Exempt PVA for drugs with claims less than ₩10 billion

Pharma industry will not accept the 'less than 90% of the arithmetic mean' criteria…requests to retain the current plan in place

Suggests adding ‘low-priced drugs’ to those eligible for price discount rate reduction

The pharmaceutical industry officially delivered its position that it cannot accept any of the measures set for the improvement of the detailed guidelines for the Price-Volume Agreement negotiations that were disclosed by the National Health Insurance Service.

 

The NHIS had collected industry opinion until the 14th after disclosing the proposed revisions to the KPBMA, KRPIA, and KOBIA at the 10th public-private consultative meeting that was held on the 2nd.

 

In particular, the KPBMA opposed both the revision of Article 6.1.1 of the guideline that calls for expanding the total claims amount set for a product group from 'less than ₩1.5 billion' to 'less than ₩2 billion,' and Article 6.1.2 that reduces 'items with an upper limit of less than the arithmetic average of drugs with the same ingredient' to 'less than 90% of the arithmetic average.' In addition, the industry added that the items that were initially listed at a low price should be added to subjects eligible for exclusion from price cuts or price cut rate reductions.

 

The main reason why the industry opposed the improvement in the PVA guidelines was that the financial savings gained on the NHIS's part were insignificant.

 

If the revision that expands the amount of the annual claims from less than ₩1.5 billion to less than ₩2 billion is applied, drugs that have an annual claims amount of ₩1.2 billion will also be subject to PVA negotiations if their use volume increases by over ₩800 million.

 

If the amount is calculated at the discount rate of 6.0% in line with the reference formula, the savings amount will be around ₩120 million.

 

The industry pointed out that “₩120 million is an insignificant amount of savings on the NHIS’s part.

 

However, from the small-and-mid-sized pharmaceutical company’s viewpoint, a 6% drop in a drug’s price will be discouraging as the company will not invest in such a product as its main item, which will then become an obstacle to corporate growth that can be achieved from sales expansions.

 

Therefore, from the industry’s viewpoint, the government's negotiations should be focused on mid-to-large sized items whose use exceeds ₩10 billion in line with the PVA system's purpose, and the amount subject to exclusion from PVA to be increased to be set at ₩10 billion or less.

 

Also, on changing the ‘same ingredient’ term to ‘main component code’ for all items other than the disposable eye drops and reducing the limit from the arithmetic average to 90% of the arithmetic average, the industry requested the government retain the current guideline.

 

The industry said, “The arithmetic average is a social convention and an absolute standard for judging whether the insurance finances can be saved, and therefore, it is in line with the system's purpose to exclude drugs that cost under the arithmetic average from negotiations.

 

Abuse of the system, such as evading negotiations by voluntarily reducing the price to less than the arithmetic average may be well prevented by changing the time of application of the arithmetic average to the time when the monitoring starts.” With the opinion that the arithmetic average will be adjusted with the graded system for pricing generic drugs and the reevaluations planned to be implemented in July 2023 for already-listed drugs, the industry expressed concerns that enforcing the revisions will rather diminish the companies’ efforts to save NHI finances through voluntary low price listing or voluntary price cuts.

 

In addition, the industry requested the ‘low-priced drugs’ to be added to drugs eligible for price cut rate reductions as proposed by the public-private consultative body.

 

The currently announced guideline allows companies that voluntarily cut the price of drugs (if the 1-year period from the voluntary price cut is included in the period of analysis) may be exempted from a single negotiation under the PV guidelines or be calculated for a negotiation reference price that takes into account the voluntary price cut rate.

 

The industry said, “Although drugs that were initially announced at a lower price (scheduled sales price) than what can be calculated have a positive effect on health insurance finances from the time of its listing, the reduced rate is not reflected during PVA negotiations.

 

We ask that new drugs that are initially listed at a low price also be applied the exemption for one single negotiation or be reflected for its low price when assessing eligibility for PVA negotiations and in calculating the negotiation reference price.”