Preferential drug pricing not enough for emerging innovative pharmas

Rep. Tae-ho Kim: “Drug pricing and R&D support alone cannot create an effective growth ladder”

Tax incentives, research facility benefits excluded...MOHW “will gather industry input through public-private consultative body”

During a National Assembly audit, calls have emerged for stronger support for “emerging (semi)” innovative pharmaceutical companies, a new intermediate category introduced below innovative pharmaceutical companies.

The argument is that preferential drug pricing and government R&D support are not enough to help the semi-innovative companies advance to fully innovative pharmaceutical company status.

In response, the Ministry of Health and Welfare (MOHW) said it would gather industry feedback through a public-private consultative body before implementing the new system and review whether additional support measures are needed.

During the National Assembly audit of the MOHW on the 7th, People Power Party lawmaker Tae-ho Kim agreed to the government’s policy of dividing innovative pharmaceutical companies into “emerging (semi-innovative)” and “leading (innovative)” categories and providing support according to their stage of growth, but criticized the lack of support offered to the emerging category.

Kim said, “I understand the government’s intention to build a growth ladder for pharmaceutical companies by dividing them into emerging and leading categories. But in practice, it seems as if several of the lower rungs of that growth ladder have been removed, then coined ‘emerging’ in name only.”

“I’m not sure whether telling companies to jump higher after removing the footholds is really a policy designed to help them grow, or simply a test of how well they can jump,” he added.

Support for companies in the emerging category is largely limited to government R&D programs and preferential drug pricing, while excluding benefits available to existing innovative pharmaceutical companies—including tax incentives, special provisions for the construction of research facilities and exemptions from certain charges.

Kim said, “We should be helping these companies conduct more research so that they can grow into innovative companies, but this could instead reduce their capacity to invest in research. Can this really serve as a growth ladder?”

Health and Welfare Minister Eun-kyeong Jeong responded that the emerging category is being newly introduced as an intermediate step toward full innovative pharmaceutical company status and that support measures would be refined as the program is implemented.

Jeong said, “Since this is a new category, we first need to evaluate participating companies and then consider improvements to the system step by step. The emerging category is intended to serve as an intermediate stage toward innovative pharmaceutical company status, with certain forms of support helping companies grow along the way.”

Jeong cited preferential treatment under the revised drug pricing system as one of the main reasons for introducing the new category. She nevertheless acknowledged the gap in support between emerging and fully innovative companies and said the government would consider additional measures as the program develops.

Jeong said, “I understand that the point is that we need appropriate support measures tailored to different types of companies, creating a pathway from startups to emerging companies and ultimately innovative pharmaceutical companies. We will design the system more carefully and refine it based on industry feedback gathered through the public-private consultative body.”

Kim asked the ministry to submit a comparative analysis before the comprehensive audit, including supplementary measures to support clinical development and research funding for emerging innovative pharmaceutical companies.