Industry welcomes pricing benefit unchanged for IMD

ER and combination drug to protect market with PMS for four to six years

Ultimatum for the industry to shift focus from generic to IMD and new drug

The Korean pharmaceutical industry is positively reacting to Ministry of Health and Welfare’s (MOHW) revised drug pricing system including the weighted pricing benefit for incrementally modified drug (IMD) as it would allow IMDs to remain as a cash cow generating finance for new drug R&D.

 

Although they are regretful the weighted pricing is limited only to government-designated IMD and excluded other ‘drugs for data submission,’ the majority of the industry says the government started recognizing the value of IMDs.

 

On Jan.

 

28, a pharmaceutical industry insider commented “MOHW reissued a notice of revised ‘Criteria for Decision or Adjustment on Drugs’ that saved IMD from leveling itself down with other generics.

 

But it also highlighted the importance and need for Korean pharmaceutical companies to switch their core business model.” MOHW re-notified the revised generic drug pricing criteria including the weighted pricing for IMD on Jan.

 

28.

 

The key change made was maintaining the pricing benefit for IMD until other generic is released, as the drugs work as a stepping stone to new drug development.

 

Quoting the notice issued by the ministry, the weighted pricing benefit would be applied to “IMD (including incrementally modified combination drug) until other single or combination drug with same administration method, content, and formulation is listed.” The industry perceives the change as the government’s ultimatum for Korean pharmaceutical companies to shift away from generic development to better-priced IMD development.

 

Among all drugs for data submission, the pricing benefit was limited to IMD designated by Ministry of Food and Drug Safety (MFDS), which also means IMD’s individual patent registration and four to six years of post-marketing surveillance (PMS) period would come in effect as well.

 

For pharmaceutical companies, the revision would encourage them to explore patent difficult for competitors to replicate and to develop IMD to ultimately block off other generic competitors while making profit during the PMS period.

 

The PMS period is valid for four years on extended release drug with prolonged effect, and six years on combination drug or drug improving benefit with alternative administration method.

 

Until the PMS period expires, other generic launch is restricted for the IMD to dominate the market to some extent.

 

As a result, IMDs that MFDS sees inventiveness in safety, efficacy and utility (drug compliance, convenience and etc.) based on pharmaceutical approval and registration review regulation would be provided with benefits of market exclusivity and pricing.

 

A pharmaceutical company official commented, “Many opinions of IMD-focused companies have been reflected.

 

As the purpose of the revision was to improve the weighted pricing system, MOHW seems to have widely accepted of the industry’s opinions,” but “limiting the pricing benefit only to MFDS-designated IMD, instead for all drugs for data submission, is regretful.” The official elaborated, “The restriction means drugs for data submission with change in saline base, isomer and formulation would be neglected from the pricing benefit.

 

Accordingly, Korean pharmaceutical companies would have to act fast analyzing the changes and to plan for new business model,” as “the government has technically sketched out the prospective of the industry with pricing benefit, so lingering in the generic game would eventually risk the business.”