Fewer drugs reimbursed 5 years into pricing reform

The number of reimbursed drugs decreased by 4,500 five years after the drug pricing system reform

Following changes in the approval and pricing system, new market entries have significantly declined.

The regulations on co-development of generic drugs that had been imposed in 2021 have also had an impact, leading to an 84% drop in the number of approved prescription drugs.

Number of approved prescription drugs decreased year-on-year last year...Generic drugs approved before stricter regulations were introduced were withdrawn en masse

Over the past five years, 4,500 drugs have been removed from the reimbursement list in Korea.

 

The number of new drugs entering the market has decreased significantly with the introduction of generic drug price reforms and joint development regulations.

 

The number of prescription drug approvals has decreased by more than 80% compared to 5 years ago.

 

Pharmaceutical companies rushed to enter the generic market ahead of the tighter regulations, and new market entries plummeted after changes were made to the approval and drug pricing systems.

 

With more products being withdrawn than entering the market, the total number of listed prescription drugs began to decline.

 

Reimbursed drugs down 17% in 5 years...

 

Decline continues after drug price reform According to the Health Insurance Review and Assessment Service on the 28th, as of the 1st of this month, a total of 20,277 drugs were listed on the health insurance reimbursement list.

 

Although this is an increase of 44 from the 21,983 last month, it is a decrease of 1,000 from 23,027 in July last year.

 

This means that the number of drugs listed on the reimbursement list has decreased by an average of 83.3 per month over the past year.

 

Approvals for prescription drugs decreased by 84% this year compared to 5 years ago...

 

Joint development regulations accelerate sharp decline in approvals The number of approvals for prescription drugs has significantly decreased since the reform of the drug pricing system.

 

As of June this year, the number of approvals for prescription drugs was 315, with a monthly average of 52.5.

 

Although this is 4.2 drugs more than last year's monthly average of 48.3, it is 23.8 fewer than the 76.3 in 2023, marking a decrease of 23.8 in 2 years.

 

In the first half of 2020, a total of 2,015 prescription drugs were approved, averaging 335.8 per month.

 

This is an 84.4% decrease in the monthly average number of prescription drug approvals over 5 years.

 

The average number of prescription drugs approved per month in 2021 and 2022 was 133.3 and 93.2, respectively, which was significantly higher than the average number approved this year.

 

No.

 

of prescription drugs approved every month (Source: HIRA)

The analysis is that the attempts to enter the generic drug market, which accounts for the largest share of new entries in the prescription drug market, have decreased significantly.

 

The rise in the regulatory barriers for approval significantly dampened the market entry momentum.

 

Since July 2021, the revised Pharmaceutical Affairs Act has limited the number of incrementally modified and generic drugs that can be approved on a single clinical trial.

 

The new regulations, known as the “1+3 rule,” restrict the number of incrementally modified drugs and generics that can be approved based on a single clinical trial.

 

If a pharmaceutical company manufactures its product at the same facility with the same formulation and manufacturing process as the product for which it conducted its own bioequivalence study, the use of that data is limited to three.

 

In other words, only four generic drugs in total can be approved based on a single bioequivalence study.

 

Similarly, clinical trial data can be shared with and applied to only 3 other products besides the one directly conducted by the company.

 

In the past, when one pharmaceutical company obtained approval for a generic drug after bioequivalence testing, dozens of other pharmaceutical companies could obtain approval for their own generic drugs using the same data.

 

However, due to the joint development regulations, “unrestricted replication of generic drugs” is no longer possible.

 

The number of prescription drugs, which had been increasing annually, turned to a decline.

 

According to the MFDS, the number of prescription drugs approved last year was 15,893, a decrease of 739 from 1,6632 in 2023.

 

This means that 739 more products had their approvals expire than those approved as prescription drugs in a single year.

 

The number of prescription drug items had increased every year until 2023, since recording 9,572 in 2010.

 

During that period, the number of new products entering the market exceeded the number of products withdrawn from the market every year.

 

However, due to the decrease in prescription drug approvals, an unusual situation occurred last year, with the total number of items decreasing.

 

The number of prescription drug approvals has increased explosively since 2019, but has turned to a decline since 2020.

 

In 2018, 1,562 prescription drugs were approved, averaging 130 per month, but in 2019, the number jumped to 4,195, averaging 350 per month, more than double the previous year.

 

In May 2019 alone, 584 prescription drugs were approved in that single month.

 

From October 2018 to July 2020, more than 100 prescription drugs were approved each month, but in August 2020, the number of approvals fell below 100 for the first time in 23 months.

 

Since January 2023, when 216 prescription drugs were approved, the number of prescription drugs approved each month has fallen below 100 for two years and five months.

 

Companies indiscriminately entered the market in 2019 and 2020 before the introduction of tightened regulations...

 

Repeated mass withdrawals due to non-production and non-claiming The surge in prescription drug approvals in 2019 and 2020 has been attributed to government policies.

 

The government's move to tighten regulations on generics led to a surge in generic approvals.

 

In 2018, 175 items containing the high blood pressure drug valsartan were banned from sale due to excessive impurities.

 

At that time, the MOHW and MFDS formed a “Generic Drug System Improvement Council” and began to develop measures to curb the proliferation of generics.

 

When the government signaled its intention to strengthen regulations, pharmaceutical companies moved to secure generic products in advance, leading to a temporary surge in generic drug approvals.

 

The number of generic drug approvals surged in response to the government's plans to tighten regulations, but returned to previous levels after the system was revised.

 

At the time, there were numerous cases of pharmaceutical companies withdrawing their generic products from the market without selling them after indiscriminately obtaining approval.

 

In November last year, over 1,000 drug items were removed from the health insurance reimbursement list due to non-production and non-claims.

 

Health authorities will remove drugs from the reimbursement list if there have been no insurance reimbursement claims in the last 2 years or no production or import reports in the last 3 years.

 

This means that 1,000 items were removed from the reimbursement list despite being approved by the Ministry of Food and Drug Safety and being listed for reimbursement because they had no production or sales for a certain period of time.

 

No.

 

of reimbursement discontinuation drugs due to lack of claims or production by year of approval as of November 2024 (Source: MFDS):

Many of the drugs that were removed from the reimbursement list in November last year were approved in 2019 and 2020.

 

Among the 1,000 drugs removed from the reimbursement list in November last year, 334 were approved in 2000, and 187 in 2019.

 

Products approved in 2019 and 2020 accounted for more than half of all products removed from the reimbursement list, being 521 products in total.

 

This means that more than half of the drugs whose reimbursement was revoked were new products that had been on the market for less than 5 years.

 

Among the drugs whose reimbursement was discontinued due to lack of claims or production, 47 were approved in 2015, and 39 were approved in 2016 and 2017, which was significantly lower than in 2019 and 2020.

 

Only 24 products approved in 2018 were removed from the reimbursement list, compared to how the number of products withdrawn from the market skyrocketed among drugs approved in 2019 and 2020, Pharmaceutical companies indiscriminately obtained generic approvals in response to the government's strengthened regulatory measures, but many products ended up disappearing from the market without being sold.

 

The companies pursued an indiscriminate policy of securing as many generic products as possible before the government strengthened its regulations, leading to an unusual phenomenon where products were withdrawn from the market in large numbers after a certain period of time.