Generic prices are 41-54% more expensive than foreign ones

Posted in the Journal of Health Economy and Policy Studies, Switzerland and Japan have high prices

The level of generic prices in Korea is 41 to 54% higher than that of foreign generics.

 

This leads to an interpretation that if domestic generics are replaced with foreign medicines, 41-54% of costs will be reduced if only tariffs and transportation costs are compared.

 

The findings were recently published by The Korean Association of Health Economics and Policy in its "The Cross-National drug price computing on the methods" (Korea University's College of Pharmacy, Bae Eun-mi, Choi Sang-eun, Kang Daewon, and Kyungsun Shin).

 

To investigate generic drug price levels in Korea, we conducted a cross-national drug price comparison.

 

Also, it was investigated whether the price level could differ when the price comparison method was changed.

 

Bilateral comparisons with 15 countries were conducted for the top 23 molecules based on health insurance claims data.

 

As a result, the price level of generic drugs in Korea was slightly different depending on the method, but it was overall higher than that of comparison countries.

 

The weighted average price of generics was similar to that of the brand, and none of the launch date, the market share, and the number of competing items appear to affect the drug price level.

 

This study has demonstrated the sensitivity of cross-national drug price comparisons to the methods used, including comparison countries, weights, and price type.

 

A total of 23 ingredients are included in this analysis, and the 2016 claims for these drugs are about ₩2 trillion.

 

It accounted for 18.4% of all claimed medicines at ₩800 billion.

 

According to the analysis, the price level of generics in 15 countries could be seen as 61% to 78% of Korea on average (simple average comparison basis), and the average of Group A, which has a higher economic level than Korea, was 77% to 88% of Korea's drug price level.

 

When usage weights are applied, the level of drug prices in foreign countries is lower, indicating 41%-54% of the level of drug prices in Korea.

 

In terms of the level of drug prices by country, Switzerland and Japan were the only countries that could be said to have higher generic prices than Korea.

 

Some countries, such as the United Kingdom and Germany, had higher generic prices than Korea, but it was not known at what level the actual price (the country's weighted average price) was formed between the highest and lowest prices.

 

The price level of brand drugs was formed slightly higher than the generic weighted average in Korea, and the weighted average of generic drugs in Korea was located at the top of the overall generic price range.

 

Korea's upper limit price included wholesale distribution margins and VAT without a separate retail margin, and the average of 15 countries was similar to that of Korea (94-114%) compared to that of other countries.

 

The drug price level by ingredient was overwhelming for systemic antibiotics, digestive systems, and metabolic medicines compared to brand drugs, but the price was similar to brand drugs.

 

When listed in order of the amount of claims, the Korean generic price was higher than the foreign generic price in the ingredients with high claims.

 

The earlier the initial notice date, the higher the proportion of generic drugs used, but the lower the price compared to brand and foreign generic prices.

 

Although the generic share of ingredients with a large number of items was high, the price level was not lower than that of foreign countries, apart from the presence of competition.

 

"Considering that most countries (excluding the UK) in the analysis use a reference pricing system and that there will be price competition between generics, it can be assumed that there will be more use of low-cost generics," the research team said.