KPBMA proposes policies ahead of the presidential election

"Support for R&D·AI-drivien system·drug price system for novel drugs are needed"

The Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) proposes 'The Ten Pillars of Policies' ahead of the 21st presidential election

"Establishing performance-based R&D policies·Establishing a compensation system for domestically Developed novel drugs"

"Increasing domestically developed novel drugs·establishingAI-driven open innovation ecosystem·structuring a predictable drug price system are needed"

The Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) proposes the "Pharmaceutical and Biotech Policies for Korea

Ahead of South Korea's 21st presidential election, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) has proposed "The Ten Pillars of Pharmaceutical and Biotechnology Policies." KPBMA's proposal can be summarized in three keywords: supporting R&D, establishing an AI-based new drug development platform, and improving the drug pricing system.

 

The KPBMA proposed initiatives, such as establishing performance-based R&D policies, creating a compensation system for domestically developed novel drugs, and supporting domestically-produced active pharmaceutical ingredients (APIs).

 

The KPBMA also asked the government to develop an AI-driven drug discovery big data platform and cultivate specialized professionals in this field.

 

Furthermore, they asked to establish a reinvestment cycle where drug price reduction exemptions based on R&D investment ratios are reinvested.

 

They also urged the creation of a predictable drug pricing roadmap according to the balanced post-market management policies.

 

In its policy report published on May 19, the KPBMA proposed its "Pharmaceutical and Biotech Policies for Korea's Healthy Future for the 21st Presidential Election." ◆Performance-Based R&D Policy Establishment = According to the KPBMA, the Korean government's 2023 R&D budget for the pharmaceutical and biotech sector was KRW 2.5826 trillion.

 

However, only KRW 347.7 billion, or 13.5%, was allocated to direct corporate support.

 

This differs significantly from the IT sector, where the proportion of corporate support reached 44.5%.

 

In response, the KPBMA called for the establishment of a strategic R&D investment system.

 

They stressed the need for institutional improvements, including expanding the 'Korean ARPA-H' project (a reference to the U.S.

 

Advanced Research Projects Agency for Health) and applying exemption from preliminary feasibility studies.

 

Furthermore, they urged for the continuous expansion of mega-funds to foster the creation of blockbuster novel drugs and to broaden tax credits for pharmaceutical and biotech companies' investments in bio-ventures.

 

The KPBMA also stressed a shift in R&D budget policy towards an 'performance-based' approach.

 

They emphasized the need to increase the corporate support ratio of government R&D budgets to over 30%.

 

Additionally, they stressed the importance of strengthening support for Phase 2 and 3 clinical trials and global market entry to enhance the success rates of new drug development and commercialization.

 

◆Domestically Produced Vaccines·Treatments for Infectious Disease = The KPBMA asked for expanded support for research and development into next-generation vaccine platforms, such as mRNA and synthetic antigen technologies.

 

They stressed the urgent need for swift countermeasures to the infectious disease crisis, citing initiatives like a '100-Day Vaccine Development Project' or 'Large-scale Rapid Global Clinical Projects.' Furthermore, the KPBMA proposed introducing a 'loss compensation system' and establishing pre-purchase schemes and long-term procurement contract systems to accelerate the development of national essential vaccines and treatments.

 

For instance, countries like the United States and Japan actively utilized pre-purchase systems during the COVID-19 pandemic to shorten development timelines.

 

◆Establishing a Compensation System for Domestically Developed Novel Drugs = The KPBMA urged an improved drug pricing compensation system for domestically developed innovative new drugs.

 

Currently, preferential drug pricing is only applied to novel drugs produced by innovative pharmaceutical companies or those that conduct domestic clinical trials.

 

The KPBMA argued this should be expanded to pharmaceutical and biotech companies that contribute to the supply of essential medicines or job creation.

 

The KPBMA also called for expanding the scope of the refund system, also known as a dual pricing system, to enhance global competitiveness.

 

They anticipate that the refund system could be applied when the market launch plans for new drugs developed overseas or those subject to technology export are identified.

 

◆Supporting domestically produced APIs = According to the KPBMA, the number of domestic API manufacturers in Korea decreased significantly over the last decade, from 381 in 2013 to 296 in 2023.

 

During the same period, API items sharply declined from 10,341 to 6,244.

