pharmaceutical companies in Korea.

 

The criteria will be used to implement a new policy aimed at enhancing preferential drug pricing benefits for pharmaceutical companies that have contributed to Korea’s economic growth.

 

The government has promised to strengthen drug pricing support using the National Health Insurance finance if a pharmaceutical company shows achievements, such as enhancing R&D efforts, alleviating essential drug shortages, and increasing hires, regardless of its status as an innovative pharmaceutical company.

 

Notably, the government has announced a plan to establish a new direction for generic drug pricing system.

 

The current stepwise pricing system for generic drugs was analyzed in research service report, upon which this revision is based.

 

On the 5th, Lee Joongkyu, Director of the National Health Policy at the Ministry of Health and Welfare (MOHW), held the meeting for the 2nd comprehensive National Health Insurance plan with the KSPA NEWS and announced the plan.

 

Chang-Hyun Oh, Director of Pharmaceutical Benefits, attended the meeting and answered the questions regarding the 2nd National Health Insurance plan in detail, including the drug pricing system and issues related to drug prices.

 

Pharmaceutical companies contributing to healthcare security and Korea economic growth will receive preferential drug pricing The 2nd NHI plan announced on the 4th by the MOHW contains policy objectives of assessing preferential drug pricing differentially based on companies’ contribution to improvement in citizens’ healthcare, considering the sustainability of NHI and national economic growth The plan outlines a vision to provide preferential drug pricing to pharmaceutical companies that advance healthcare and establish a stable supply chain.

 

This includes investing in R&D of innovative pharmaceuticals, such as new drugs and incremental new drugs, contributing to the supply of essential drugs, and creating new jobs opportunities.

 

Director Oh emphasized that the 2nd NHI plan is focused on contributing to economic growth and healthcare security.

 

Particularly, the plan includes various measures within the health insurance policy to encourage pharmaceutical companies to engage in the development of new drugs, incrementally modified drugs, and generics.

 

“The current health insurance plan includes discussions on assessing ICER value flexibility and implementing measures to reduce drug pricing if a company positively contrivutes to Korean medical healthcare through substantial investment in R&D, as well as job creation,” said Oh.

 

“Compared to the current incentive system, the revision may yield more improvements because the development of new drugs, incrementally modified drugs, and combination drugs can help healthcare finances.” Oh also mentioned that regardless of a company’s status as an innovative pharmaceutical company, the policy of higher drug pricing will apply to pharmaceutical companies that contribute to Korean economic growth.

 

A reference criteria for preferential drug pricing will be set in the first half of this year after working with a public-private consultative body comprised of the MOHW and pharmaceutical companies, Oh answered.

 

Oh stated that they plan to revise the qualification criteria for innovative pharmaceutical companies to make them less stringent.

 

“Additionally, we will consider creating an administrative system that provides drug pricing benefits to companies that do not qualify as innovative pharmaceutical companies but have made significant contributions to the healthcare industry and health insurance finances through their R&D investments,” Oh said.

 

“We will put our efforts into formulating the criteria of preferential drug pricing by the first half of this year.” “In the 2nd NHI plan, we have suggested a course of direction.

 

We will hear from industry experts in a public-private consultative body to discuss drug pricing index, systemization, and ratios.

 

We have not yet decided on the execution date, but we will implement the system soon,” Oh commented.

 

The MOHW will look into the revision of the generic drug pricing system and the post-management system of drug pricing The MOHW will assess whether the post-management drug pricing system should be revised as well, in addition to enhancing administrative measures for better patient access and considering revision to the drug pricing system of generic drugs.

 

Since July of last year, the MOHW has initiated research with a team led by Professor Dong-Sook Kim at Kongju National University under the government contract to work on evaluating the necessity of restructuring Korea’s drug pricing of generic drugs and to devise revision.

 

The MOHW is currently finalizing the research.

 

Comparing Korea’s drug pricing system for generics to the overseas drug pricing system, the research aims to evaluate whether the current step-wise drug pricing system is valid.

 

Specifically, the research team will analyze whether it is appropriate to set the number of items, differentially priced at 53.55~38.69%, that receive differential drug pricing to 20, should drug prices of generics be maintained at 53.55% of the originals before the patent expires, and whether it is necessary to differentially set the drug prices of generics to 53.55% once the patent of the originals expires.

 

The research includes the post-management methods, including the price-volume agreement.

 

Oh has announced that they will begin working on amending the drug pricing system and the post-management of generic drugs this year after completing the research and a comprehensive review of the post-management system,.

 

However, the execution date will be determined later “after gathering opinions from patients, pharmaceutical companies, and experts.”