Gov't declines preferential pricing for innovative drugs

continously with “concerns over trade conflict” as a reason

“US and UK companies are also included as Korea Innovative Pharmaceutical Companies... should at least prepare a price preservation measure”

NA Health and Welfare Committee requests preparation of subordinate statutes under the Special Act On Fostering and Support of the Pharmaceutical Industry

Complaints are rising in various areas of the pharmaceutical industry with the Ministry of Health and Welfare maintaining its position that preferential pricing for new drugs manufactured by Korea Innovative Pharmaceutical Companies cannot be introduced in practicality due to issues including trade conflict, NHI finances, etc.

 

The industry is complaining that the Ministry of Health and Welfare taking too much of a protective stance rather than focusing on preparing preferential pricing measures based on the fact that not only domestic pharmaceutical companies but US and UK companies are accredited as Korea Innovative Pharmaceutical Companies.

 

On the 20th, MOHW reiterated its position that authorities must play caution in providing preferential pricing measures for Korea Innovative Pharmaceutical Companies and drugs that use domestically manufactured APIs, etc, virtually reaffirming its plan on the non-introduction of such policies.

 

Although a clause for providing preferential pricing to Korea Innovative Pharmaceutical Companies had been prepared as of December 11th, 2018 under the Special Act On Fostering and Support of Pharmaceutical Industry, the government had also expressed practical difficulties in its implementation as providing pricing support for specific pharmaceutical companies, despite its legal basis, can lead to trade conflict.

 

Regarding the enactment of subordinate statutes, the MOHW said it agrees with their necessity, but would need to consider whether it conforms to the international trade order.

 

The ‘Premium drug pricing system for global innovative new drugs,’ which had been announced on July 7th, 2016 to provide preferential treatment for drugs developed by such companies, had been deleted in December 2018 as a discriminatory factor as a result of negotiations on amendments and modifications of the US-Korea (KORUS FTA).

 

However, the domestic pharmaceutical industry stressed the need to promptly introduce a preferential pricing policy for innovative new drugs based on the fact that the criteria for accrediting innovative pharmaceutical companies are not limited to domestic companies.

 

Also, the demand for preferential pricing of innovative new drugs by domestic pharmaceutical companies has been increasing further as MOHW Minister Kyu-Hong Cho stated that “further phased price cuts are deemed necessary as the price of generics are more expensive in Korea than overseas” regarding price cuts for generic drugs that are considered the basis of Korea’s pharmaceutical industry at the NA audit this year.

 

The main reason for complaints raised by domestic pharmaceutical companies is that the Korean government is passive in preparing preferential treatment for innovative new drugs while concentrating on reducing the generic drug price.

 

Also, the industry pointed out that as multinational pharmaceutical companies are also selected as Korea Innovative Pharmaceutical Companies in addition to domestic pharmaceutical companies, the policy should not be considered as being favorable for domestic pharmaceutical companies.

 

Three multinational pharmaceutical companies – AstraZeneca Korea, Janssen Korea, and Korea Otsuka Pharmaceutical - have been accredited as Korea Innovative Pharmaceutical Companies.

 

In other words, if the MOHW continues to solely pursue the plan to lower generic drug prices without specific preferential treatment or preservation measures, the concern of domestic pharmaceutical companies is likely to continue to deepen.

 

A domestic pharmaceutical company official pointed out, “In every NA audit, the government had repeatedly promised policies to support drive new drug development, but no mechanism for preferential treatment for new drugs has been established as of now.

 

The MOHW seems to have no plans to provide preferential treatment for drug prices and only have plans to lower generic drug prices." The official said, “If preferential pricing for Korea Innovative Pharmaceutical Companies may cause a trade dispute, the government should also separately contemplate measures to resolve the issue as well.

 

Foreign pharmaceutical companies are also accredited as Korea Innovative Pharmaceutical Companies in addition to Korean companies.” Another official from a different pharmaceutical company in Korea also said, “The answer that the government would provide preferential treatment for new drugs after reviewing the international trade order and its financial impact on health insurance finances seems to mean that it will provide no preferential treatment.

 

If this measure cannot be implemented, other measures to provide measures to preserve the drug price.

 

The government has always been opposed to the request to preserve drug prices as well.” The official added, “If the government only formalizes the price cut of generic drugs and provides no response to the request for preferential treatment, reevaluation, or exceptions for the other drugs, domestic pharmaceutical companies will inevitably become more dissatisfied.

 

The current response that no preservation or preferential treatment can be provided to domestic drugs because of NHI finances is quite irresponsible.” Meanwhile, members of the National Assembly's Health and Welfare Committee have also been demanding a drug price preservation policy every year, but it seems difficult for the NA to make further requests with the government continuing to repeat its principled answer.

 

Following last year, members of the NA Health and Welfare Committee Rep.

 

In-Soon Nam, Min-Seok Kim of the Democratic Party of Korea, and Rep.

 

Jong-Seong Lee, Jong-Hean Baek, called for measures to provide preferential treatment for new drugs to foster Korea’s domestic pharmaceutical industry at this year’s NA audit.