[Reporter's View] Contradiction of "K-passing" and a new drug powerhouse

The President Lee Jae Myung administration is promoting the growth of the pharmaceutical and biotech industry with goals of 'Rising as a leading country in global pharmaceuticals,' 'Strengthening treatment accessibility for patients with severe and rare/intractable diseases,' and 'Expanding fair value compensation for innovative new drugs.'

The government's stance on the end goal of the drug pricing system reform plan, which recently passed the Health Insurance Policy Review Committee, is to transform the inherent nature of Korea's pharmaceutical and biotech industry, aiming to 'develop new drugs·stably supply essential medicines·expand patient accessibility to reimbursement.'

Despite the government's policy vision, South Korea is facing "New Drug Korea-Passing." The South Korean government is not immune to the phenomenon in which pharmaceutical companies that have developed innovative new drugs delay or abandon their launches in the Korean market.

While "New Drug Korea-Passing" has long been practiced primarily by global pharmaceutical companies, the rapid improvement in domestic firms' drug development capabilities suggests a future in which Korean deciding to bypass Korea. One of these examples is Cenobamate (brand name Xcopri), a new epilepsy drug developed by SK Biopharmaceuticals and Dong-A ST.

It is a contradiction that South Korea, while seeking to become a global pharmaceutical powerhouse, must now worry about the availability of patient treatment, given the "Korea-Passing" phenomenon.

The bigger issue is that it is difficult to find any serious deliberation at the government level to establish a solution.

The cause of "New Drug Korea-Passing" is "low National Health Insurance (NHI) reimbursement prices for new drugs." Criticism follows that Korea's maximum reimbursement prices for new drugs are only half the OECD average and about 1/30 of those in the United States.

When pharmaceutical companies accept Korea's low drug prices, other countries may use them as a reference, leading companies to abandon the relatively small Korean market. Ultimately, the victims of these decisions are the patients who must bear the full burden.

The reason the South Korean government tries to set new drug prices as low as possible is not entirely incomprehensible. Since they attempt to set prices using the NHI fund, composed of citizen contributions, as the sole source of financing, it is inevitably difficult to determine a price that fully reflects the value of an innovative drug.

Ultimately, the conclusion is reached that to realize a pharmaceutical and biotech powerhouse and solve the "New Drug Korea-Passing" problem, substantial financial resources are required to set prices that reflect the proper value of new drugs.

This means that government efforts to secure separate financial resources outside of the NHI fund to determine new drug prices are needed immediately. The solution to achieving both the conflicting tasks of securing the sustainability and soundness of NHI finances while strengthening patient access to medicines also involves breaking away from the single-source NHI funding structure.

The consequence of failing to manage the national task and securing separate funds has consistently manifested as a reduction in pharmaceutical spending through generic drug price cuts, repeated in the same pattern every time. This is why criticism arises that, while intense strategic posturing continues between the Ministry of Health and Welfare (MOHW), global pharmaceutical companies, domestic pharmaceutical companies, and patient groups over how to distribute limited resources, only innocent generic companies are hit.

Unless the structure that relies entirely on the NHI fund to expand innovative drug reimbursement, amid an era of super-aging and the increasing launch of ultra-expensive new drugs, is reformed, there is no place for the MOHW, the domestic pharmaceutical industry, or patients.

Various methods for creating separate funds beyond the NHI can be discussed. These include establishing funds dedicated to ultra-expensive medicines, similar to the UK's Cancer Drugs Fund, or implementing policies that allow a portion of tobacco taxes or lottery proceeds to be used for innovative drug reimbursement.

Legislative bills for such policies have been proposed in the National Assembly for over a decade. The key is the government's will. Responsibility should not be placed solely on the MOHW. It requires a policy decision from the Ministry of Economy and Finance, the Ministry of Planning and Budget. Furthermore, the Prime Minister and the President. Are they not the drivers who set the policy goals of leaping into a pharmaceutical and bio-tech powerhouse and strengthening patient access to new drugs?

In the National Assembly, policy seminars calling for the rapid reimbursement of innovative new drugs and the expansion of reimbursed indications are held daily, and the heavy responsibility for solving the problem is habitually returned to the Bureau of Health Insurance Policy of the MOHW. Can we continue to demand a solution for the expansion of new drug reimbursement and the "Korea-Passing" problem from the MOHW alone?

It is time for the fiscal authorities, besides the MOHW, to take the lead with proactive measures to solve the task of securing separate funds through social consensus, and to immediately resolve the contradiction where being a 'new drug powerhouse' and "Korea-Passing" coexist. The President's political slogan, "I'll do it," should not be an exception when it comes to strengthening access to innovative drug reimbursement and expanding financial resources.