Reassessment may be deferred for some Phase 1 products

Drugs with prices cut by at least 16% since 2014 likely candidates

Need for stable supply also to be considered…Drugs subject to rebate-related cuts or reimbursement reassessment excluded

Attention is turning to the “threshold price-cut rate” following the introduction of a new measure allowing drugs initially slated for Phase 1 of the reassessment of listed drugs to be moved to Phase 2.

Price cuts for Phase 1 drugs are scheduled to begin in April next year, while those for Phase 2 drugs will start in October 2030. Drugs moved from Phase 1 to Phase 2 would therefore have their price cuts deferred by about 4 years, allowing pharmaceutical companies to protect sales during that period.

According to industry sources on the 31st, drugs whose prices have fallen by at least 16% from their 2014 levels are being discussed as potential candidates for reassignment to Phase 2.

Among Phase 1 drugs, those meeting the eligibility requirements will be allowed to apply separately for reassignment to Phase 2. (AI-generated image)

A recent working-level consultative meeting discussed three criteria for such reassignment. Eligible drugs must ▲require stable supply management and ▲have prices that have fallen below a certain level relative to their 2014 prices. Meanwhile, ▲drugs affected by rebate-related price cuts, reimbursement appropriateness reassessments, or measures concerning single-use ophthalmic solutions will be excluded.

For products meeting all 3 criteria, pharmaceutical companies will be allowed to submit separate applications through October following the reassessment notice, after which the government will decide whether to move their products to Phase 2.

The key question is exactly what percentage of price reduction will qualify as having fallen “below a certain level.” Another issue is whether the threshold will be applied mechanically.

The criterion currently considered most likely is whether a drug that was priced at 53.55% of the relevant benchmark in 2014 has already fallen to around 45%. If this criterion is adopted, drugs that have undergone an additional price reduction of roughly 16% over the past 12 years would meet the application requirement.

Among these, drugs deemed necessary for stable supply could have their price cuts deferred by 4 years following government review and an objection process.

However, the government has yet to announce a clear price-cut threshold for determining which products qualify for reassignment. It therefore remains unclear which products will ultimately benefit from the measure. The notice concerning the reassessment of listed drugs is expected to be issued today.

If the government mechanically applies a fixed price-cut threshold to identify drugs whose prices have “fallen excessively,” some products are expected to narrowly miss eligibility.

An industry official said, “Once a threshold is set, even a difference of less than 1 percentage point could determine whether a drug is moved to Phase 2. Detailed discussions will therefore be needed on how to determine when a drug price should be considered to have fallen substantially.”