Only K-CAB continues to be applied refund-type PVA

PVA for Boryung’s Kanarb terminated in 2018... No additional PVA contracts have been made since K-CAB

Only a few homegrown novel drugs apply for PVA due to strict requirements... need to expand options

HK Inno.N’s ‘K-CAB Tab’ is the only drug that is applied the refund-type Price-Volume Agreement (PVA) system in Korea.

 

The fact that the system is only applied to homegrown new drugs, and some companies do not prefer double pricing caused by refunds are pointed to as reasons for the low utilization rate of the PVA system.

 

The National Health Insurance Service announced this at a training session organized by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) on the revision direction of the 'drug pricing negotiation guideline' and how to conduct drug pricing negotiations.

 

The refund-type PVA is a system that allows pharmaceutical companies to maintain the insurance ceiling price of their drugs rather than undergo price cuts by refunding a portion of the pharmaceutical expenditures back to the authorities when a drug is subject to pricing negotiations with NHIS due to increased usage.

 

The system is advantageous for domestic pharmaceutical companies that plan to emerge into overseas markets because their listed drug price is set higher than the actual drug price.

 

The refund-type PVA system had been introduced in 2014 to encourage and foster exports of homegrown new drugs.

 

However, the conditions required to be eligible for the system are strict.

 

Only drugs from Korea Innovative Pharmaceutical Companies that meet the Health Insurance Review and Assessment Service’s standards as a ‘drug that affects healthcare’ may apply for the system.

 

Therefore, drugs whose entire process was manufactured in Korea and was approved as a first-in-class drug, or drugs for which the clinical trials for approval were conducted in Korea, or whole annual R&D investment ratio to annual sales exceed that of the average invested by Korea Innovative Pharmaceutical Companies are eligible to apply for the refund-type PVA.

 

When taking into account drugs that have given up domestic release and drugs that have not considered overseas expansions, only a few drugs are eligible to use the refund-type PVA system among the 36 approved homegrown new drugs, This is why only the new gastroesophageal reflux disease drug K-CAB and new hypertension drug Kanarb (Boryung Pharmaceuticals) had signed a contract for the refund-type PVA so far.

 

In the case of Kanarb Tab, the company signed a refund-type PVA contract in August 2015.

 

Without extending the contract term in 2018, its insurance price ceiling was lowered in August 2018 under the PVA system.

 

Accordingly, the price of Kanarb 60mg, which was listed at KRW 665 in March 2016, was lowered to KRW 653.

 

In the case of K-CAB, its company signed a contract with NHIS in June last year and applied the refund-type PVA.

 

Although the drug was eligible for ceiling price cuts, the company decided to refund the increased pharmaceutical expense to the NHIS and maintain its ceiling price.

 

Accordingly, the price of K-CAB 50mg is currently maintained at KRW 1,300 since its listing in 2019.

 

This year, K-CAB became subject to monitoring under the PVA system for the second time.

 

During the monitoring period, the refund amount is deducted from the claims amount for analysis.

 

If K-CAB’s usage increases further, negotiations will be held to set an additional refund rate compared to the existing refund rate.

 

If the refund contract is terminated or a generic is listed, the ceiling price is lowered to the predetermined price.

 

Since K-CAB’s contract was signed last year, the ceiling price of KRW 1,300 will be maintained until June 2024.

 

However, its actual price is expected to be less than this due to the two PVA negotiations that were conducted until now.

 

The maximum price reduction rate during PVA negotiations is set at 10%.

 

The industry is claiming that the system’s scope application should be broadened to activate the refund system.

 

A pharmaceutical industry official said, "This system, which can only be used for homegrown new drugs, should be applied to incrementally modified drugs (IMDs) so that pharmaceutical companies can increase their options and decide between lowering their drug price or making refunds."