Drug price reduction delayed due to suspension of execution

Preventing pharmaceutical companies’ tricks

Ministry of Health and Welfare implements amendment to the Health Insurance Act on the 20th, including drug price reduction and refund measures

As the so-called 'Drug Price Reduction Litigation Recovery and Refund System' is about to be implemented in earnest from the 20th, it is expected that some pharmaceutical companies will be put on hold in their tricks to preserve the prices of their own drugs by nullifying or delaying the effect of the government's drug price reduction disposition.

 

According to the Ministry of Health and Welfare on the 6th, according to the results of administrative litigation on drug price reduction, the amendment to the Health Insurance Act and subordinate laws to post-settlement the recovery and refund of drug costs between pharmaceutical companies and insurance authorities will take effect from the 20th.

 

The amendment requires domestic and foreign pharmaceutical companies to collect losses and interest if they obtain unreasonable profits, such as collecting drug costs without reducing the litigation period by suing to suspend the execution of drug price cuts decided by the government through litigation procedures.

 

Conversely, if the government loses the case and is found to have illegally lowered drug prices to a pharmaceutical company, it will be required to refund the pharmaceutical company's drug cost losses along with interest.

 

This regulation applies to administrative trials or administrative lawsuits filed after November 20, when the amendment goes into effect.

 

With the implementation of the system, the number of cases in which pharmaceutical companies protest against government drug price cuts and file 'applications for suspension of execution' and 'lawsuits for cancellation of administrative dispositions' without considering whether they win or not is expected to decrease.

 

Until now, in most cases, suspension of execution of drug price reduction measures was cited until the court's final ruling, which resulted in drug prices not being reduced or only after the lawsuit was completed several years later.

 

This is why criticism has been raised that patients had to take medicine at high prices during the period when drug prices were not reduced due to lawsuits, leading to a waste of health insurance funds.

 

According to the health insurance authorities, the financial loss of health insurance resulting from the suspension of drug price cuts in 47 lawsuits in which suspension of execution was cited since 2018 amounted to approximately 573 billion won as of the end of March 2022.

 

The Ministry of Health and Welfare plans to minimize health insurance financial losses by implementing the system and using related funds to strengthen patient access to rare disease treatments.