'Apply preferential pricing to non-inferior new drugs'

Will the industry's request be accepted and a policy be announced next month?

The current drug pricing calculation structure sets drug prices less than weighed average of its alternative

Industry asks for the highest price of its alternatives to compensate for the non-inferior new drug’s innovative value

With the government planning to release a drug price reform plan that includes a fair value compensation plan for innovative new drugs as early as next month, attention is focused on whether the reform will include a preferential measure for new drugs that demonstrate non-inferiority.

 

This is because most of the new drugs that domestic pharmaceutical companies have successfully developed are new drugs that have demonstrated non-inferiority to existing drugs.

 

Until now, non-inferior new drugs have been listed at a price below the weighted average of its alternatives.

 

Therefore, the industry has been criticizing how the prices do not properly reflect the innovativeness of the developed new drugs.

 

In addition, industry officials have pointed out that the low drug prices set in Korea render it difficult for companies to release their drugs overseas.

 

To address this, domestic pharmaceutical companies have requested the government to provide additional scores for non-inferior new drugs as compensation while discussing the fair value of innovative new drugs.

 

The government's policy on providing preferred measures for non-inferior new drugs was partially revealed on the 9th at the 'Policy Discussion for the Industry’s Leap to Become a Global Pharma & Bio Center (sub: Applying an Appropriate Value to New Drugs and Measures to Revitalize the API Industry)' that was co-hosted by Rep.

 

Choi Jae-Hyung of the People Power Party and the Korea Pharmaceutical and Bio-Pharma Manufacturers Association.

 

Director Chang-Hyun Oh from MOHW is discussing measures to compensate for the innovativeness of new drugs at a NA policy debate

At the debate, Chang-Hyun Oh, Director of the Pharmaceutical Benefits Division of the Bureau of Health Insurance Policy at MOHW introduced, ▲clinical superiority, ▲innovative company designation status ▲expedited review subject status, and ▲domestic trial status as categories that the MOHW recognizes as innovative.

 

Although Oh did not specify whether the clinical superiority of non-inferior drugs will be accepted, industry officials believe that this is highly likely.

 

However, while explaining the point of Korea's positive listing system, Director Oh said that the current system’s structure does not provide preferential treatment to non-inferior new drugs and that he will work to take into account the pharmaceutical companies’ opinions to the extent that it would not jeopardize health insurance’s finances.

 

An industry official who attended the event said, “Oh’s remarks may mean that only drugs that show clinical superiority can receive preferential treatment under Korea’s positive listing system and that non-inferior drugs are not subject to such treatment.

 

However, the government also said it will consider reflecting the concept of an innovative new drug that was discussed by the public-private consultative body, such as taking into account the company’s innovative company status, domestic clinical trial status, MFDS expedited approval track status, etc., In that case, the non-inferiority criteria may not be important." Oh also added that the announcement was delayed due to the financial impact simulations the government conducted to assess the impact of the innovative new drug value compensation plan, and the results are likely to be released next month.

 

The value of compensating non-inferior drugs was also emphasized by Gwan-Woo Park, a lawyer at Kim & Chang, who gave a presentation that day.

 

Park, who had worked at the Health Insurance Review and Assessment Service for 4 years after graduating from Sahmyook University College of Pharmacy, said that most new best-in-class drugs that treat chronic conditions are being listed at 90% of the weighted average price of alternative drugs.

 

Park said, “When a new drug for a chronic disease is released, it is difficult to convert the drug’s benefit into life expectancy extension or health-related life indicators required for QALY (quality-adjusted life year) calculation even if the drug has demonstrated clinical superiority.

 

Therefore, a very low ICER (Incremental Cost-Effective Ratio) threshold is applied to those drugs.

 

In particular, for indications that have generics drugs released, it is difficult for new drugs to obtain a price higher than that of the generics." Park explained that this was why most of the new drugs for chronic diseases are listed at 90% of the weighted average price of alternative drugs that were already listed for reimbursement.

 

New drugs that were recently developed by domestic pharmaceutical companies are non-inferior drugs that target chronic diseases and are often listed at the weighted average price level of alternative drugs.

 

On this, the pharmaceutical industry believes that for non-inferior new drugs to be properly valued, compensation should be provided so that the patients can receive the highest price of its alternatives.