Upcoming drug price reduction

"The short time between Ministry of Health and Welfare (MOHW)'s announcement and the implementation date undermines predictability"

The Health Insurance Policy Review Committee has organized a discussion meeting…Gov't and industry exchange their perspectives

 

Major domestic pharmaceutical companies and mid-sized firms are repeatedly requesting modifications to the drug price reform plan, which was announced by the Ministry of Health and Welfare (MOHW) for implementation this year. The requests include a delay in its implementation and adjustments to the price reduction rates.

The MOHW has yet to provide a clear response regarding the industry’s requests for a delay, changes to the reduction rates, or revisions to the preferential pricing details. Instead, the MOHW appears to be maintaining its "original plan to finalize the decision at the Health Insurance Policy Review Committee within the first quarter."

In response, members of the National Assembly's Health Insurance Policy Review Committee, from the opposition party, plan to mediate between the pharmaceutical industry and the MOHW by hosting policy forums.

On the 22nd, Rep. Baek Jong-heon of the People Power Party, alongside Reps. Han Ji-ah and Ahn Sang-hoon, will co-host a policy forum on drug price system reform on the 26th,. The forum will be organized by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA).

During the forum, Attorney Park Kwan-woo from Kim & Chang will analyze the impact of the MOHW's drug price reform on public health, and Attorney Kim Hyun-wook from Shin & Kim LLC will present on sustainable measures to improve the drug price system.

In the subsequent panel discussion, representatives from large domestic pharmaceutical companies, as well as the Korea Pharmaceutical Industry Cooperative, representing mid-sized and small firms, will participate to demand a delay in implementation, adjustments to the reduction rates, and revisions to the MOHW's preferential pricing plan.

Specifically, the industry representatives, including Yoon Jae-Chun, Vice Chairman of Daewoong Pharmaceutical; Young-Joo Kim, CEO of Chong Kun Dang Pharm; and Cho Yong-jun, Chairman of the Korea Pharmaceutical Industry Cooperative, will be attending. 

From academia and patient groups, Professor Hye-Young Kwon of the Department of Health and Medical Administration at Mokwon University and Yoon Gu-hyun, President of the Korean Association for the Study of Liver, will attend. Yeon-sook Kim, Head of the Pharmaceutical Management Division at the MOHW, will represent the government.

Attention is focused on whether this forum, which aims to seek a balance between the sustainability of health insurance and the development of the pharmaceutical and biotech industries, can narrow the gap in perspectives between the industry and the government.

Multiple industry sources are appealing to the MOHW to accept the industry's proposed modifications proactively. 

The top priority for the pharmaceutical industry is delaying the committee's approval of the reform plan, currently scheduled for next month (February).

On November 28 last year, the MOHW publicly announced the reform plan, which centers on cutting generic drug prices, and reported the implementation schedule to the committee.

Several domestic pharmaceutical companies maintain that the implementation plan is too rushed, failing to ensure the predictability necessary for business management.

The pharmaceutical industry is also demanding that the price-reduction rates for already-listed drugs (generics) be minimized. 

While the MOHW plans to lower the current generic price calculation rate from 53.55% to the 40% range, the industry argues this cut is excessive and insists it should be set at 48% to 50%.

Additionally, they have requested that the implementation timing for generics listed since the 2012 price cuts be pushed back sufficiently to ensure predictability, and that the details of the preferential pricing plan be revised through consultation with the industry.

An official from a top-tier domestic pharmaceutical company said,"It is frustrating that specific consultations or coordination of opinions between the MOHW and the industry regarding the reform plan have not yet taken place," adding, "We have requested several times that the short time between the announcement and the implementation date undermines predictability. A delay in the committee's approval is necessary."

Another official from a top-tier company added, "Although several forums regarding the drug price reform have been held in and around the National Assembly, the atmosphere remains unclear as to whether the government will modify its plan or accept the industry's demands. If the drug price reform aims to foster the domestic pharmaceutical industry, the MOHW needs to commit practical and proactive consultations with the sector."