 

This trend is attributed to the lower price competitiveness of domestically produced raw materials, leading to an increased reliance on APIs from China·India.

 

The KPBMA also pointed out the severe lack of policy support, such as preferential reimbursement drug pricing and tax incentives, as a reason for the lack of revitalization in API development.

 

While the government introduced a system for preferential reimbursement pricing (68%, 5 years + 5 years) for using domestically produced raw materials, its application is limited to newly listed national essential medicines.

 

Concerns remain regarding potential drug price reductions due to post-market management.

 

In response, the KPBMA urged the establishment of a control tower to build a stable drug supply system and called for real-time investigation, analysis, and monitoring of drug supply and demand.

 

In the mid-to-long term, they recommended developing a supply stability plan and establishing a government preferential procurement system for domestically produced essential medicines.

 

Furthermore, they proposed expanding tax benefits for APIs under Korea's 'Act on Restriction on Special Cases Concerning Taxation.' They also emphasized the need for incentives, such as preferential drug pricing or manufacturing facility support, when diversifying supply sources or achieving self-sufficiency.

 

◆Accelerating AI-Driven Drug Discovery Initiatives = Korea's AI-driven drug discovery technology is estimated to be at 74% of the level of the United States, indicating a technology gap of approximately five years.

 

While over 50 domestic AI drug discovery specialized companies demonstrate capabilities, a diagnosis suggests limitations in competing with global companies due to insufficient infrastructure, including data, specialized personnel, and computing resources.

 

Accordingly, the KPBMA called for expanding federated learning and establishing a collaborative AI drug discovery acceleration project (AIDA).

 

They proposed expanding the concept of the 'K-MELLODDY Project' to foster a nationwide data-driven open innovation ecosystem.

 

◆Developing a New Drug Discovery Big Data Platform = The KPBMA recommended establishing a government-funded 'New Drug Discovery Big Data Platform.' This platform would collect 'bio R&D public data' tailored to the specific needs of each drug discovery area and support industry access.

 

Additionally, they called for developing an 'AI-based intelligent autonomous laboratory optimization model' to generate and accumulate high-quality experimental data for new drug development purposes.

 

◆Training AI-based Biotech Specialized Talent = Currently, the government is running an 'AI-based New Drug Development Education and Promotion Project.' The KPBMA proposed expanding this initiative to develop an 'AI Drug Discovery Industry-Academia Cooperative Convergence Talent Training Program,' where industry and universities jointly produce talent.

 

They anticipate that establishing this program would significantly alleviate the shortage of AI talent in Korea.

 

◆Operating Industry-Led Advanced Industry Academies = The KPBMA proposed designating and operating an industry-led 'Pharmaceutical and Bio-Pharma Advanced Industry Academies.' This initiative would involve leading industry organizations coordinating government, industry, and academia to support practical education and employment linkages.

 

Through this, they emphasized the importance of building a sustainable talent supply system and nurturing talent to prepare for future new technology demands.

 

◆Reinvestment of Drug Price Reduction Exemptions Based on R&D Ratios = The KPBMA pointed out that existing post-market drug price management systems, such as the drug price-volume agreement (PVA) program and actual transaction price-based drug price reductions, operate inefficiently.

 

They highlighted that drug price reduction risks frequently arise, leading to adverse effects such as a decrease in companies' R&D investment capacity.

 

Therefore, they called for strengthening compensation, including expanding exemptions based on R&D investment ratios during drug price reductions.

 

They argued for establishing a virtuous cycle where the reduced drug prices are reinvested into R&D, leading to new drug creation.

 

Specifically, they suggested Belgium's 'R&D Incentive Drug Pricing Model' as an alternative.

 

◆Establishing a Predictable Drug Pricing Roadmap = The KPBMA proposed establishing an intuitive and predictable long-term roadmap through balanced post-market management policies.

 

They argued for rationalizing the fragmented post-market management systems and integrating the implementation schedules for drug price reductions to enhance predictability for the pharmaceutical industry.

 

Furthermore, they also urged that pediatric and orphan drugs should be excluded from post-market management systems.

 

The KPBMA argued for excluding pediatric and rare disease drugs, which are difficult to produce and have low profitability, from preferential drug pricing and post-market management selection.