[Reporter’s View] KRPIA pulls out ‘structural reform' card

to reorganize NHI's drug expenditures structure and enable better access to new drugs

The Korean Research-based Pharmaceutical Industry Association (KRPIA) has pulled out the ‘expenditure structure reform’ card as a solution to finance new drug expenditures.

 

Although the message seems somewhat familiar, it is a new and unprecedented request.

 

On the 4th, KPRIA released the results of 'A study on the analysis and rationalization of drug expenditures for new drugs in Korea' conducted by Professor Jong-Hyuk Lee from Chung-Ang University’s College of Pharmacy.

 

Study results showed that the expenditures spent on new drugs from the national health insurance finances accounted for 8.5% of total drug costs and 2.1% of the total national health insurance medical costs.

 

In particular, the financial impact made by new drugs on national health insurance finances was among the lowest when compared with other OECD countries.

 

More specifically, the annual drug expenditure spent on each new drug amounted to KRW 6.1 billion whilst the total drug expenditure spent in Korea over the past 10 years amounted to KRW 164.2 trillion.

 

In this analysis, the financial expenditures spent on items that were waived pharmacoeconomic evaluation data submissions and were subject to RSA, which account for most of the new drugs used to treat serious diseases such as cancer and rare diseases, were low, accounting for 0.3% and 2.7%, respectively, of the total drug cost.

 

In addition, the financial impact of new drugs according to their serious disease classification status showed that drug expenditures spent on new drugs for severe and rare diseases (cancer, rare diseases) were found to only account for 3.3% of the total drug costs, suggesting the low treatment access available for domestic patients with severe and rare diseases.

 

If so, why are studies and claims that should have been made a long time ago being raised and regarded as unusual now?

 

The fact that new drugs account for a small portion of drug expenditures means that drug costs of existing drugs, not new drugs, account for a sizable portion of the expenditures.

 

In other words, Korea spends 91.5% of its drug expenditures on drugs that are not new.

 

The direction of improving the expenditure structure, which the KRPIA has suggested, is to increase the proportion of new drugs and to reduce the proportion of drug expenditures spent on drugs that are not new.

 

It is an agenda that is bound to bring conflict of interest between new drug developers and non-developer pharmaceutical companies.

 

However, there is no doubt that new drugs are important to Korea’s society as a whole.

 

Prior to pointing out the limitations and reliability of the research published this time; it is necessary to consider Korea’s current expenditure structure.

 

However, the number of expensive drugs is indeed increasing, and the number of drugs that remain non-reimbursed due to their potential financial impact is also rising.

 

Korea has been known for its strong health insurance coverage supported by the national health insurance system framework.

 

Even if the government had been a little insensitive to the changes in trends in related industries, new drugs have now surely become mainstream.

 

Therefore, it is now time to consider adapting and evolving Korea’s expenditure structure and priorities accordingly.