MOHW to provide premium pricing support for innovative drugs

Promises sublaws and policy support for innovative new drugs

“Is examining from various angles to prepare drug pricing support free of trade conflict based on research service results”

The Korean government has emphasized the need to enact subordinate statutes to give preferential treatment to new drugs manufactured by Korea Innovative Pharmaceutical Companies and promises to prepare policy support.

 

This announcement reflects the authorities’ determination to find a way to provide preferential treatment for drug prices based on the “Research service for the preparation of subordinate statutes for preferential pricing of drugs developed by Korea Innovative Pharmaceutical Companies that correspond to the international trade order.” However, the government had also expressed practical difficulties in its implementation, as providing pricing support for specific pharmaceutical companies, despite its legal basis, can lead to trade conflict.

 

On the 6th, MOHW answered so to the written inquiry submitted by the People Power Party member Jong-Sung Lee regarding the preferential pricing of drugs developed by Korea Innovative Pharmaceutical Companies.

 

NA member Lee inquired on the reason why no actual support is being provided for such companies despite legal grounds provided under the Special Act On Fostering and Support of Pharmaceutical Industry, and the MOHW’s opinion on the need for subordinate statutes to support the legal grounds.

 

To the inquiry, the MOHW answered that although a clause for providing pricing premiums to Korea Innovative Pharmaceutical Companies does exist, the authorities must exercise caution in providing support to specific companies as this can lead to international trade conflict under international trade laws.

 

If the final supports implemented under the act are concentrated on Korean companies, other countries may file a complaint under the WTO subsidy agreement, etc.

 

In particular, the ‘Premium drug pricing system for global innovative new drugs’ that had been announced on July 7th, 2016, to provide preferential treatment for drugs developed by such companies, had been deleted in December 2018 as a discriminatory factor as a result of negotiations on amendments and modifications of the US-Korea (KORUS FTA).

 

Despite such realistic difficulties, the MOHW expressed its will to enact subordinate statutes for the preferential drug pricing clause of the Special Act On Fostering and Support of the Pharmaceutical Industry.

 

In addition, the MFDS said it will prepare measures for policy support that aligns with the international trade order and does not trigger trade conflict.

 

The MOHW said, “We agree on the need to enact subordinate statutes to foster the Korean biohealth industry.

 

However, the matter needs to be approached in comprehensive consideration of its impact on the domestic pharmaceutical industry, its compliance with the international trade order, its fiscal impact on NHI finances, etc.." It added, “We will also contemplate preparing policy measures for preferential pricing of new drugs manufactured by Korea Innovative Pharmaceutical Companies.

 

And examine various angles to prepare drug pricing support that complies with the international trade order.

 

The authorities also announced their operation plan for the Roadmap on supporting homegrown new drugs.

 

The MOHW explained, “The government will support the full cycle of new drug R&D processes, investing ₩2.2 trillion through the pan-government National New Drug Development Project (2021-2030).

 

With the support, we will start introducing a smart clinical trial system in 2022 to establish an environment for large-scale clinical trials and new drug development.” "We are also reviewing preparing measures to support continous new drug development for pharmaceutical companies by establishing large-scale funds in the pharma and bio industry."