‘Refer to Japan’s half-price policy for generic's price'

Japan sets price of generic drugs at half the price of the originals

NHIS-affiliated research institution introduces Japan’s aggressive price reduction measure

The price of first generics is lower in Japan, and discounted to 40% from the 10th entrant

Should refer to the price adjustment policy in Japan, and investigate and reflect the actual transaction price in Korea as well”

The Health Insurance Research Institute, a research institution under the National Health Insurance Service, stressed the need to refer to Japan’s generic drug price reduction policies in its recently published ‘Issue & View June 2023.’ Hyun-Ok Lee, Associate Research Fellow of the Health Insurance Research Institute, and her fellow researchers published an article containing the need above in the June issue of Issue & View under the title of 'Recent Changes in Japan's Drug Pricing System and Implications'.

 

The authors argued that it is necessary to refer to and reflect on Japan’s generic drug pricing system in the paper’s conclusion and implications.

 

The research team said, “Korea’s elderly population continues to increase, and the country is expected to enter a super-aged society by 2025.

 

Therefore, various reforms need to be made to Korea’s current pricing system in preparation for a super-aged society, and we should refer to Japan's revised drug pricing system in the process.” As its background, the paper pointed to the rise in drug expenditures that followed the rise in multiple chronic diseases caused by population aging.

 

The medical expenditures in Korea’s national health insurance from KRW 43.6 trillion in 2010 to KRW 86 trillion in 2019, and health insurance drug expenditures increased from KRW 12.7 trillion in 2010 to KRW 19.4 trillion in 2019.

 

In other words, drug expenditures accounted for 24.1% of the total medical expense in 2019.

 

“In Korea, an equal price policy between original and generic drugs was implemented in 2012.

 

Based on the system, the upper limit of insurance listing price for generic drugs was set at 59% of the initial original drug price in the first year, then at 53.55% from the second year.

 

In Japan, generic drug prices are set at 50% of the original drug price, and generic drugs that are listed thereafter are set at the same price as the lowest price of previously listed generics.” Japan also has a drug price system where if 10 or more generic drugs are listed, their price is set at 40% of the original price, and at 90% of the lowest price when 20 or more are listed.

 

Unlike Korea, Japan implemented a claim addition system to encourage the use of generic drugs.

 

Japan's first generic drug price (50%) is lower than that of Korea (53.55%).

 

The method of lowering drug prices according to the number of generics introduced has also been introduced in Korea, but the difference is that Japan applies the standard from 10 or more, and Korea from 20 or more.

 

The authors explained, "Korea has conducted drug price reevaluations for already-listed drugs in 2012 and unilaterally adjusted drug prices in 2012, but has not been regularly conducting drug price reevaluations thereafter.

 

However, Korea has a post-marketing Price-Volume Agreement system in place that lowers prices as a drug’s use volume increases.

 

“On the other hand, Japan has been conducting an annual drug price survey on all items since 2020 to adjust its drug prices to reflect actual market prices.

 

Korea should also refer to Japan’s drug price adjustment policy that reflects actual transaction price and generic price decision method to improve Korea’s drug pricing policy in the future, ahead of the surge in pharmaceutical expenses that may occur in line with the rapidly aging population.” In other words, the paper stressed the need to periodically make price adjustments to generic drugs in Korea.

 

The paper is expected to serve as a basis for raising the legitimacy of generic drug price cuts at a time when the government has recently started measures to improve the drug price cut investigation system and reform the generic drug price system.