Dilemmas for fostering pharma and lowering drug prices

An effective post-management system is needed

An effective post-management system is needed

The pharmaceutical industry states, "An independent reimbursement reevaluation standard is needed for domestically developed natural new drugs"

Gov't says, "Taking a balanced approach, reducing expenses and supporting pharma industry"

What would be a reasonable drug pricing policy to foster new drug development?

 

The government is focusing on the sustainability of the National Health Insurance, while the industry expresses concerns about decreasing new drug development due to reduced drug prices.

 

These conflicting perspectives are raising about the future direction of drug pricing policy.

 

On February 14, a 'Policy debate to foster pharmaceutical and biotechnology industry' was held at the National Assembly Building.

 

The debate was hosted by the Democratic Party of Korea's Future Economic Growth Strategy Committee (Lee Eun-Joo, Committee Leader and sponsored by the National Assembly's Public Healthcare Committee Rep.

 

Seo Young-Seok and the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA).

 

Photo opportunity with the debate participants.

 

(from upper left) Kim Gook-hee, Head of the Pharmaceutical Benefits Department at HIRA, Rep.

 

Lee Byeong-jin, Member of the Democratic Party of Korea, Noh Yunhong, President of KPBMA, Rep.

 

Seo Young-seok, Member of the Democratic Party of Korea, and Cho Ha-Jin, Director of the Bureau of Health Insurance Policy division at the MOHW, (from lower left) Kang Hyun-Sik, Chairperson of the Drug Pricing System Specialist Committee of the KBPMA, Choi Yun Jeong, Professor of the Department of Economics at Yonsei University, Lee Eui-Kyung, a professor at the School of Pharmacy at Sungkyunkwan University, and Kim Dong-Sook, Professor of the Department of Health and Public Administration at Kongju National University.

 

The event's speakers mentioned that a large-scale reduction in drug pricing is not effective and that the post-management system needs reform.

 

Choi Yun Jeong, Professor of the Department of Economics at Yonsei University, said, "After the nationwide drug pricing reduction in 2012, companies directions have changed." Choi presented the research results, "The production of non-reimbursed prescription drugs increased, production of items without price reduction increased, and co-promotion of imported drugs also increased." "Changes in production types, such as an increase in production of non-reimbursed prescription drugs, have led to higher consumer drug costs, which have diminished the efforts to improve National Health Insurance improvement," Choi explained.

 

Choi pointed, "Changes to company's production type, which was not intended by policy, may result in side effects in the long term in the pharmaceutical industry." Choi added, "The government has aimed to reduce National Health Insurance expenditure by lowering drug prices.

 

However, this policy has not effectively improved pharmaceutical choices and volume management." Consequently, speakers stressed that before reducing drug pricing in large-scale, improvements must made to original and high-priced pharmaceutical preferences, pharmaceutical overspending, overprescription, and practices.

 

Yu Seung-Rae, Professor of School of Pharmacy at Dongduk Women's University, stressed that regular and repetitive drug pricing reduction policy must be improved, and a comprehensive pharmaceuticals post-management system is needed.

 

Also, the seller-distributor participation method should be established, and improvements to reimbursement monitoring, which is directly related to product quality, are required.

 

To achieve this, Yu explained that the current policy of individually lowering the unit price of each drug should be changed to goal-oriented and comprehensive management methods.

 

In particular, a 'refund system' can be utilized.

 

"Seven years ago, a similar topic was discussed.

 

If the government had initiated a mid-to-long-term project then, the current challenges would likely have been resolved," Yu said.

 

"Other OECD countries have simplified their post-management systems and implemented policies to provide refunds based on the potential value of new drugs." As the current policy is aimed at reducing individual drug prices, all participants agreed on the need for revision.

