Will the number of generics decrease?

If the number of drugs based on the cascading drug price system is reduced to 10

The government begins a study on the appropriateness of the cascading drug pricing system introduced in 2020

The number of registered generics does not increase, but the impact of new generics is small

Analysts say that the government has begun strengthening the standard for cascading drug pricing in order to reduce the number of generics.

 

A plan to reduce the existing list of 20 items, which is currently used as the standard for lowering the upper limit of new items, to 10 seems promising.

 

However, the industry points out that there is a limit to reducing the number of large generics even if the tiered drug pricing standard is strengthened.

 

Rather, it is predicted that it will only encourage development.

 

The Ministry of Health and Welfare recently entrusted a research service to Kongju University professor Kim Dong-sook's team on the subject of 'preparation of measures to improve the drug price system for generic drugs'.

 

In this study, the appropriateness of 20 products, which is the standard for the number of products to which differential price is applied, will be addressed.

 

The 20 baselines were introduced in 2020 with the reorganization of the drug pricing system.

 

If a generic enters the market with more than 20 identical products already listed, the upper limit will be set at 85% of the lower price between the lowest price of the same product and 38.69%.

 

Unfortunately, the NHIS-affiliated Health Insurance Research Institute recently introduced the Japanese generic drug pricing system through a publication in the June 2023 issue and View, arguing that it needs to be reflected in the domestic system.

 

In particular, when the number of generics is 10 or more, the generic price is calculated at 40% of the original price, and when there are 20 or more, the system is set at 90% of the lowest price.

 

There was an atmosphere that the current baseline of 20 needs to be reduced to 10 like Japan.

 

It is known that the Ministry of Health and Welfare, NHIS, and HIRA have also mentioned the plan to have a strict baseline for generic drug price cuts.

 

Accordingly, the industry is of the opinion that it is not possible to further strengthen the cascading drug pricing system by creating a clear basis through research services.

 

However, it is pointed out that there is a limit to reducing the number of large generics no matter how low the baseline for cascading drug pricing is.

 

The cascading drug pricing system will be applied from the month after the first generic is listed.

 

Therefore, in the first month, there is no penalty even if the number of entries exceeds 20.

 

In the case of Forxiga's generic 10mg, which served as an opportunity for insurance authorities to pursue a plan to reduce the number of generics, 57 were listed in the first month of April alone.

 

Most of the generic companies tried to register their products according to the patent expiry schedule to avoid the cascading drug pricing system.

 

For the next two months, only one of Forxiga's generic 10mg was listed.

 

Industry analysts say that generics with a large market size, such as Forxiga's generic, are highly likely to be listed on a large scale in the first month regardless of the cascading drug pricing baseline.

 

The same is true for Januvia generics scheduled to be listed in September.

 

Therefore, in Korea where generic competition is fierce, even if the price cut baseline is reduced from 20 to 10, the number of large generics will not change significantly.

 

Rather, it is pointed out that generic companies can only waste social costs by trying to develop without asking regardless of expected performance in order not to be late for entering the insurance coverage.

 

An official from the pharmaceutical industry explained, "There is a possibility that generic companies will flock to patent challenges at once to get reimbursed early." However, if the baseline is set from 20 to 10, the effect of not increasing the number of listed generics will be more significant.

 

However, it is also pointed out that there is a limit to reducing the total number of generics.

 

Another official in the pharmaceutical industry said, “Although Japan has generally reduced the price of generic drugs, it is different from Korea in that it is simultaneously promoting generic incentives, such as actively granting incentives to doctors and pharmacists for generic prescriptions.” He criticized, "Our insurance authorities are only concentrating on lowering the price of generic drugs and seem to have no interest in encouraging their use."