On a mission to eradicate KOEDC’s deep-rooted ill practice

“Preparing for drug price modification negotiation with HIRA”

NA budget increase and government support fund hold the key

Sources confirmed Korea Orphan and Essential Drug Center (KOEDC) submitted the National Assembly (NA) a plan to resolve its issue of redirecting profit made from drug expense gap, as it was pointed out at the latest NA Annual Audit.

 

The center is committed to eradicate its deep-rooted practice of making profit from drug price difference and reusing it as the center’s budget.

 

However, some point out the center would eventually need significantly increased budget approved by the center’s affiliated government body, Ministry of Food and Drug Safety (MFDS) and Ministry of Economy and Finance (MOEF).

 

On Nov.

 

6, NA Health and Welfare Committee lawmaker, In Jae-Keun’s office explained “KOEDC submitted a proposal to cease their ill practice of redirecting unfairly made profit”.

 

By the end of the year, KOEDC plans to compile ‘Evidences for Drug Pricing Readjustment Application’, needed to remove profit from drug price differences.

 

Until February next year, KOEDC is to initiate a negotiation with Health Insurance Review and Assessment Service (HIRA) on modifying drug pricing, and in March, it would execute a lump-sum reevaluation on drug price gap.

 

The center claims it would be done with redirecting drug pricing gap profit to budget use after HIRA completes drug reimbursement listing procedure by December next year.

 

Newly appointed KOEDC Chairperson Yun Young Mi is reportedly determined to eradicate unethical practice within the center and normalize its internal management.

 

As a matter of fact, KOEDC has been under a criticism for last five year on re-utilizing 6.5 billion won, made from differences in orphan drug’s actual transaction price and National Health Insurance Service (NHIS) billing price, as the center’s budget.

 

The center official explained the practice actually has been a solution to MFDS’ insufficient budget support rate of average 37 percent.

 

Although the center has consistently confessed of abnormal use of drug price differences and urged MFDS to boost its budget support, KOEDC did not get any answer.

 

So in the end, it is up to MFDS to allocate budget support for the center to ultimately resolve the budget redirecting practices, according to the plan submitted to the NA.

 

Apparently, the center used drug price differences of about one billion won every year as their organizational operation expense.

 

But after HIRA’s adjustment on the drug pricing, the center would lose budget of one billion won.

 

However, it is not going to be an easy ride.

 

KOEDC has already asked for next year’s budget of 14.03 billion won, but the government only passed about 17 percent of the requested amount, 2.39 billion won.

 

The NA is already reviewing the government’s next year budget plan, but the Health and Welfare Committee’s ‘Budget and Accounting Evaluation Subcommittee’ and ‘Budget Deliberation Special Committee’ have not yet made a decision on whether or not to increase KOEDC’s budget.

 

Even after the committees decide to increase the overall budget, the key to the problem is then passed to MFDS and MOEF’s decision to provide the center’s requested budget.

 

KOEDC official said, “A number of lawmakers at the NA Health and Welfare Committee audit session demanded the government to work on the center’s drug price gap profit redirecting issue, insufficient budget and low government support funding rate.

 

For the center to operate properly, the addressed issues have to be resolved completely, and it ultimately comes down to the matter of budget allocation.

 

The center would do its best waiting for the NA make a decision.” “For now, Health and Welfare Committee is to request Budget Deliberation Special Committee to consider increasing budget for KOEDC basic operation expense, personnel expense, and regional center operation expense.

 

As the center’s issue of redirecting profit from drug price difference has been addressed, the lawmakers have asked MFDS to submit a solution to KOEDC’s problems,” an official from Lawmaker In Jae-Keun’s office commented.