Comprehensive Health Insurance Plan to be released soon

After the delay…will it include measures to promote generics?

Industry expects drug price improvements to spur new drug development

“In addition to reflecting the innovative value of generics, measures are needed to nurture generics”

With the government's plan to announce the 2nd National Health Insurance Comprehensive Plan being postponed from December last year to January of this year, the pharmaceutical industry is anxiously awaiting what policy direction will be included in the new plan regarding drug expenditures.

 

The pharmaceutical industry’s wishes are that the plan should include policies to promote and revitalize domestic generics and incrementally modified drugs that can serve as cash cows in securing research and development (R&D) investment costs for new drug development.

 

On Jan.

 

1, the Ministry of Health and Welfare is known to be in the final stages of formulating the second health insurance plan, which will be in place for 5 years from this year (2024) to 2028.

 

The MOHW had aimed to release the plan in December last year, but postponed the announcement, saying it needed more time to reflect the newly announced policies.

 

This implied that the MOHW was not finished organizing the policies it had finalized last year, such as setting a public policy fee to support essential healthcare and the reform of the drug pricing system to reflect innovation value, into the comprehensive plan.

 

The industry’s eyes are on the drug expenditure management direction that will be included in the new health insurance plan.

 

In particular, domestic pharmaceutical companies are concerned that if the MOHW includes a new mechanism for reducing drug prices in addition to the post-listing reimbursement management of generic drugs that are already in place, this will dampen the industry’s drive for new drug R&D.

 

In the study on the establishment of a comprehensive health insurance plan released by the Korea Institute for Health and Social Affairs in October last year, no mention had been made of the need to introduce a new drug price reduction model for generic drugs.

 

However, the study suggested a policy to expand the targets subject to reevaluation for drug reimbursement adequacy review and to reevaluate generics by comparing their drug prices with the overseas A8 countries (Japan, France, Germany, Italy, Switzerland, the United Kingdom, the United States, and Canada).

 

It also revealed plans to improve the effectiveness of the actual transaction price investigation and management system, reorganize the targets of the Price-volume Agreement system, and revise its formula.

 

Furthermore, the MOHW had set criteria for easing the application of the PVA system for drugs made by innovative pharmaceutical companies or equivalent in the reform plan for the drug pricing system that recognizes the innovation value of drugs.

 

Despite such improvements, domestic pharmaceutical companies are nervous as the MOHW is still known working on a drug price reduction model for generics.

 

A domestic pharmaceutical company official said, "We hope that the new health insurance plan will not include a new price reduction mechanism.

 

We also need to up with a reasonable reorganization plan for the post-listing management measures that are already in place.

 

Also, we would like to discuss the permanence of the drug price reduction dispositions." The official added, "Although a drug pricing system that reflects innovation value has been introduced, it is partly focused on new drugs or essential drugs with low monetization.

 

We need more measures to encourage generic development, which is the source of cash generation, to strengthen Korea’s new drug development momentum.” Another domestic company official said, "I hope that the MOHW will hold a closer ear to the voices of companies with the aim of advancing post-management mechanisms including the PVA system.

 

In the big picture, I hope that the new plan will include short- and long-term policies to save health insurance finances and revitalize the pharmaceutical market to exceed the performance made this year.”