Controversy rise over standards used in pricing negotiations

Sales‧marketing ability of companies will be assessed in pricing negotiations, raising controversy

NHIS presents standards for determining market share of pharmaceuticals subject to pricing negotiations in the ‘Guidelines for setting the expected claims amount’

“May consider UBIST and IQVIA data, but NHIS data is more accurate

“It may seem cruel for the smaller pharmaceutical companies, but it is important.” The National Health Insurance Services is expected to consider the ‘marketing and sales’ ability of pharmaceutical companies as a major criterion in estimating the ‘expected claims amount’ of the companies, which is an essential part in drug pricing negotiations.

 

In other words, such abilities will be a major consideration in judging the ‘market share rate’ of drugs subject to negotiations.

 

As marketing and sales abilities inevitably correspond to the size of the companies, controversy over this criterion will be inevitable in the future.

 

# The NHIS held an online briefing session on ‘Guidelines for setting the expected claims amount’ for front-line pharmaceutical companies and explained the specifics of its implementation.

 

The NHIS guideline could be considered as the standard used by the NHIS in setting the expected claims amount of a drug during pricing negotiations, a process that is mostly conducted for new drugs.

 

The guideline will serve as a guide that shows what data is used to calculate the expected market size, growth, and share of a drug, depending on whether the drug has an alternative available, and how the expected claims amount is set.

 

In the drug negotiation process, the NHIS had been continuously criticized for conducting ‘negotiations in the dark.’ The guideline is interpreted as the authorities’ groundwork to dispel such concerns and conduct transparent negotiations.

 

The key item of focus among pharmaceutical companies was the method NHIS used to estimate the ‘market share’ of the drug subject to negotiation.

 

This is because the NHIS will be estimating the market size and growth rate with predictable data such as the NHI claims data, claims amount, and the number of patients, but will reflect the characteristics of pharmaceutical companies to estimate the market share of the drug subject to negotiations.

 

The ‘characteristics’ part of the pharmaceutical companies was designed so that the marketing and sales power of the companies will affect the results.

 

In other words, marketing for the subject drugs and the number of sales representatives will be used to judge the expected market share of the drug, and this number could influence the drug pricing negotiations.

 

Therefore, the NHIS said that the pharmaceutical companies will have to submit data on doctor surveys, hospital drug committee (DC) approval status, number of client clinics and hospitals, major pipeline, number of sales representatives, number of marketing PMs, and whether a domestic trial was conducted in the process of drug pricing negotiations.

 

Se Rim Oh, Head of Team in the NHIS’s New Drug Management Division, said, “It may seem brutal for the smaller pharmaceutical companies, but new drug development requires more than just will.

 

We need to be level in this aspect.

 

Developing a new drug and future occupation of the market both require money.” Oh said, “Submitting a survey on doctors or data on the number of PMs or sales representatives at your company will help estimate the claims amount during the negotiation process.

 

Even a small pharmaceutical company that has an excellent pipeline in its field and has enough clients, the aspects will be fully considered in our estimates.” In addition, the NHIS said that data from domestic claims companies may be used as a reference when the authorities estimate the total market size of the drug subject to pricing negotiations.

 

However, this only applies when domestic or foreign data on the drug is virtually nonexistent.

 

Some pharmaceutical companies have been submitting claims data from domestic pharmaceutical research institutions for support during the negotiation process, however, such data is not expected to be much help.

 

Oh said, “NHIS’s claims data is more accurate than UBIST and IQVIA combined.

 

However, we will consider using such data when identifying the market size.

 

We may consider using the data if the domestic data or the NHIS claims data we have is limited.”