[Reporter’s View] ‘Cool time’ too short for price cuts

drug price reduction measures are being too frequently implemented in Korea

There is a gaming term called 'cool time.’ It refers to the cooling down time a character in a game needs to wait before reusing a certain skill.

 

Looking at the government's recent drug price reduction measures, its ‘cool time’ seems to be too short.

 

The price cuts have been imposed on generic drugs continuously since around the 2020 drug price reform.

 

In July 2020, the government revived the 'tiered drug price system'.

 

If a generic drug meets the requirements of conducting a self-bioequivalence test and registering a domestic active pharmaceutical ingredient, the price of the generic drugs listed on the 21st and later were cut by 15%.

 

The government retroactively applied the new system to previously listed generics.

 

Twenty thousand listed generics were subject to price reevaluations, and the prices of more than 7,000 generics were lowered simultaneously last year.

 

Earlier this year, a second round of reevaluations was conducted on listed generics, resulting in additional price cuts of more than 1,000 items.

 

In July this year, the price cuts on actual transaction price that is conducted every 2 years were conducted.

 

The prices of more than 4,000 drugs that were supplied and billed at lower prices than the upper limit were reduced.

 

In addition, since 2020, the annualized reimbursement reevaluation has been repeatedly eliminating reimbursements, reducing the scope of reimbursement, and forcing voluntary drug price reductions.

 

Drug prices have also been repeatedly reduced due to price-volume agreement negotiations.

 

Since the end of last year, the government has been discussing comparative reevaluation of overseas drug prices (external reference pricing reevaluations).

 

The plan is to reduce the price of generic drugs in Korea by comparing their price with A8 countries, which are Korea’s drug price referencing countries.

 

The repeated drug price cuts have caused much confusion in the pharmaceutical industry.

 

Pharmaceutical companies are bearing losses due to price cuts, and pharmacies are experiencing confusion due to the monthly changes in drug prices.

 

Some pharmaceutical companies challenge the drug price cut measure through lawsuits.

 

The confusion on the front lines is amplified when courts issue and lift injunctions.

 

This is not to say that price reductions have not happened before, but the pharmaceutical industry has had plenty of time to adapt at the time.

 

Historically, major generic pricing policies have typically been in place for 6-7 years upon implementation.

 

The tiered pricing system, introduced in 2007, operated until 2012.

 

After the 2012 generic price cuts, the system of equal pricing for identical ingredients was implemented until 2020.

 

However, since the revival of the tiered drug price system in 2020, various price reduction measures have been operated simultaneously.

 

And another huge wave of reevaluations is set to hit the field, with the imminent implementation of the external reference pricing system.

 

Games have a ‘cool time’ because the overuse of a specific skill can put off the balance of the entire game.

 

The same goes for the drug price reduction measures.

 

Too many repetitive drug reductions will unbalance the entire pharma-bio industry.

 

The current ‘cool time’ is too short.