 

Dong-Sook Kim, Professor of the Department of Health and Public Administration at Kongju National University, remarked, "Both the universal drug price reduction and various post-management mechanisms create anxiety for pharmaceutical companies," Kim stressed, "To resolve this, we need a comprehensive approach to drug pricing management." Kim added, "Various post-management systems are available, but they are not being effectively implemented." Kim stressed that "Ongoing studies of comprehensive post-management systems show that the number of drug pricing reductions is typically only two for 20,000 items listed between 2007 and 2022.

 

The drug price remains about 87% of the initially listed price.

 

Therefore, we must establish a post-management system to ensure that new drug values are accurately evaluated and effectively managed." Cho Wonjun, a Project Specialist at the Public Health Division of the Democratic Party of Korea, said, "The drug pricing system has operated independently from the prescription department, making it difficult to achieve specific goals and often resulting in balloon effects." Cho added, "We need to consider whether the aim of controlling prices contradicts the initiative to reduce volume.

 

For instance, we should evaluate whether lowering drug prices as an administrative measure in response to previous illegal rebate practices is appropriate." Cho suggested, "The system should be structured so that the goals are reflected and contribute to improving practices." During the event, it has been suggested that an assessment reflecting domestic practices is needed as domestically produced, natural new drugs are included in the reevaluation of reimbursement appropriateness for this year.

 

Kang Hyun-Sik, Chairperson of the Drug Pricing System Specialist Committee of the KBPMA, said, "Domestically developed natural new drugs face more challenges in the process of approvall-reimbursement-listing compared to new drugs originating from foreign countries." Kang emphasized the need to consider special circumstances surrounding domestically developed new drugs, stating, "Evaluating these drugs similarly as those from foreign countries would be discriminatory against Korean companies." "A drug that has been used for many years and its claim amount is high indicates that its utility in clinical practices as well as societal demands are high," Kang said.

 

"Domestically developed new drugs need a different evaluation standard for reevaluation." Panels representing the government emphasized that the department has been putting efforts to find a balance between industry development policy, such as reflecting new drug values, and sustaining the National Health Insurance.

 

The department promised to bring improvements to effective post-mangagment system.

 

Kim Gook-hee, Head of the Pharmaceutical Benefits Department at HIRA, said, "The pharmaceutical industry is a national-level industry that holds greater importance than the semiconductor business." Kim stressed that, "A predictable system for the pharmaceutical industry is important but the government must prepare additional plans." "We should consistently implement policy, focusing on reimbursed pharmaceuticals, comprehensively managing goals from a macroscopic perspective, industry reform and R&D promotion, a direction to transform generic industry capacity to exports," Kim said.

 

"In the past, we have failed to pursue a policy consistently.

 

Therefore, we are currently assessing whether our support for the pharmaceutical industry has been effective." Kim added, "The government is working to simplify the repetitive and excessive post-management system.

 

The department has initiated measures to improve problems, such as promoting national essential drugs made with domestically produced ingredients and considering the value assessment of new drugs and public health and security aspects." Cho Ha-Jin, Director of the Bureau of Health Insurance Policy division at the Ministry of Health and Welfare (MOHW), said, "The policy direction of the government is changing towards balanced goals, such as supporting the pharmaceutical industry, rather than saving expenses." Cho said, "In the past, the government focused on saving expenses, but now, it is thoroughly considering ways to support industries, including new drug development and drug cost coverage for drug shortages." However, Cho explained that a significant drug pricing reduction is unlikely to lead to an increase in non-reimbursed drugs, as suggested by Professor Choi.

 

Therefore, the government must consider clinical utility and cost-effectiveness when reevaluating the reimbursement appropriateness.

 

Generally, supporting domestically produced new drugs requires careful consideration.

 

Choi reassured the debate participants, "Please note that the department has appointed a research team to restructure the drug pricing post-management system to formulate a comprehensive post-management method." The debate was led by Lee Eui-Kyung, a professor at the School of Pharmacy at Sungkyunkwan University who served previously as the 5th Minister to the Ministry of Food and Drug Safety (MFDS).