Legislation to prevent reverse-payment agreements

Bill submitted for 'price cuts or reimb suspensions' for companies that conduct collusion

‘Will prevent collusion between pharmaceutical companies and prevent financial leakage’

Rep. Young-Seok Seo presents a bill as representative to reform the National Health Insurance Act

Legislation is being promoted to eradicate the so-called 'generic reverse-payment agreements’ that prevent the launch of generic drugs by delaying or suspending the price cuts made on new drugs.

 

If passed, the legislation will stipulate the reduction in the reimbursement price or suspension of reimbursement of drugs that took part in unfair collusion, such as reverse-payment agreements.

 

Rep.

 

Young-Seok Seo of the Democratic Party of Korea announced on the 27th that he proposed a bill for the partial amendment to the National Health Insurance Act that contained the contents above.

 

The current law sets the price of the original drug that is currently listed for reimbursement in Korea at 70% of its current price, and the price of the generic at 59.5% of the original drug’s price when the first generic version of the original drug is released.

 

When the third generic drug is released, the price of the original and the generic drugs are set at 53.55% of the previous existing drug price.

 

Rep.

 

Seo believes that although the launch of generic drugs is what leads to the price reduction of the original drug, the issue is that some companies are employing expedient measures to avoid lowering the price of their drugs with collusion.

 

The Fair Trade Commission had uncovered acts of collusion between companies, where pharmaceutical companies producing and releasing generic versions agreed not to produce or release their respective generic versions in return for receiving exclusive domestic distribution rights from the original company.

 

In this regard, Rep.

 

Seo proposed a bill to prevent pharmaceutical companies from making unfair profits through collusion by reducing the reimbursed insurance ceiling price or suspending reimbursement of drugs that took part in unfair collusion.

 

Rep.

 

Seo explained, “If generic drugs are not released due to collusion between pharmaceutical companies, it is the patients that suffer the burden of drug cost and the health authorities that bear the increased financial leakage burden.

 

The bill can establish a fair drug sales order and prevent waste of Korea’s health insurance finances.”