Stepwise price reduction applied from 13th listed product

Management plan for multi-listed products changed from last November

Shift from 11th to 13th listing…current 15% reduction likely maintained

The government, which had planned to implement stepwise drug price reductions of 5 percentage points starting from the 11th listed product, has decided to revise both the criteria for listing items and the reduction method.

The new direction under discussion is to apply stepwise reductions starting from the 13th listed product, while maintaining the current method of applying 85% of the previous lowest price as the new price.

According to industry sources on the 16th, the government’s drug pricing system reform proposal discussed at the recent Health Insurance Policy Deliberation Committee (HIPDC) subcommittee differs from the proposal announced in November last year.

The stepwise drug price reduction reform plan is expected to undergo partial changes. AI-generated image

The reform plan from last November included a method whereby “the price of the first generic would be reduced by 5 percentage points starting from the 11th product listing of the same formulation.” This represented a significant strengthening of the current product reduction system, which is applied starting from the 21st listed product.

Additionally, the plan stipulated that if there were 10 or more initially listed generics, the price would be uniformly set at the 11th product’s level one year later.

At this HIPDC subcommittee meeting, a proposal to apply the stepwise reduction starting from the 13th product was discussed. While the method of reducing the price by 5 percentage points each time would be removed, discussions are focused on maintaining the approach of applying a price set at 85% of the lowest price for subsequent listings. This effectively means maintaining the current reduction rate of 15% applied from the 21st product onward.

Products listed at the point where stepwise reductions begin will have their prices adjusted to 85% of the lowest price after one year.

For example, if there were 10 products this month and the number exceeds 13 with next month’s listings, the price for the newly listed products will be set at 85% one year later. However, if additional items are listed the following month, their prices would be further reduced by an additional 85% on top of the 85% already applied.

Although the threshold number of products used as the basis for stepwise reductions has been slightly relaxed, the system still effectively results in an additional 15% reduction following the initial 15% reduction, depending on the listing timing.

However, the details currently under discussion are not yet finalized. There is a possibility that the application method or specific figures could change at the HIPDC meeting on the 26th.

Additionally, since the generic drug pricing rate is not clearly defined as being in the “mid-to-high 40% range,” the exact drug price calculations under stepwise reductions will likely be possible only after the HIPDC decision is finalized.