"MOHW will design the drug pricing policy considering NHI cost"

Lee Hyung-hoon, Second Vice Minister of Health and Welfare (60, Yonsei University), commented on the issue

"The Ministry will gather opinions from the pharmaceutical industry regarding the drug pricing reform plan…the policy can change at any time"

Lee Hyung-hoon, Second Vice Minister of Health and Welfare

"We recognize that the pharmaceutical industry has varying opinions regarding government policy. However, the government designs policy by looking at where the public's expectations lie and what their interests are. The necessity of fostering the pharmaceutical industry and the fact that domestic generic drug prices are high are areas where society relatively shares a consensus, and social agreement is required. We are not setting a single specific drug pricing reform plan and trying to force it through. We will repeatedly collect and discuss opinions from the pharmaceutical industry. Since policy can change at any time, there is room to modify the reform plan."

Lee Hyung-hoon, Second Vice Minister of Health and Welfare (60, Yonsei University), has drawn significant attention by highlighting the difficulties of reconciling diverse interests in a single policy for drug pricing reform, which primarily focuses on lowering the prices of previously-listed generic drugs.

Lee stated that, given South Korea's adoption and operation of a single-payer National Health Insurance system, writing a reform plan that simultaneously achieves the goals of fostering the pharmaceutical industry and ensuring efficient, rational national pharmaceutical expenditures requires considering the interests of both the industry and the public as beneficiaries of health insurance.

Meeting with the Korea Special Press Association on the 18th, Vice Minister Lee promised, "Rather than taking the stance of a policy authority, the Ministry of Health and Welfare designs policy by examining public interests. However, we have not finished setting a single drug pricing reform plan. Policy is open and can continue to change. We will communicate with the pharmaceutical industry."

This was the Vice Minister's response when asked how the Ministry intends to resolve the industry's backlash against the drug pricing system reform plan announced on November 28 last year.

Lee stated that, while agreeing on the necessity of fostering the South Korean pharmaceutical and biotech industry on a global scale to strengthen national competitiveness, the final reform plan would be finalized after collecting opposing opinions from the industry on uniform price cuts.

The Ministry intends to listen to the industry's voice and to prepare a revised proposal until the Health Insurance Policy Deliberation Committee deliberates on the reform plan on the 26th.

Since releasing the initial draft of the reform plan on November 28 last year, the Ministry has presented a revised draft to the industry on March 11 at the subcommittee. 

However, the domestic pharmaceutical industry continues to criticize the process as 'closed administration,' citing the failure to specify clear generic price calculation rates, mentioning only a range of 'low-to-mid 40%,' the lack of specific timing and methods for price cuts per item, and the absence of detailed criteria and periods for preferential drug pricing.

Lee repeatedly stated that he would gather industry opinions before the committee's final decision. He emphasized that, because pharmaceutical expenditures are funded through the health insurance budget, the government views the drug pricing system considering the efficiency of public insurance premiums.

"South Korea operates the drug pricing system based on the health insurance finances funded by the mandatory premiums paid by citizens," Lee stated. "Because medical fees and drug prices for both generics and new drugs are operated through health insurance finances, we value the National Health Insurance cost, which represents public expectations."

Lee also noted that he recognizes the domestic pharmaceutical industry as a partner in South Korea's efforts to advance to one of the top five global pharmaceutical and biopharmaceutical powers. 

This is interpreted as a necessity for the administration to communicate and make adjustments to the aspects the industry hopes will be reflected in the reform plan.

Lee stated, ​"Since the Ministry of Health and Welfare also aims to leap into a top-five pharmaceutical and bio-powerhouse as a national task, the pharmaceutical industry is an important partner," Lee explained. "We are discussing the reform plan with the industry. There is a backlash because the industry has more favorable, explicit expectations, but we will continue to communicate. There is room for modification within the system."

Lee added, "There may be differing opinions because the industry has its own perspective and expected levels. While the Ministry has its position as a policy authority, we work by looking at where the public views, perspective, and interests lie."

Lee stated, "We are open to differing opinions on Ministry policy or points raised by the media. We are not setting one thing and trying to force it through," adding, "Policy can continue to change."

Lee concluded by saying, "The need to foster the pharmaceutical industry and the fact that generic prices are high are areas where there is a relatively social consensus. We have carefully considered the drug pricing policy. We are listening to the pharmaceutical industry's opinions," adding, "We fully recognize, acknowledge, and respect the necessity for innovative pharmaceutical companies and the domestic industry to possess national competitiveness and move toward becoming a bio-power. We support and share with the industry's aspiration to expand to a larger global stage."