Generic drug price for non-innovative firms set to 45% by 2029

Gradual 2% annual reduction... Special provisions for quasi-innovative and innovative drugs over 3–4 years

Products listed after 2013 will undergo gradual reductions starting in 2030

Decline in pharmaceutical companies’ revenue to expand gradually over a maximum of 10 years

The government will implement price cuts for already-listed drugs, including those of non-innovative pharmaceutical companies, over a period of up to 10 years. With a gradual annual reduction of 2%, the drug price of innovative and quasi-innovative companies is expected to reach a rate of 45% by 2032, while non-innovative companies will reach the same level by 2029.

Additionally, for products listed after 2013, gradual reductions will begin in 2030. Non-innovative companies will converge to 45% by 2033, while innovative and quasi-innovative companies will do so by 2036.

The aim is to mitigate the shock of a sudden drop in sales for the pharmaceutical industry. Under this structure, if pharmaceutical companies fail to generate new revenue, the scale of their sales decline will gradually increase over the 10-year period.

Price reductions for already-listed drugs will be implemented over a maximum of 10 years, including for non-innovative pharmaceutical companies.

According to the government’s finalized plan announced on the 26th, the timing of reaching the 45% pricing rate will differ depending on ▲the listing date ▲whether special provisions apply.

There are also conditional clauses for drugs with the same active ingredient, those failing to meet requirements, combination drugs, and data-submitted products. This means that even if a product was listed in 2013, it may still be included in the first-stage reduction.

First, even general pharmaceutical companies that are not classified as innovative will undergo price cuts over 4 years. Prices will fall to 49% next year, then to 47% in 2028, and to 45% in 2029. Compared to innovative firms, they will reach the 45% level three years earlier.

Innovative companies will be given a four-year grace period, and quasi-innovative companies a three-year grace period, reaching 45% by 2032. For innovative firms, the pricing rate will remain at 49% until 2027 and then drop directly to 45% in 2032.

Drugs listed from 2013 onward will start at 51% in 2030 and decrease by 2% annually. General pharmaceutical companies will reach 45% in 2033, while innovative and non-innovative companies will similarly receive a 3- or 4-year grace period, with the 45% rate applying in 2036.

A key feature is the classification of drugs listed by 2012 and those listed from 2013 into two stages (Stage 1 and Stage 2). However, drugs with the same active ingredient are classified into the same group based on the timing of the first generic entry.

For example, even if a drug was listed in 2013, if the first generic for that active ingredient was listed in 2012, it falls under the first stage price reduction. ‘

In addition, drugs that do not meet requirements, such as those lacking in-house bioequivalence testing or registered active pharmaceutical ingredients, will be subject to the 45% pricing rate. The same applies to combination drugs and data-submitted drugs that are essentially based on off-patent, generic substances.

This means that even if a drug is a combination drug or a data-submission drug, if its active ingredients are equivalent to off-patent generics, it is subject to the 45% adjustment without exception.