Will losses from drug price cut dispositions be recovered?

Gov-Pharma companies clash over indemnifying losses from price discounts and reimbursement suspensions

Pharma companies "Compensate for damage until losses incurred are fully recovered”

Claims for the need for deliberation committee to calculate the losses from disease code deletion and adverse effects on market share, etc.

The Ministry of Health and Welfare and the pharmaceutical companies are intensely arguing over the application of an indemnification system where the pharmaceutical company’s damages are refunded by the government if they win the administrative suits for price cuts and reimbursement suspensions.

 

As the system has already met the administrative notice period and completed the Regulation Reform Committee procedures, all that is left is for the MOHW to decide upon its implementation and period, but the pharmaceutical companies have been raising issues and requesting the government to amend the specifics in the bill.

 

On the 14th, the MOHW had announced it had started an internal review process for the partial revision of the “Criteria for Decision or Adjustment on Drugs.” The administrative pre-announcement of the amendment that was presented on January 17th contained guarantees that refunds losses incurred by drug manufacturers, etc.

 

as results of administrative trials and litigations.

 

In essence, the government will recover the damages incurred if the pharmaceutical company wins after filing an administrative lawsuit against the MOHW’s disposition such as drug price cuts, reimbursement suspensions, or deletions.

 

The pharmaceutical industry has been protesting that the system does not fully reflect reality.

 

The companies are stressing that, unlike the price cut dispositions where the price can be immediately restored if the company wins the suit, damages from dispositions such as reimbursement suspensions or reductions cannot be recovered even afterward.

 

For example, just a 1 month's suspension of reimbursement would result in the deletion of the prescription code at healthcare institutions, due to which the drug would lose its foothold in the market.

 

Reducing the scope of reimbursement would also render considerable losses in prescriptions as the doctors would switch to other drugs, but the refunded amount is too insufficient to cover the losses.

 

The companies believe that if they win the suits after reimbursement suspension or reduction dispositions, the government should compensate for its damages until the company fully recovers the damages caused by the disposition.

 

In addition, the pharmaceutical companies insisted that an appropriate rate should be set through calculation by the Loss Estimation Committee rather than the MOHW unilaterally calculating the refund rate for drugs subject to reimbursement application suspensions or reductions.

 

Whether the government would accept the industry’s argument will affect the final implementation of the system.

 

If the MOHW accepts a broad range of opinions made by the industry, it may be necessary for the authorities to take additional administrative notice procedures.

 

The MOHW is currently preparing the final administrative notice for review by the Ministry of Government Legislation after completing the Regulation Reform Committee procedures as well as opinion collection from the industry.

 

An official from MOHW said, “We are internally discussing whether to accept the opinion collected during the administrative pre-announcement period.

 

It has not been decided whether we will be reflecting the changes, and after we make a decision, we will receive a review from the Ministry of Government Legislation."