[Reporter’s View] The new drug approval fee hike

Is something that had to be done sooner or later

The Ministry of Food and Drug Safety has announced an amendment to the “Fee Regulations for the Approval of Drugs, etc.” that will significantly increase the fee for new drug approvals from KRW 8.83 million to KRW 410 million.

 

This is the first time in 4 years that the government has decided to increase the new drug approval fee, which is in line with the previous four-year cycle fee hike.

 

In 2016, the fee was raised from KRW 6.82 million to KRW 8.83 million in 2020, and this time in 2024, another 4 years later, the fee is being raised to KRW 410 million.

 

The MFDS’s fee hike announcement was received with surprise in the industry.

 

The MFDS had been conducting a study to increase the fee for new drug approvals, so there had been a widespread assumption that the fee would be increased within the year.

 

However, few thought that the increase, which had been 30% four years ago, would soar to 4500% and exceed KRW 400 million.

 

No one expected the MFDS to raise the drug approval fee to a level similar to Europe and Japan at once.

 

Most had expected the government to raise the fee in phases as before.

 

When considering the fees charged by advanced regulatory agencies abroad, Korea's current KRW 8.83 million is unreasonable, to say the least.

 

Even the industry acknowledged this.

 

In Japan alone, which has a similar GDP per capita level, the PMDA KRW 430 million, the European EMA KRW 490 million, and the Canadian HC KRW 550 million.

 

The US FDA charges KRW 5.3 billion, therefore, the MFDS’s administrative notice of raising the fee to 410 million is appropriate to align the fee to a realistic price at the global level.

 

In particular, it has been pointed out the MFDS’s new drug approval fee is much lower than that of advanced regulatory agencies overseas, leading global pharmaceutical companies to apply for approval in a ‘testing the water’ type of manner.

 

Before applying for approval to the FDA or EMA, the companies first apply to the MFDS, and then add the supplementary data requested by the MFDS before applying to regulatory agencies abroad.

 

There has also been a feeling that MFDS is being regarded as a ‘consultant’ for overseas regulators.

 

The damage caused by the understaffed reviewers reviewing the data of false applications was the delay in review, which was ultimately borne by domestic pharmaceutical companies that needed new drug approvals.

 

The increase in the new drug approval fee seems to mean that MFDS will no longer act as a ‘consultant’ and fulfill its purpose as a proper regulator.

 

Moreover, it seems like the government decided to foster the development of new drugs by domestic pharmaceutical companies rather than global pharmaceutical companies as the new amendment specifies the benefits provided to such by the MFDS, such as a 50% reduction in fees for domestic pharmaceutical companies and a 90% reduction in fees for modifications made to existing drugs.

 

Although the new drug approval fee seems to have suddenly risen to KRW 410 million, this was an inevitable raise that had to be made to meet the global level sooner or later.

 

The MFDS announced that the new drug approval period will be shortened from 420 days to 295 days with this increase.

 

If it goes as planned, new drugs developed by domestic pharmaceutical companies will be able to enter the market a little faster.

 

However, it would be necessary to expand the number of expert staff to accommodate this.

 

The MFDS has set aside half of the increased fees for labor costs.

 

The amount may seem like a lot, but it will be used as a basis for expanding the number of reviewers.

 

If the increase in the number of expert staff can actually shorten the time it takes to approve a new drug, the fee increase would have been necessary sooner or later.