Gov’t will announce preferential pricing measures by June

preferential drug pricing measures for excellent pharmaceutical companies that drove innovation in Korea’s healthcare industry through R&D, essential medicine, job creation, etc.

Preferential drug pricing will be granted to drugs using domestic APIs... Fast Track will be prepared to raise prices for drugs with frequent stock shortages

Will start preparing an integrated plan for adjusting the upper limit of drug prices... Will improve clinical reevaluation and PVA system of listed drugs

The government plans to prepare and announce the standards for providing preferential drug prices to pharmaceutical companies that have led healthcare innovation through R&D investment, supply of essential medicines, and job creation by June at the latest.

 

The government will also provide preferential drug pricing for drugs that use domestic APIs and establish a procedure to promptly raise drug prices of drugs experiencing supply instability due to rising costs by June.

 

Also, for efficient health insurance drug expenditures, the MOHW will devise a mid-to-long-term strategy to integrate the currently fragmented mechanisms for adjusting the upper limit of insured drug prices, while also promoting clinical reevaluation of listed drugs and rationalization of the price-volume agreement (PVA) system.

 

The MOHW made the announcement through the '2024 Implementation Plan for the 2nd Comprehensive National Health Insurance Plan' on the 30th.

 

The MOHW plans to prepare a preferential treatment system for innovative new drugs, establish a stable supply support system for essential medicines, and promote efficient drug price expenditures through the detailed plan for the 2nd Comprehensive National Health Insurance Plan.

 

▲Advancing the preferential treatment system for innovative new drugs=The MOHW will strengthen compensation for innovative growth efforts, including fostering a virtuous cycle for new drug development through R&D investment, etc.

 

This is to support the creation of a sustainable pharmaceutical and biotechnology innovation ecosystem.

 

To this end, the evaluation criteria and procedure regulations for medical care benefits of medicines will be revised by the first half of this year.

 

Specifically, the government will ease the standard for cost-effectiveness evaluations of new drugs that meet the innovation evaluation criteria, such as those that demonstrate clinical superiority.

 

Preferential pricing will be applied to companies that lead healthcare innovation, including companies that invest in R&D, supply essential drugs, create jobs, and ensure stable supply.

 

The detailed action plan will specify how the innovativeness of new drugs should be defined to apply a flexible scope for acceptance during cost-effectiveness evaluations.

 

The plan will apply preferential pricing for new drugs made by pharmaceutical companies with a high R&D ratio and expand subjects for the risk-sharing agreement (RSA) scheme.

 

It will allow RSA to be applied to life-threatening or chronically debilitating diseases that do not qualify for the current special exception of calculations.

 

The MOHW estimates the budget for the program to be around KRW 81.9 billion.

 

▲Strengthening the support System for a stable supply of essential medicines=To ensure the stable supply of essential medicines in terms of health security, prices of essential drugs will receive preferential treatment upon listing, and drugs with low profitability will be protected.

 

The MOHW has decided to give generics of designated ingredients of national essential drugs a higher drug price than other generics if they are newly registered using domestic ingredients.

 

The preferential rate is 68% of the original drug price, which is higher than the 59.5% granted to first listed generics.

 

In the case of generic drugs, the upper limit will be raised if a listed generic drug designated as a national essential medicine changes its API from foreign to domestic.

 

Also, the government will establish a procedure to quickly raise the price of drugs that have become difficult to produce due to unstable drug supply and rising costs after COVID-19.

 

The government plans to shorten the period required to raise drug prices from '210 days or more' to '30 days or more' by streamlining the review process for the Health Insurance Review and Assessment Service's upper limit increase adjustment criteria and simultaneously negotiating drug prices with the National Health Insurance Service.

 

It will also strengthen the adequacy of compensation for drugs that fall under the drug shortage prevention program by reflecting the manufacturing cost and adjusting the upper limit for herbal medicines covered by Korean medicine insurance.

 

To this end, the MOHW will revise the standards used for determining and adjusting medicines that fall under the MOHW's notification by the first half of this year.

 

Its expected budget is around KRW 75.6 billion.

 

Efficient management of drug expenditures= The government will also maintain rational expenditure management and financial sustainability of Korea’s national health insurance through drug price reevaluations and ensure both drug quality and reasonable cost.

 

As a mid-to-long-term strategy, the government plans to integrate the currently fragmented drug price ceiling adjustment mechanism.

 

The government plans to order a policy research service in May to establish an integrated drug price adjustment mechanism that can accommodate for the authorities’ plans above.

 

More specifically, the research will analyze the current status of the drug price follow-up system as a whole, compare its performance with overseas cases, and prepare a system improvement plan tailored to domestic conditions.

 

Drugs that have been listed for a long time but lack clinical utility will be selected and reevaluated based on current standards.

 

If they fail to prove clinical utility, reimbursement of those drugs will be restricted.

 

Also, the government will maintain a rational follow-up system by adjusting the reimbursement range and drug price through the reevaluation of reimbursement adequacy and reevaluation through comparison with foreign drug prices.

 

The government will also rationalize the PVA system.

 

For example, the government plans to increase the price discount rate for drugs with high claims amounts, such as those whose claims exceed KRW 30 billion.

 

It will also expand the exclusion criteria for the PVA system.

 

The government explained that the PVA system will be improved by expanding the current standard of less than KRW 2 billion to less than KRW 3 billion.

 

Losses incurred during the stay of execution of rebate drug price cuts will be collected afterward to minimize financial losses.

 

To solidify these plans, the MOHW will revise the standards used for determining and adjusting medicines within the first half of this year.

 

The MOHW has estimated the drug cost savings incurred by the administrative action to be around KRW 242.8 billion.