MSD Korea begins Januvia drug price difference compensation

starting next month

The first official compensation, two years after the price cut… compensation is limited to the quantity sold before the transfer of marketing rights

The issue remains unresolved regarding the compensation of quantity sold after July 2023…responsibility debate continues with Chong Kun Dang

Product photo of Januvia products

There are changes regarding the Januvia drug price difference compensation issue, which had been stalled for nearly two years.

 

MSD Korea has officially informed the distribution industry that it will begin accepting applications for Januvia compensation starting next month, August 1.

 

However, this compensation is limited to the quantity sold before the transfer of marketing rights to Chong Kun Dang, and whether compensation on sales will be made still requires discussion.

 

According to industry sources on the 31st, MSD Korea sent an official letter to the Korea Pharmaceutical Distributors Association on the 29th, stating that it will begin accepting applications for compensation due to the Januvia drug price reduction starting August 1st.

 

This compensation will apply only to the quantity directly sold by MSD Korea before July 15, 2023, the date when Chong Kun Dang acquired exclusive domestic marketing rights for Januvia.

 

Until now, the disagreement between MSD Korea and Chong Kun Dang regarding Januvia drug price difference compensation had not narrowed, leading to ongoing confusion in the distribution industry and local pharmacies.

 

However, with MSD Korea announcing the compensation procedure for the drug price reduction, it is expected that discussions on compensation will begin.

 

An MSD Korea official said, "We believe a significant portion of the inventory still exists with pharmaceutical distributors and healthcare institutions." They added, "We will proceed with compensation through prompt and accurate procedures to minimize damage." They further added, "We have continuously put efforts into responding responsibly regarding compensation for the price difference due to the Januvia drug price reduction," and explained, "We plan to begin accepting compensation applications starting August 1st and officially proceed with the procedures." However, the party responsible for compensation for sales made after July 15, 2023, the date of the marketing rights transfer, has not yet been determined.

 

The drug prices for the Januvia family products, including Januvia, Janumet, and Janumet XR, were sequentially reduced between September and October 2023 due to patent expirations.

 

MSD Korea stressed its position that it has no responsibility for compensation for the period after September 2023, the time of the Januvia drug price reduction, as Chong Kun Dang took over exclusive sales and revenue rights for Januvia following the marketing rights transfer agreement.

 

Januvia is a DPP-4 inhibitor, containing sitagliptin, used to treat diabetes and is developed by MSD.

 

Following Januvia's launch, MSD and Chong Kun Dang have been jointly promoting these products since 2016.

 

However, in 2023, MSD Korea reorganized its chronic disease business unit to focus on its oncology and vaccine businesses, transferring the rights for the Januvia Family to Chong Kun Dang.

 

Chong Kun Dang has been exclusively handling the domestic sales of Januvia as of July 15, 2023.

 

MSD Korea's position is that since the marketing and revenue rights were already transferred at that time, they bear no responsibility for compensation related to the drug price reduction after September 2023, when the price cut occurred.

 

MSD Korea said, "We transferred all domestic rights, including marketing and manufacturing rights, for Januvia products to Chong Kun Dang in July 2023, transferring exclusive sales and marketing authority," and added, "Accordingly, Chong Kun Dang is responsible for price difference compensation due to drug price reductions that occurred after that point." Chong Kun Dang believes that it is unfair to transfer the responsibility for compensation when the marketing authorization holder had not been officially changed.

 

Therefore, difficulties in negotiation are anticipated.

 

The marketing authorization was indeed transferred to Chong Kun Dang on July 23, 2024, after which the business transitioned to a global direct import structure.

 

An official from the Korea Pharmaceutical Distributors Association said, "As MSD Korea has delivered an official letter stating its position on compensation, Chong Kun Dang is also expected to clarify its stance soon," and added, "It is a desirable direction for both companies to clearly define their areas of responsibility and proceed with compensation." They further commented, "We suffered significant losses by not receiving price difference compensation for over a year.

 

We faced severe difficulties in the middle, and we hope to find an amicable solution."