Rapid adjustment of insurance prices for rare drugs granted

to alleviate the KOEDC's supply burden due to exchange rate fluctuations

Insurance price ceiling adjustment term was reduced from 8-9 months to 4 months... Made possible through cooperation between MFDS and MOHW

Verorab (pictured above), for which a price adjustment has been completed in response to exchange rate fluctuations, and Ivexproglycem (pictured below) for which a price adjustment application is currently under negotiations.

The insurance price ceiling adjustment term for insured drugs supplied by the Korea Orphan Drug Center (KOEDC) is expected to be significantly reduced from the initial 8-9 months to around 4 months.

 

Previously, it took at least 8-9 months to adjust the price cap, raising concerns about supply disruptions and financial losses for the center, so the government decided to take proactive measures to resolve the issue by significantly simplifying the price adjustment process for urgently needed drugs.

 

During a meeting with journalists from the Ministry of Food and Drug Safety’s press corps on the 17th, the KOEDC said that it is operating a consultation system to promptly adjust reimbursement price ceilings for publicly procured orphan drugs in order to ease the supply burden caused by sharp exchange rate fluctuations.

 

The KOEDC added that it adjusted the insurance price ceiling for Verorab through the system in January.

 

The insurance price of Verorab was KRW 63,000 before the adjustment, but after the adjustment, it was raised by 65.9% to 104,887 won.

 

According to the center, most orphan drugs are highly dependent on overseas imports, and import prices are sensitive to exchange rate fluctuations.

 

However, the reimbursement ceiling was fixed, so there was a structural problem where the center had to continue supplying the drugs at a loss when the exchange rate rose sharply.

 

According to the center, the exchange rate has risen by about 20% in the last three years, and in the case of some items, the KOEDC incurred losses of more than KRW 100 million per case.

 

This has directly impacted patients' access to treatment.

 

When the center delays or suspends supply due to budget constraints, patients experience treatment gaps because there are no domestic alternatives for orphan drugs.

 

As a result, patient groups and relevant experts have consistently raised the need for system improvements.

 

Kim Ki-young, Director of KOEDC, explained, “There has been around a 20% fluctuation in exchange rates over the past 3 years.

 

For orphan drugs distributed in the market based on the reimbursement price ceiling, the increased costs have led to losses exceeding KRW 100 million per drug.

 

In practice, the total budget for drug purchases has decreased, which has also caused disruptions in the supply of subsequent orphan drugs.” In response, the center established an exceptional price adjustment procedure in collaboration with the Ministry of Health and Welfare, the Ministry of Food and Drug Safety, the Health Insurance Review and Assessment Service (HIRA), and the National Health Insurance Service (NHIS).

 

This streamlined process applies exclusively to publicly procured items that meet specific criteria.

 

It significantly shortens the price ceiling adjustment period from several months to within 10 days, thereby minimizing supply disruptions and ensuring continuity of patient care.

 

Notable examples of the expedited adjustment procedure include Verorab, which was adjusted in January this year, and Ivexproglycem, which is currently undergoing price adjustment.

 

Kim said, “Previously, adjustments to the reimbursement price ceiling took eight to nine months due to various procedures, which inevitably resulted in losses for the center.

 

The MFDS requested cooperation from the MOHW to establish a procedure to correct supply instability so that adjustments can be made quickly in response to exchange rate fluctuations.” Just like with exchange rate increases, price adjustments are also promptly made in the event of a decrease.

 

Director Kim said, “If an exchange rate drop results in a surplus, the revised amount can be reflected starting on the first day of the following month.

 

This new cooperative framework enables more reasonable adjustments and contributes to the stability and sustainability of public procurement by government agencies.” In addition, KOEDC is pursuing various policies to improve access to orphan drugs.

 

Key initiatives include operating patient assistance programs in partnership with pharmaceutical companies and providing free or cost-based supply of drugs for which price negotiations are delayed.

 

Also, the center is working to establish overseas supply chains to introduce medications for self-treatment and is running an early distribution program for pediatric orphan disease treatments.