Innovative Pharma Company certification reform…"application opens in August"

The MOHW has decided to implement an absolute evaluation method (65 points or higher)…no limit on the final number of designated companies

In the process of establishing the review criteria, including new indicators, such as supply chain stabilization

More than 100 domestic and international companies are expected to apply…'compliance management indicators' have been added to the qualitative evaluation

The Ministry of Health and Welfare (MOHW) plans to begin accepting applications from pharmaceutical companies as early as August to implement the reformed "Innovative Pharmaceutical Companies" certification system, following the completion of remaining administrative procedures.

As both domestic and multinational pharmaceutical companies have shown strong interest in the reformed certification system, the MOHW has decided to implement an absolute evaluation method, granting the designation of an Innovative Pharmaceutical Companies to all companies that score 65 points or higher.

If applications are accepted in August as scheduled, the final list of certified pharmaceutical companies is expected to be officially notified (announced) by the end of December following the review process.

On the 26th, Lim Kang-seop, director of the Pharmaceutical and Bio Industry Division at the MOHW, explained the administrative plan to reform the "Innovative Pharmaceutical Companies" certification system during a meeting with KSPA News.

The MOHW has issued legislative and administrative notices regarding the enforcement decree·enforcement rules for related notifications of the "Special Act on Fostering and Support of Pharmaceutical Industry" as of the 26th of last month.

The Ministry plans to finish gathering opinions by the 6th of next month, followed by an internal review, a regulatory review by the Prime Minister's Office, and a review by the Ministry of Government Legislation.

The reform plan will be implemented immediately upon finalization and promulgation. The MOHW plans to start accepting applications for innovative pharmaceutical companies based on the new criteria as early as the beginning of or mid-August and continue through the end of September.

Key indicators for the certification review include whether the R&D-to-revenue ratio meets the standards and whether any disqualifying factors exist. Disqualifying factors include illegal drug rebates and unethical conduct by executives or employees. Exceeding the threshold in these areas will result in failure to obtain certification.

Lim explained that there will be no limit on the final number of innovative pharmaceutical companies, and certification will be granted through an absolute evaluation.

Lim stated, ​"Certification as an innovative pharmaceutical company is possible if a minimum score of 65 points is achieved. The review will be conducted as an absolute evaluation," and added, "After the Korea Health Industry Development Institute (KHIDI) conducts an initial document review of the applicant companies, those that pass the criteria will undergo deliberation by the committee. We expect to be able to notify the final list by the end of December this year."

Given the high interest from both domestic and foreign pharmaceutical companies, with over 100 companies expected to apply, the specific schedule for the official notification of the list may change.

Lim plans to hold briefing sessions and public-private consultations regarding the certification system for domestic and foreign pharmaceutical companies between May and June.

Lim also noted that further review by the MOHW is required regarding the specific evaluation methods and score allocations for new indicators, such as supply chain stabilization for medicines experiencing supply instability.

Lim stated, ​"This time, both quantitative and qualitative indicators will be reviewed together. Quantitative indicators are being simulated on a 5-point scale, while qualitative indicators will be evaluated according to guidelines for the reviewers," and said. "We are working with the KHIDI to determine evaluation methods suited for new indicators like supply chain stabilization."

Lim further stated, "Once the detailed review guidelines are established, we plan to provide briefing sessions or further guidance. A briefing session could be held around late May or early June," and added, "There are requests to include compliance management indicators related to pharmaceutical rebates in the review process, but these are already reflected in the qualitative indicators."

Lim concluded by stating that "The qualitative evaluation already accounts for instances where a pharmaceutical company has independently adopted a Compliance Program (CP) and operated a compliance management program following the discovery of rebates," and added, "The legislative notice contains only the broad framework of review items, and the method of qualitative evaluation will be determined by the KHIDI's reviewer guidelines and the items in the documents submitted by the companies. Even if there were past rebates, companies will be able to appeal by demonstrating how they have since strengthened internal controls."

Meanwhile, Semi-Innovative Pharmaceutical Companies are also expected to be reviewed and selected through an absolute evaluation based on R&D standards and disqualifying factors, similar to the process for Innovative Pharmaceutical Companies.