"U.S. MFN drug policy will impact KOR's new drug companies"

Sejin Lee, CEO of Acadia Pharmaceuticals, anticipated that the U.S. 'most-favored-nation (MFN) drug price policy' will have a significant impact on the Korean biopharma industry

U.S. pursuing drug price comparison between major nations and to bring reduction…"A decrease in corporate value of Korean companies conducting new drug discovery inevitable"

"Companies that export biosimilars·generics will experience minimal impact…but they may face a decline in profitability"

Analysis suggests that the Korean pharmaceutical and biotech industry may be significantly impacted if the U.S.

 

government institutes a 'most-favored-nation (MFN)' policy on drug prices.

 

Sejin Lee, CEO of Acadia Pharmaceuticals, presented the potential impact of U.S.

 

drug price policy changes on the Korean pharmaceutical industry during the 'U.S.

 

Pharmaceutical and Biotech Market Entry Webinar' hosted by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) on May 30.

 

Lee warned that "MFN policy may structurally impact sales, new drug value, and global entry strategies of Korean companies.

 

PART II: U.S.

 

Trump Administration revives "most-favored-nation (MFN)" drug price policy.

 

The second Trump administration revived the MFN policy and announced that it would implement the lowest drug price after conducting a drug price comparison.

 

Earlier this month, U.S.

 

President Donald Trump signed an executive order reducing prescription drug prices within the U.S.

 

to the lowest among advanced nations (MFN).

 

The proposal is to compare drug prices with those of OECD countries where the GDP per capita is 60% or more of that of the United States and then lower U.S.

 

drug prices to the lowest among these compared countries.

 

The MFN policy will be applied to items without biosimilars and generics.

 

The U.S.

 

Department of Health and Human Services (HHS) aims to induce voluntary drug price reductions from pharmaceutical companies initially, then plans to mandatorily lower drug prices.

 

If the MFN policy is fully implemented, the prices of new drugs launched in the U.S.

 

are expected to be set lower than in other countries, such as the EU and Canada.

 

This process raises concerns that U.S.

 

drug prices for Korean pharmaceutical companies may decrease automatically.

 

Lee anticipated that the MFN policy would significantly impact new drug development companies.

 

It is predicted that if drug prices in the U.S.

 

fall to European or Canadian levels, pharmaceutical companies' projected revenues will decrease, and the asset value of new drug licenses will decline.

 

Companies that out-licensed might also receive less licensing revenue than initially expected.

 

Furthermore, global big pharma companies could launch products only in the U.S.

 

or delay launches in major countries to circumvent the MFN policy.

 

However, biosimilar and generic drug companies are not expected to experience a direct impact, as the MFN policy targets items without generic and biosimilar alternatives.

 

However, the profitability of these products could still come under pressure in the future.

 

Specifically, if original drug prices decrease, the standard prices for biosimilar products could also be lowered, potentially reducing sales incentives.

 

Lee explained, "For new drug development companies, U.S.

 

sales are substantial, so a drop in drug prices directly translates to a decrease in corporate value," and added, "Considering patient access and distribution structures, Korean companies with high-cost, high-risk pipelines could be more significantly impacted." "If price distortions between countries intensify, pharmaceutical companies might choose specific countries as priority suppliers, leading to supply imbalances," Lee pointed out.

 

"Ultimately, a global supply shortage phenomenon could become extended." "It is unlikely that the executive order issued by President Trump will be fully implemented as is due to legal issues within the U.S.

 

However, there is a possibility that it could be enacted into law by the U.S.

 

Congress.

 

In that case, the impact would be immense," Lee emphasized.

 

"The Korean government may need to conduct a preliminary scenario analysis and formulate a communication strategy with the U.S."