Price cuts loom over 3 or fewer same-class listed drugs

“Most products made by three or fewer manufacturers have low profitability, excluding some CNS drugs”

“Existing products could be discontinued if reimbursement prices are reduced”

Similar products received preferential treatment during the 2012 price cut to ensure stable supply

Industry concerns are growing that lowering reimbursement prices under the price cuts applied to already-listed drugs—including products manufactured by three or fewer companies—could worsen medicine supply shortages.

Some stakeholders have proposed exempting products made by three or fewer manufacturers from the reassessment process until a fourth manufacturer enters the market, at which point the price reduction could be applied.

According to industry sources on the 13th, discussions are increasing over products with three or fewer manufacturers ahead of the implementation of reimbursement price cuts under the reassessment of already-listed drugs.

The industry is requesting that products with three or fewer manufacturers be excluded from the reassessment program, which is scheduled to continue over the next 10 years beginning this year

The concern is that as many of these products are already unprofitable, discouraging new market entrants, further price reductions could prompt existing manufacturers to discontinue production.

Industry representatives note that when the government implemented across-the-board drug price cuts in 2012, it introduced preferential pricing for products with three or fewer manufacturers to help ensure a stable supply.

Since then, original drugs in this category have received a 70% premium, while generics have received a 59.5% premium.

One pharmaceutical industry official said, "Products manufactured by three or fewer companies should be excluded from uniform price reductions. Reassessment could simply be postponed until a fourth manufacturer enters the market, allowing a stable supply system to be maintained."

Another industry source added, "If a product continues to have fewer than 3 manufacturers over time, it indicates that other companies have chosen not to enter because the market is not commercially viable. If one or two of the remaining manufacturers discontinue production, supply disruptions could occur. There is sufficient justification for exempting these products from reassessment."

The issue was also raised during the working-level consultative body on drug pricing reform, but discussions have so far focused only on exempting products with a single listed manufacturer from reassessment.

Expanding the exemption to products made by three or fewer manufacturers would reduce the scope of the reassessment compared with the government's original plan and would require further discussions with the authorities.

Nevertheless, the industry argues that preventive measures are needed to avoid supply disruptions after the reassessment begins.

An industry official said, "About 8,000 active ingredients are currently listed for reimbursement. Roughly half are supplied by only a single manufacturer. Among the remaining products, those produced by three or fewer companies—apart from certain central nervous system drugs with high market entry barriers—are generally low-profit, low-attractiveness products. If reimbursement prices are reduced further, production discontinuations could become a reality."