“No considerations made to protect generics” at NA audit

…Industry expresses concerns over price cuts mentioned at the NA Audit

Industry “Generics are a cash cow for new drug development... should protect the domestic industry”

MOHW Minister “agrees” to ruling party member’s request for “drug price cuts to save NHI finances."

After the Ministry of Health and Welfare revealed its plan to lower the price of generics step by step at the 2022 NA Audit, the domestic pharmaceutical industry has been expressly expressing their displeasure on how pro-government the regulation is and criticized how the plan does not consider the realities of the industry.

 

The industry relayed its concerns on how the MOHW had opted to save NHI finances by regulating the price of generics rather than protecting the domestic industry, even though the sales of generics are a major means for profit generation used by domestic pharmaceutical companies to invest in R&D of new drugs.

 

Also, suggestions that policies to preserve drug prices or preferential pricing should be considered and pharmaceutical support for new drug development should be increased substantially if the government plans to implement such drug price-reducing policies.

 

On the 16th, the domestic industry has been reacting sensitively to the issue of generic drug price cuts raised that had been raised at the NA Audit by the NA Health and Welfare Committee.

 

During the NA Audit for MOHW, Rep.

 

Jae-Hyung Choi of the People Power Party raised the need to reduce NHI expenditures through drug price cuts and expand R&D investments for new drugs, pointing out how generic drug prices in Korea are excessively high compared to those in other advanced countries overseas.

 

MOHW Minister Kyu-Hong Cho agreed with Rep.

 

Choi and said he will seek measures to lower the price of generics in Korea step-by-step as the price of generics in Korea is higher than overseas.

 

On this, the domestic pharmaceutical companies have complained that the government has opted to unilaterally reduce the price of generic drugs, which is the easiest way to save NHI finances.

 

Although financial management of insurance in other advanced countries cannot be simply compared with Korea's situation, the government is pushing this fragmentary logic, vaguely comparing the price of generic drugs to original drugs to hold as a reason to lower drug prices.

 

The industry also claimed that the NA and MOHW’s argument that the higher price of generic drugs in Korea compared to overseas undermines the willpower to develop new drugs.

 

In particular, they criticized how critical an issue it is that the MOHW does not properly recognize the "generic Industry as part of the domestic industry.” While many foreign countries, including the US’s Biden administration, are devising multifaceted measures to protect their own pharmaceutical bio-industry, Korea is repeatedly laying out measures that cut the price of generic drugs in its own industry to “secure financial soundness” of NHI finances.

 

Reducing the price of generic drugs in the single-payer NHI system will only reduce the share of the pie held by the domestic industry, which in turn will increase the market share of foreign pharmaceutical companies and cause difficulties for domestic pharmaceutical companies from market contraction.

 

Moreover, the industry demanded that MOHW should proactively consider measures to preserve generic drug prices in various situations as much as for the reduction of the same, and develop policies to provide preferential pricing for innovative new drugs and budget support for new drug development, etc.

 

Without a drug price preservation policy that partially exempts or suspends post-drug price cuts for generic drugs that have contributed to saving NHI finances, the generic drug price cuts will only impede drivers of new drug development in pharmaceutical companies.

 

An official from Company A said, “Pounding on generics may be the easiest way to reduce NHI finances on the government’s part, but generics are the root and cash cow of the Korean pharmaceutical industry.

 

Not many companies are reluctant to invest in new drug development because the price of generics are so high.” “Companies that continue to invest in new drugs and IMDs despite the burden of sunken costs will face a lack of financial resources to continue the research if the price of generic drugs is reduced.

 

In addition, Korean companies have continuously contributed to national health crises with their generics, such as in resolving the Tamiflu shortage during the swine flu incident.” “Korea has a tendency to undervalue generic drugs, undermining the social contribution that had been made by the generic drugs and periodically reducing their price.

 

The US uses private insurance, not a single-payer system like Korea.

 

This is one of the reasons why generic drug prices of different countries should not be compared simply.” Another domestic pharmaceutical company official from Company B also said, "President Biden has recently issued an executive order to protect the pharmaceutical and bio-industry in the US.

 

If the Korean market is attractive because of the high generic drug prices, why wouldn’t the foreign generic companies be entering the Korean market?"