Gov’t raises price of Harmonilan due to unstable supply

After cutting its price through the PVA system

Government, ‘in a dilemma' lowering drug prices of drugs with unstable supply

Need rises for reform of the post-management price reduction system for drugs on the market

Enteral nutrition products Harmonilan(left) and Encover(right)

The insurance ceiling price of the enteral nutrition formula Harmonilan (B Braun Korea), which the company has been experiencing difficulties in ensuring supply and demand recently, is expected to rise from April.

 

The company had continuously been applying to register the drug as a ‘drug shortage prevention drug' and preserve production costs due to its low profitability, to no avail.

 

This is why criticism arose on how the government has deferred taking measures until now and only set out to adjust the price ceiling after the supply and demand instability intensified.

 

Harmonilan’s actual transaction price had been cut 2 years ago According to industry sources on the 20th, the company has completed negotiations to raise the ceiling price of Harmonilan with the government, and the new drug price is expected to be applied next month after being reported to the Health Insurance Policy Deliberation Committee.

 

Encover and Harmonilan are the two products that dominate the enteral nutrition market.

 

Enteral nutrition products are given to patients who have difficulty getting nourished through food.

 

The product is directly into the digestive tract through a tube.

 

They are essential for patients with eating disorders.

 

However, enteral nutrients such as Harmonilan and Encover are often in short supply depending on import situations, which has caused a lot of frustration among patients.

 

This is why healthcare providers and patients have long requested such enteral nutrition products be designated as a drug shortage prevention drug, but health authorities have been unwilling to do so.

 

Pharmaceutical companies have also requested the designation.

 

Because they are low-margin products, the companies explained that they would need to raise the price of the drugs to conserve their cost and keep up with the high demand.

 

However, the price of these enteral nutrition products has fallen in the past due to actual transaction price cuts and the Price-Volume Agreement system.

 

The price of Harmonilan 200ml was lowered from KRW 2,291 to KRW 2,282 in January 2022 as part of actual transaction price cuts.

 

In the case of Encover, the price of the 200ml product had fallen 2.9% in October 2022 under the PVA system.

 

The company had applied for price adjustments at the time, but the price had not been increased then.

 

Such price reductions are regarded as a major cause of supply instability, as they decrease profitability.

 

Therefore, the price increase granted for Harmonilan this time is regarded as one example of the government's inconsistent drug price adjustment policy.

 

Drug that require price increases are also subject to price cuts The government has been postponing the implementation of the actual transaction price cut plan, which had been scheduled to take effect in January.

 

This in part is interpreted as the government’s effort to to prevent cases like Harmonilan, as drugs with unstable supply and demand may be subject to price reductions.

 

According to government officials, it is likely that the price reduction will not be implemented in April either.

 

The postponement has also halved the health insurance financial savings the government sought to earn through the drug price reduction.

 

The government seems to be in a dilemma, caught between its recent move to broadly raise drug prices of drugs with unstable supply and measures previously prepared to cut the prices of existing drugs.

 

The industry is calling for a complementary measure to prevent price cuts not only for existing drug shortage prevention drugs but also for drugs that are likely to have unstable supply and have difficulty continuously treating patients.

 

An industry official said, "The list of non-eligible items should be expanded after close examination when selecting subjects for actual transaction price cuts and PVA price cuts reductions.

 

We need to get rid of the absurd situation where a drug subject to a price reduction suddenly becomes a drug subject to a price increase.”