Drug pricing reform faces public interest audit petition

Targeting expedited listing and ICER threshold adjustment

The Association of Pharmacists is filing a public interest audit petition against the MOHW, previously filed one against choline alfoscerate

"Ineffective in reducing medication costs…certain reform items may increase expense"

"Lacks analysis on additional financial savings"…has critized omission of preliminary feasibility studies

The Ministry of Health and Welfare's (MOHW) proposed drug pricing reform has run into an unexpected hurdle, a public interest audit request. Regardless of whether the Board of Audit and Inspection (BAI) chooses to formally accept the request, administrative and procedural conflict is expected in the regulatory overhaul.

The Association of Pharmacists is filing a formal public interest audit request with the BAI today (June 17th) targeting the core provisions of the pricing reform. The association previously initiated a similar audit against the MOHW and the Health Insurance Review and Assessment Service (HIRA) in 2019, surrounding the controversial reimbursement re-evaluation of choline alfoscerate.

Under current statutory guidelines, a public interest audit can be requested by civic organizations possessing more than 300 members, provided there are reasonable grounds to suspect that an administrative action by a public entity compromises the broader public interest.  

The Association of Pharmacists is filing a formal public interest audit request with the Board of Audit and Inspection (BAI) on June 17. AI-generated image

The Association of Pharmacists is scheduled to officially submit the petition to the audit bureau on the morning of June 17th. The central premise of their challenge is that, while the revised pricing policies will heavily inflate national health insurance expenditures, the ministry entirely bypassed mandatory regulatory verification procedures, including the preliminary feasibility studies prescribed under the National Finance Act.

The audit petition primarily focus on clauses projected to drive up healthcare spending, including ▲preferential pricing policies for generic medications ▲ fast-track expedited listing pathways ▲upward adjustments to the Incremental Cost-Effectiveness Ratio (ICER) thresholds ▲flexible drug pricing contract systems. The group deliberately curated its petition to isolate elements deemed most detrimental to the long-term fiscal sustainability of the national insurance fund. 

​"While certain generic price reductions will be carried out, our internal assessment suggests those savings remain capped at a few hundred billion KRW, whereas measures like fast-track listings and elevated ICER ceilings will increase the net financial burden," stated Lee Dong-geun, Vice Chairman of the association. Criticizing the lack of robust economic impact assessments, Lee added, "If a policy demands vast additional public expenditure, it is imperative to rigorously simulate and disclose the cost-benefit dynamics before implementation."  

The association noted that despite persistent warnings regarding these structural vulnerabilities, the health ministry has consistently stonewalled industry feedback and pushed forward with the execution of the policy package.

Currently, the MOHW is implementing pricing reform through a phased reduction. A draft revision of the "Criteria for Determination and Adjustment of Pharmaceutical Benefits," which includes explicit price premiums for designated "innovative" and "semi-innovative" pharmaceutical firms, is currently undergoing an administrative notice window to gather public and industry comments through July 13th.

Furthermore, the Health Insurance Policy Review Committee resolved during its March session to stagger implementation dates, scheduling the upward expansion of the ICER threshold for 2027 and the implementation of fast-track drug registration systems for 2028. The expedited listing mechanism for orphan drugs treating rare diseases will be launched via an initial pilot framework before expanding to broader therapeutic categories.

​"Because the MOHW’s unilateral policy decisions and administrative procedures currently lack formal regulatory checks and balances, an official audit request was our sole mechanism to force structural oversight," Lee emphasized. Lee asserted that any structural flaws identified within the currently noticed administrative texts must be corrected before final promulgation.  

Although the probability of the BAI fully accepting the public interest audit remains modest, the audit petition succeeds in turning public focus toward fiscal exposure, establishing an enduring pressure point for the health ministry as it continues the pricing modifications.