[Desk’s View] An 'Exeption’ for drug price cuts must be approved

It is difficult to understand the operation of the government's drug price reduction system. This is because countless variables and conditions are intertwined, including eligibility criteria for targeted drugs, implementation timelines, price reduction rates, and the number of products containing identical active pharmaceutical ingredients.

The Ministry of Health and Welfare's (MOHW) decision to schedule the drug price cut for currently listed drugs for April next year likely reflects the friction and difficulty of applying complex calculation formulas across tens of thousands of items en masse.

The real issue is that even if the government and pharmaceutical companies fine-tune the granular details, unfairly affected products will inevitably fall through the cracks of the current system. Without a reasonable exception and relief mechanism, the industry will have no choice but to be dragged into litigation once again, followed by greater administrative voids and market disruption.

The recent appellate court ruling in favor of Mother's Pharmaceutical, overturning the first-instance decision in its lawsuit seeking cancellation of the drug price-reduction administrative disposition filed against the Ministry of Health and Welfare (MOHW), is highly suggestive. The Seoul High Court ruled that the 15% price cut disposition imposed on three of Mother's Pharmaceutical's herbal medicine formulations, including 'Sto M Tab.', was unjust.

The prices of the items in question were slashed during the 2021 criteria-based drug price re-evaluation due to "failure to demonstrate in-house bioequivalence". However, their failure to provide proof stemmed from a structural flaw rather than negligence by the pharmaceutical manufacturer. Even the competent regulatory authority, the Ministry of Food and Drug Safety (MFDS), failed to establish protocols for demonstrating equivalence in herbal medicinal preparations, publicly announcing the equivalence re-evaluation only after the price-reduction disposition had already been issued. In essence, prices were reduced for failing to provide proof when no criteria for proof existed. The court's finding that the disposition lacked rationality and validity is an entirely commonsense judgment.

If the Supreme Court finalizes this ruling, it will lead to the conclusion that the existing price-reduction dispositions imposed on herbal drug formulations subject to MFDS equivalence re-evaluations were fundamentally unlawful. However, pharmaceutical companies that could not endure the price reductions and have already withdrawn from the market have no recourse for compensation anywhere.

There is no guarantee that the same catastrophe will not recur in this large-scale re-evaluation of currently listed drugs, conducted for the first time in five years. If one judges all pharmaceutical products under the same standard, blind spots like the Mother's Pharmaceutical case will inevitably emerge at some point.

If the administration cannot flexibly accommodate exceptional circumstances, resolving disputes will ultimately fall to the judiciary. Unnecessary litigation expenses and wasted administrative resources translate directly into societal costs. Before applying a conventional review to this round of drug price re-evaluations for currently listed drugs, a mechanism must be implemented to screen and review, in advance, exceptional items that suffer from systemic contradictions.