“Just worrying about new pricing system gets you nowhere”

An interview on Dr. Suh Dong-churl, a professor at Chung-ang University College of Pharmacy

“Rather put restriction and limitation like RSA to protect the patients”

“Recommend letting the applicant company to pay for administrative cost to accelerate the listing procedure”

Professor Suh Dong-churl

A vast number of patients are suffering in vain and pain as more drugs are available without the healthcare insurance benefit.

 

Now, the coverage on new drug is developing into an issue for the general South Korean public.

 

Although the South Korean government tried to expand the scope of risk sharing agreement (RSA) and pharmacoeconomic evaluation (PE) exemption system, the government and pharmaceutical industry are not seeing eye-to-eye in the age of the high-priced drug.

 

To seek the breakthrough point, the industry claims the government has to implement post-listing evaluation, adjusted incremental cost-effectiveness ratio (ICER), and indication-specific pricing, but the government, who needs to count every penny cannot easily be convinced by the industry’s suggestions.

 

Daily Pharm interviewed Dr.

 

Suh Dong-churl, a professor at Chung-ang University College of Pharmacy and a pharmacoeconomic scholar, for his opinion on the effectiveness and implementation strategy of the above mentioned policy recommendations.

 

-First, what is your opinion on the need to implement the post-listing evaluation?

 

Personally, the government’s concern on listing a drug first and evaluating it later seems to be on the difficulty in setting the drug pricing.

 

But a recent study comparing the drug pricing in South Korea to A7 countries using the latest currency rates and purchasing power parities (PPP) found the drug pricing in South Korea was on par with the lowest pricing among the A7 member countries.

 

So that’s a start.

 

It cannot be said there is no financial impact at all, but limiting the post-listing evaluation to rare disease treatment would not create threatening level of financial impact.

 

I see about less than 1 percent and maximum under 10 billion won.

 

Like how the health authority stipulated various conditions and limitation when implementing the RSA, the authority can also set out restrictions for the pre-listing evaluation.

 

Did RSA push up the financial burden in the National Health Insurance (NHI)?

 

I don’t think so.

 

I assume the same for the pre-listing evaluation.

 

-There are concerns of possible reimbursement suspension, when a company refuses to accept the adjusted pricing after the post-listing evaluation. Such situation could be avoided if the contract term preemptively requires at least a few years of drug supply or continuous supply to the patients using the drug.

 

In the U.S., for instance, a pharmaceutical company signs a contract in the beginning of the year with their requested pricing, and the company refunds back the difference at the end of the year, if there were a gap between the actual transaction prices by the pharmaceutical company and hospital and insurance company.

 

On the other hand, the South Korean government is trying to do everything.

 

We don’t need to worry too much now.

 

The concern of reimbursement suspension was also there when RSA was reevaluated.

 

But have you heard of any case reported so?

 

-The need of adjusting ICER is constantly addressed.

 

Some say it should be applied flexibly, and some say it should be raised completely. ICER should not be fixed, but should rather reflect the reality.

 

But current system is going backwards.

 

Personally, I advise adjusting it in ranges.

 

At the moment the ICER for anticancer treatment is at around 70 million won, which doubles the GDP, but it is actually fixed at around below 50 million won.

 

However, adjusting the ICER should seek for national consensus, before the actual enforcement of the change, by discussing it with the healthcare providers, patient groups and consumer groups.

 

It is not an easy one to solve.

 

-How about the frequently addressed indication-specific pricing?

 

Some are worried about various issues like confusion in disease code or an abuse. First, there is an opinion that the NHI data cannot fathom the figures, but the Health Insurance Review and Assessment Service’s (HIRA) data can clearly confirm which drug was prescribed for which indication.

 

And I heard some are criticizing the indication-specific pricing goes against the fundamental principle of the NHI that gives a single pricing on a single drug.

 

But it would make more sense for policies to constantly change as there are new drugs released with various indications.

 

The government is concerned of the surging financial burden.

 

The pharmaceutical expense budget may be raised, but the number of patients receiving medical service and admitted to hospital would be lessened.

 

Ultimately, the increased pharmaceutical expense would balance out with the decreased medical service expense.

 

-But a string of expensive new drugs are preparing for the South Korean market, and surely the financial burden on NHI would get heavier.

 

What would be your advice on the financial issue?

 

Securing a certain level of finance would be needed.

 

Reducing the generic pricing would save somewhat of the expenditure, and expanding tax benefit would be good as well.

 

And to improve the listing process speed, I would like to recommend pharmaceutical companies to directly pay for the administrative cost.

 

The U.S.

 

Food and Drug Administration (FDA) offers a system called, ‘User Fee Program,’ which lets an applicant company to cover for the cost of human resource to reduce the review period.

 

Using the program, FDA was able to significantly shorten the review time.

 

Patients with rare disease or cancer have short life expectancy, and that is why swiftly granting access to new drug is crucial.

 

The efforts to expedite the review process would not go unnoticed.