“Drug pricing reform relies on collaboration btwn Korea-multinational companies”

National Assembly-MOHW shares opinion at the Healthcare Innovation Seminar

Cho Won Jun, Policy Director of the Democratic Party of Korea emphasized the industry efforts from multinational companies aimed at building innovative ecosystem

Kang Joonhyuk, Director of the Division of Pharmaceutical Benefits, said, "The collaboration model between domestic companies and multinational companies should be expanded"

From left, Policy Director of the Democratic Party of Korea, Hye Young Lee, Country Manager of BMS Korea,  Christian Rodseth, Managing Director of Johnson & Johnson Korea, Kang Joonhyuk, Director of the Division of Pharmaceutical Benefits at the Ministry of Health and Welfare, Youngjoo Song, Senior Advisor at Bae, Kim & Lee LLC.

The National Assembly and the Ministry of Health and Welfare (MOHW) evaluated that an innovation alliance between multinational and domestic pharmaceutical companies will determine the success of the drug pricing system reform.

This indicates that outcomes from innovation must accumulate for the drug pricing reform, primarily pursued to restructure the domestic generic-centric pharmaceutical industry, to advance to its next phase.

At the Healthcare Innovation Seminar hosted by the American Chamber of Commerce in Korea (AMCHAM) at the Shilla Hotel on the 3rd, Cho Won Jun, Policy Director of the Democratic Party of Korea, and Kang Joonhyuk, Director of the Division of Pharmaceutical Benefits at the Ministry of Health and Welfare (MOHW), emphasized the importance of fostering an innovation ecosystem.

Cho stated, "From the perspective of domestic companies, because the National Health Insurance pie is fixed, there is a negative perception that expanding access to new drugs might reduce their own profits," adding, "Civil society organizations also harbor skepticism over whether profits are appropriately reinvested domestically. We can only move toward the next innovation when perceptions change in favor of shared value".

Director Cho stated, "When the perception spreads that both sides are creators of shared profit through innovation and joint global expansion, the relationship inevitably becomes interdependent," and emphasized the importance of open innovation, "Trust is essential for policy shifts. We can only move forward once concerns over polarization diminish. We must forge an innovation alliance."

Multinational pharmaceutical companies also agreed on the growth potential of the Korean market. However, they pointed out that the policies aimed at expanding drug access contained within the pricing reform must take firm root to create a predictable business environment.

Furthermore, their position is that shared performance target metrics between the government and industry, alongside the swift expansion of drug access, are critical.

Christian Rodseth, Managing Director of Johnson & Johnson Korea, positively evaluated the access expansion measures, remarking, "Initiatives such as the ICER threshold and flexible drug pricing agreements are outstanding because their purpose is to reward innovation".

However, Rodseth added that the actual implementation of the institutional reform is crucial. Rodseth stated, "What matters is whether the reform plan is clear, whether it is genuinely implemented, and whether companies have experienced tangible benefits from it."

Hye Young Lee, Country Manager of BMS Korea, emphasized performance measurement metrics, rapid expansion, and consistent execution through communication.

Lee stated, "In the United Kingdom, a policy target was established to double expenditure on innovative new drugs from 0.3% to 0.6% of GDP. Having clear indicators enables transparent monitoring," adding, "Moreover, the fast-track listing pilot program is being implemented within a limited scope. While we agree with the necessity of a pilot project, a swift expansion is needed."

Lee further stated, "If the government and industry fail to reach consensus on ambiguous areas or differing perspectives regarding policy interpretation, it could become a roadblock to execution and goal attainment," and suggested active communication.

The government noted that it is deliberating on how to implement new drug access expansion measures while addressing regulatory gaps, and requested industry cooperation to ensure the completeness of the drug pricing system reform.

Kang Joonhyuk, Director of the Division of Pharmaceutical Benefits at the Ministry of Health and Welfare, stated, "The system reform was conducted in a way that adjusts generics, which account for the largest share of pharmaceutical expenditures, to appropriate price levels while expanding access to innovative new drugs. We are finding a balance between appropriately rewarding the value of new drugs and maintaining the fiscal soundness of National Health Insurance".

Kang continued, "There are various opinions regarding the expansion of flexible pricing agreements and institutionalizing the fast-track listing pilot program," and "We view policies concerning new drugs in the second half of the year as critically important."

Lastly, Director Kang stressed industry efforts, stating, "The pharmaceutical industry is a vital partner in expanding policies with speed. Fast-track listing also requires the active participation of many companies," concluding that "Companies that have relied primarily on generics lack significant know-how in new drug development. We hope to see many collaboration models emerge with multinational pharmaceutical companies."