US pressures MFNs to cut drug prices

calls for RSA adjustments and dual pricing system

Need to expand refund-type RSA to ease U.S. trade pressure

Refund-type RSA should be applied to new drugs, anticancer drugs, and orphan drugs by “Non-innovative companies” In-Hwa Choi, "Should apply dual pricing to imported drugs to partially resolve U.S. trade disputes"

As the US Trump administration pushes hard for Most Favored Nation (MFN) drug pricing policies, voices are growing within the industry that Korea should mitigate trade pressure by expanding the “risk-sharing agreement (RSA),” the key tool used during drug pricing negotiations in the reimbursement process.

 

Industry representatives are arguing that non-innovative pharmaceutical companies’ new drugs developed for export, as well as anticancer and orphan drugs introduced through open innovation, should also be included in the refund-type RSA scheme.

 

The industry insisted that the dual pricing system—currently applied only to exported drugs to allow higher external list prices—should also be extended to imported drugs.

 

This would increase Korea’s freedom from U.S.

 

pharmaceutical trade pressure while improving patient access.

 

The Ministry of Health and Welfare acknowledged that Korea’s current drug price disclosure system is excessively transparent, creating disadvantages in international trade and exports, and promised to actively consider reforms such as refund-type RSAs and the dual pricing system.

 

This signals a green light for system improvements in line with industry demands.

 

On the 15th, Democratic Party of Korea lawmakers Yoon Kim and Youngseok Seo co-hosted a National Assembly debate on “Future Directions for the RSA System.” Professor Jeonghoon Ahn (Ewha Womans University, Department of Convergence Health Policy) who presented at the debate, explained that Korea’s drug prices significantly affect global markets.

 

Initially, Korean drug prices were unofficially referenced by Asian countries.

 

In 2013, Saudi Arabia formally included Korea as a reference country, followed by Canada in 2019, which greatly expanded Korea’s global pricing influence.

 

Given that the US.

 

MFN drug pricing policy under the Trump administration undermines the profitability of Korean drug exports, Prof.

 

Ahn stressed that RSA expansion is necessary to address the issue.

 

Ahn said, “Limiting RSAs only to anticancer and orphan drugs is far too restrictive compared to many advanced countries.

 

If export-bound Korean drugs were also eligible for RSA, they could benefit when entering the US market.

 

It is time to consider RSA expansion given the changing external environment.” “Refund-type RSA should also be applied to non-innovative pharmaceutical company’s anticancer drugs and rare disease drugs” Hee-Sung Kang, Head of the External Affairs Team at Daewoong Pharmaceutical, who participated as a panelist, expressed the opinion that expanding the scope of drugs eligible for the refund-type RSA would benefit domestic pharmaceutical companies pursuing export-focused strategies.

 

When included as price reference countries in China, Southeast Asia, and BRICS nations, refund-type RSAs would allow higher list prices to be maintained while controlling domestic budget impact.

 

This strategy would improve both domestic and global access to new medicines.

 

“The March 2023 revision of the Drug Decision and Adjustment Criteria limited refund-type RSAs to innovative drugs developed by innovative pharmaceutical companies.

 

But considering the reality of Korea’s pharmaceutical industry, new drugs from non-innovative pharmaceutical companies developed for export, as well as anticancer and orphan drugs introduced through open innovation, should also be eligible.” He added: “This would help maintain high list prices at the time of local reimbursement, reduce concerns about reference pricing by overseas developers, and ultimately expand treatment options for domestic patients.

 

Even in cases of post-marketing price cuts, if companies can choose refund-type RSAs, companies can preserve list prices while securing market trust.” “Applying dual pricing system to imported drugs could resolve U.S.

 

trade issues” In-Hwa Choi, Director of the Korean Research-based Pharmaceutical Industry Association (KRPIA), stated that the Trump administration's push for MFN drug pricing and the increased likelihood of high tariffs should not be viewed merely as external pressure.

 

Instead, she urged using this as an opportunity to supplement and innovate the structural weaknesses of the domestic drug pricing system.

 

Most importantly, Choi called for revising the refund-type RSA system, which distinguishes between list price and actual price.

 

She noted that Korea’s drug price disclosure system is highly transparent, which is advantageous in some respects but creates structural disadvantages in international negotiations.

 

As a solution, she proposed extending the dual pricing system—currently applied only to exported drugs—to imported drugs as well.

 

“Korea introduced the dual pricing system in March to allow higher list prices for exported drugs to prevent the risk of unfavorable, low drug pricing abroad.

 

If we extend this system to imported drugs as well, we can partially resolve supply stability risks that may arise under the MFN trade environment.” Choi also suggested rebranding the dual pricing scheme under a new name, such as “Korean-style refund system,” to avoid misunderstandings associated with the term.

 

“Other countries also use alternative terms like MEA or claw-back system,” she said.

 

She concluded: “The K-refund system could become a strategic innovation model that helps Korea manage trade uncertainties while improving both patient access and industrial competitiveness.

 

Patients would benefit from timely and stable treatment; the government would gain fiscal efficiency; and the industry would strengthen global competitiveness—a true win-win solution.” MOHW “RSA, U.S.

 

MFN, and other external changes in addition to industry demands necessitate improvements and development” Yeon-Sook Kim, Director of the Division of Pharmaceutical Benefits at MOHW, emphasized that the ministry's principle for national health insurance reimbursement of pharmaceuticals is ‘timely reimbursement of effective drugs’.

 

Kim acknowledged that the RSA system is at a point where development is needed in response to changes in the external environment and the pharmaceutical industry's demands.

 

She also agreed on the need to closely monitor and respond swiftly to the significant domestic impact of the Trump administration's trade pressure regarding most-favored-nation (MFN) drug pricing.

 

Yeon-Sook Kim, Director of the Division of Pharmaceutical Benefits at MOHW

She admitted that Korea’s single-payer national insurance system, with its fixed patient co-payment model, has limited flexibility.

 

This, combined with high transparency in drug pricing, has sometimes caused “unintended disadvantages” for pharmaceutical companies.

 

Regarding whether South Korea's new drug prices are truly low, Kim mentioned there is much debate among experts and responded with the intention to partially improve the transparent drug price disclosure system.

 

Kim said, “Operating within a robust public health insurance system inevitably leads to a lack of flexibility.

 

Consequently, while a highly transparent system has been established, we understand that pharmaceutical companies experience unintended harm and unfairness.

 

AS a result, the current drug price disclosure system is transparent, but it must be improved to address the inherent risk of being unreasonably disadvantaged.” Kim added, “While there was much initial debate about RSA, it is now making a significant contribution to Korea’s national health insurance.

 

However, it is time for it to evolve in response to changes in the external environment.

 

Various terms like RSA or dual drug pricing systems are being discussed, and the government will actively and promptly review the drug pricing system.”