Can generic listing negotiation prevent reckless listing?

Pharmaceutical industry torn about justification of revised generic pricing

“Toughen pre and post-listing obstacles are to lower generic pricing”

Although some pharmaceutical companies are voicing their concerns over the generic reimbursement negotiation, to be enforced from the second half of the year, some are actually welcoming the new system with an anticipation of positive benefits.

 

Along with the revised drug pricing system coming in effect around the same time, the generic negotiation is expected to eliminate ‘reckless’ competition among reimbursed drugs in same class.

 

Pharmaceutical industry sources reported on Apr.

 

6 about the growing voices of the industry claiming the partially revised Regulation on National Health Insurance (NHI) Reimbursement Standard is needed for the amended stepped drug pricing system.

 

The revised Regulation on NHI Reimbursement Standard aims to require drugs receiving automatically calculated reimbursed pricing to negotiate with the government and the insurer to sign an agreement before listing.

 

The Korean government and insurer manage drug pricing with pricing and projected volume negotiation prior to the listing, and with price-volume agreement (PVA) negotiation after the listing.

 

So far, the pre-listing obstacles have been mostly targeting new drug or high-cost drugs only, but soon the generics would have to undergo similar procedure to enhance reimbursement listing value and NHI expenditure efficiency.

 

Reimbursement negotiation does not only regard drug pricing, but also regards supplier’s duty, patient accessibility and financial stability depending on the various pursuing items, which allows healthcare insurance to be utilize more directly to manage active pharmaceutical ingredient’s supply and quality and drug production and distribution.

 

The negotiation for generics with National Health Insurance Service (NHIS) would be completed under 60 days like the new drug reimbursement procedure.

 

The government is currently accepting the industry’s opinion while scheduling the amendments to take an effect from the second half of the year.

 

Nevertheless, the industry has expressed their concerns of the government trying to burden the pharmaceutical companies with excessive liability through unnecessary administrative procedure.

 

And some even complained of the government trying to reinforce pre-listing obstacles and keep pharmaceutical companies on a leash to lower drug pricing.

 

However, contrasting voices have been raised, noticeably.

 

They claim the newly revised stepped pricing system could motivate generics to recklessly apply for reimbursement to be more competitive in the market.

 

Accordingly, other set of regulation to manage the generic pricing system is needed.

 

A pharmaceutical company insider said, “Regardless of their sales plan, some generic products are aggressively applying for reimbursement after their approval.

 

When the stepped pricing system comes in effect, generic makers with actual plan to release the product would unfairly receive pricing close to nothing.” The insider also noted the negotiation with the government and insurer would be able to resolve the loophole issues.

 

Another pharmaceutical industry insider argued “When the reckless listing phenomenon gets more prevalent, pricing of some originals with extremely low marketability could be pressured to drop and they could suspend supplying for the Korean market and cause shortage.

 

Ultimately it could negatively affect patient’s accessibility and treatment, so the government and NHIS should clearly address the subject on the agreement.” Moreover, another pharmaceutical company has mentioned of a reverse discrimination.

 

The company insider said, “The government and the insurer impose duty and liability on original item and its company’s agreement, only because it is a first-in-class.

 

But their competitors, the generic companies, are free of any liability.

 

This is why the question of reverse discrimination has surfaced.” The company insider emphasized, “The government should be considerate of some companies complaining of generic reimbursement negotiation, but also some agreeing on the necessity of the system.

 

Based on the industry’s reaction, hopefully the government and the insurer could reflect their opinions on the system”