[Desk View] Thoughts on 18-year economic evaluation system

Anticipation and concerns are remaining as the reform of the drug pricing system in 2026 is approaching.

Amid the anticipated introduction of various regulatory frameworks and drug price-reduction measures, as a journalist covering multinational pharmaceutical companies, I am closely monitoring potential shifts in South Korea's economic evaluation system.

It has been approximately 18 years since the economic evaluation system was first introduced as part of the 2007 Drug Expenditure Rationalization Plan. It has been more than enough time to identify systemic flaws and determine necessary improvements.

Economic evaluation is a tool for assessing the cost-effectiveness of a drug. The majority of new medicines must undergo this process for insurance reimbursement listing.

In principle, economic evaluation is straightforward. It measures clinical benefit against cost to determine how much more the payer is willing to spend. However, because these are new drugs, economic evaluations involve numerous assumptions, ranging from treatment duration and the extent of clinical efficacy recognized to endpoint selection, extrapolation, and weighting. Consequently, the structure is such that reimbursement is based entirely on which assumptions are accepted.

The pace of new drug listing in South Korea is reportedly slower than in other major economies. Economic evaluation is cited as the primary cause. If it is such a simple tool, why does it take so long? It is because a consensus must be reached on those aforementioned assumptions. Every single underlying assumption requires total agreement.

Because acceptance of these assumptions determines the Incremental Cost-Effectiveness Ratio (ICER) and, subsequently, the price, this process becomes a battle in which neither side can easily concede. We must reconsider whether spending this much time at this stage is truly the right direction.

Depending on the assumptions made, a drug can be considered a cost-effective treatment or dismissed as unacceptably expensive. Currently, drug characteristics vary significantly not only across different therapeutic areas but even within the same disease category. However, the government’s actual evaluative criteria remain extremely limited. In contrast, looking at evaluation results from agencies such as the UK’s NICE, one can see instances in which manufacturer-proposed assumptions are accepted even when they deviate from traditional methods.

Experts argue that, since assumptions in economic evaluations involve uncertainty, efforts must be made to minimize it. However, this is directly linked to the speed of new drug adoption. Minimizing uncertainty inevitably requires a significant amount of time. The real question is whether such a process actually reduces that uncertainty.

For drugs with high clinical need, cost-effectiveness can be sufficiently demonstrated if different assumptions are applied. In other words, flexibility in evaluation can accelerate market entry. For more radical reform, we could consider a system that categorizes ICER ranges and determines drug prices accordingly.

Similar to France's ASMR, South Korea could establish pricing criteria based on value, using scores for different ICER ranges as one component of the value judgment. It is finally time for a serious re-evaluation of the current system, where economic evaluation serves as the final stage of drug pricing.