Moon Care on new drug and generic pricing in 2019

Revised 7.7 Drug Pricing, RSA expansion, listed drug reevaluation to surface next year

Summing up medical and pharmaceutical industry issues of the year by government policy

The Moon Jae-in administration’s ambitious Moon Jae-in Care has directly affected the drug pricing system, essential to the insurance coverage.

 

The healthcare coverage enhancement policy lowered the threshold of new drug listing standard, but further complicated the post-marketing drug pricing system.

 

Also Ministry of Health and Welfare’s (MOHW) had its pharmaceutical benefit sector to concentrate their drug pricing capability on the designing of the technicalities of the healthcare policy.

 

Lowered threshold, but complicated post-marketing evaluation for all-around management of generic and new drug The impact of the groundbreaking insurance coverage enhancement program by the Moon Care has struck down on the general drug pricing system this year.

 

In the beginning of the year, the government, as previously notified, presented generic pricing and new drug listing system revision, listed drug reevaluation and pharmaceutical expense management all at once.

 

For the bigger frame of enhancing healthcare coverage and reducing the people’s medical bills, the government has decided to progressively reinforce coverage on new drug while strictly managing already-listed new drugs and generics.

 

To better manage quality of generic after the valsartan contamination issue, the government has decided to link approval and drug pricing system under the name of ‘3+1 System.’ Ministry of Food and Drug Safety (MFDS) revised the generic approval system and pricing system to gradually lower pricing of items depending on the number of listed items.

 

In July, MOHW issued an administrative notice on partially revised regulation of ‘Pharmaceutical Affairs Decision Making and Approval Criteria’ with the said changes, and plans to finalize it by the end of the year.

 

On the other hand, the barrier of new drug listing has been alleviated.

 

The RSA eligibility and scope have been expanded for high-cost new drugs as constantly demanded by the industry.

 

But for an item to choose the option, it has to pass the three following conditions; a drug used for treating cancer or disease either recognized by ‘Special Case Standard for Partial Copayment Benefit’ or ‘Special Case Benefit for Patients with Rare Disease and Chronic Disease’; drug with clinical efficacy proven to improve quality of life or recognized so by a related committee; drug recognized as Breakthrough Therapy Designation (BTD) or Priority Medicines (PRIME) by the US Food and Drug Administration (FDA) or European Medicines Agency (EMA), respectively, or recognized as equivalent by Drug Reimbursement Evaluation Committee (DREC).

 

But some have raised an issue about the regulator turning Health Insurance Policy Deliberation Committee (HIPDC) on-paper reimbursement listing review into a face-to-face review for new drug exempted from negotiation.

 

They claimed it would cripple the system’s effectiveness and accessibility.

 

Meanwhile, the government plans to establish a listed drug reevaluation standard and to elaborate the post-marketing evaluation procedure.

 

The three reevaluation types—external reference pricing, listing contract expired drug, and performance-based post-marketing evaluation—would be categorized by literature-based reevaluation and real world evidence (RWE)-based reevaluation.

 

But the industry is firmly opposing on the notion of reevaluation, as the result of the reevaluations would eventually either reduce reimbursed price or adjust the general pricing lower.

 

Reevaluation procedure on reimbursed drugs (summarized by Daily Pharm)

The government also finalized the ‘7.7 Pricing System’, which raised both Korean and global pharmaceutical companies’ eyebrows, as its initial version and enforced it from this year.

 

First it started from the KORUS FTA renegotiation agenda, but technically the government dropped both benefit for Korean-made new drug exporting to global markets and the U.S.-based multinational pharmaceutical companies’ demand for new drug pricing benefit.

 

Considering the government had its agenda behind it, the industry reprehended the government last year for its concerning and unfair action.

 

The Drug Pricing Benefit for companies states the manufacturer and suppliers of WHO-recommended essential drug or National Essential Drug as designated by Article 2 of the Pharmaceutical Affairs Act should be confirmed to manufacture and supply without an issue.

 

And the government would strip the pricing benefit of the companies, if they have issues supplying drugs on the Reimbursed Drug List, or were imposed with administrative penalty or convicted by a court for providing illegal rebate, according to Paragraph 2 of Article 47 of the Pharmaceutical Affairs Act.

 

But there are exceptions.

 

A company that suspends the supply of the drug with following reasons would be exempted from the penalty; in case manufacturing plant is shut down or closed; manufacturing, import or sales approval is suspended or canceled; new issue of safety or effectiveness arises; manufactured or imported supply shortage occurs due to surged demand (except when the demanded amount is within the predicted billing amount); when the company is faced with inevitable natural disaster.

 

The government is also continuing on with the rebate prevention policy.

 

The so-called ‘K-Sunshine Act’ was enforced and required pharmaceutical companies to file, archive and submit financial profit provision record (within the allowed amount by Pharmaceutical Affairs Act), or the expenditure report.

 

At the moment, the government is reviewing the submitted expenditure reports.

 

The government is focusing on analyzing and investigating expenditure types to set the system down.

 

However, the companies may undergo investigation by prosecution when correlation between their expenditure and rebate are clearly found.

 

The insurance coverage enhancement policy implemented this year constructed with substance-by-substance reimbursement, expanded listing of high-cost drug, and listed drug reevaluation would base even more specified drug pricing policy for next year.

 

The industry is expected to see the effect in the field.

 

Moon Care ploughs on with coverage enhancement with selective reimbursement This year was the first year for the first National Health Insurance Comprehensive Plan.

 

Last year the government was sketching out the technicality of the Moon Care, and this year it was busy executing the detailed policy actions in the set order.

 

Starting from the first pilot program of primary healthcare-based chronic disease management (initiated from December 2018), the government gradually increased healthcare coverage on ultrasound scan, essential check up and treatment for lower abdomen (rectums and anal passage) and urinary system (kidney and bladder).

 

Moreover, coverage on cavity treatment for children under 12, thoracoabdominal MRI scan and Korean medicine treatment has been granted this year.

 

In addition, the government started the pilot program for Community Care that integrated healthcare and welfare, providing customized benefit by each region across the country.

 

On July 2, President Moon Jae-In presented the importance of National Health Insurance, performance of coverage enhancement and prospective plan at the ‘Second Anniversary Briefing of NHI Coverage Enhancement Initiative Implementation’ convened at NHIS Ilsan Hospital.

The healthcare coverage statistics presented by the government in July found the coverage rate in general hospital was increased from 62.6 percent in 2016 to 67.2 percent in 2018.

 

But with the figure, the public is skeptical about the government raising the National Health Insurance premium by 3.2 percent.

 

The skepticism is not only about the premium increase, but also about ultimately reducing the people’s medical bills by fixing insurance income source and increasing rate of the government funding.

 

Both industrial organizations and civic groups are urging the National Assembly to push up the government funding rate up to 20 percent to keep the moderate balance of medical service fee and coverage rate.

 

Currently, Ministry of Economy and Finance has promised MOHW to provide the government insurance funding of 14 percent for next year, which MOHW would utilize on reinforcing insurance coverage programs.