PVA price cut rate will be raised by up to 15%

A higher discount rate to be applied to higher priced drugs…using a differentiated formula

Claims amount limit for exclusions will be raised from KRW 2 billion to 3 billion

From next year, items with higher insurance claims will be subject to higher price cuts when negotiating prices through the Price-Volume Agreement (PVA) system.

 

The maximum price cut rate is also expected to be raised to 15% from the current 10%.

 

However, the exclusion limit will also be raised to KRW 3 billion from the current 2 billion won, which is expected to increase the range of small and medium-sized products that benefit.

 

The National Health Insurance Service reportedly held a public-private consultative body meeting with the Korea Pharmaceutical and Bio-Pharma Manufacturers Association and shared the plans above on the 15th.

 

With this public-private consultation meeting as its last, the NHIS will prepare a final draft with the Ministry of Health and Welfare and apply the changes from January next year.

 

However, changes requiring revision of notifications will be implemented after April next year.

 

A change that does not require revision of the notification – changing the formula to be applied differently according to the claims amount – will be implemented from January next year.

 

Based on the threshold of KRW 30 billion, a higher reduction rate will be applied for higher claims amounts.

 

However, the range of items that are exempt from being applied PVA will be expanded.

 

Currently, drugs with insurance claims of less than KRW 2 billion are excluded, but the plan is to raise this criterion to KRW 3 billion.

 

In addition, a measure has been put in place to adjust the reduction rate or provide refunds for items with temporarily increased usage due to infectious disease situations or unstable drug supply, such as in the case of respiratory drugs that were sued for COVID-19.

 

Furthermore, the innovative drugs mentioned will be recognized for their fair value, and the reduction rate will be lowered for innovative new drugs.

 

If an innovative drug is subject to negotiation 3 times in 5 years, the discount rate will be reduced further during the third negotiation.

 

The maximum reduction rate will be raised from the current 10% to 15-20%, with 15% being the most likely rate considering the range deemed acceptable by the pharmaceutical industry.

 

The rate is expected to be implemented after April next year as it requires revision of the notification.

 

The PVA improvement plan has been discussed with the pharmaceutical industry through a public-private consultative body after the results of the ‘A study on the performance of the Price-Volume Agreement System and measures on its improvement’ that Professor SeungJin Bae from Ewha Womans University's College of Pharmacy participated as the principal investigator, was released in April.

 

The contents shared during the final public-private consultative body meeting were also based on the results of the research service.

 

However, the final draft excluded the research service’s proposal of adding items whose claims had increased by 10% and exceeded by over KRW 5 billion in Type A of the PVA system, which the pharmaceutical industry responded most sensitively to.