Criteria for classifying combination drugs will be relaxed

Pharmaceutical industry·MOHW discuss key issues during the consultative body committee on the 26th

Combination drugs containing Phase 1 ingredients will be classified as Phase 2 if listed before 2013

Announcement in August→Health Insurance Policy Deliberative Committee in February of next year→price reductions in April…Phase 2 will be implemented in October, 2030

The maximum price ceiling for combination drugs will be reduced to 45% from 53.55%. 

Drug price reductions from the re-evaluation of previously listed pharmaceuticals, originally expected by the end of this year, have been postponed to April next year. As criteria classifying combination drugs into Phase 1 and Phase 2 are relaxed, the number of combination products categorized under Phase 2 is projected to expand significantly.  

​On the 26th, the Ministry of Health and Welfare (MOHW), the Health Insurance Review and Assessment Service (HIRA), and the National Health Insurance Service (NHIS) convened a consultative body with industry representatives, including the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA), to deliberate key issues surrounding the re-evaluation of listed pharmaceuticals.

​A substantial portion of the industry demands compiled and submitted to the government by the KPBMA was discussed.

Combination drugs containing Phase 1 ingredients also classified as Phase 2 

​Previously, the government maintained the stance that any combination drug containing at least one Phase 1 active pharmaceutical ingredient (listed before 2013) would be categorized under Phase 1.  

With a large proportion of combination drugs scheduled for inclusion in Phase 1, price cuts were expected immediately.  

The consultative body reached a consensus to separate the re-evaluation timeline from individual constituent active ingredients. In other words, combination drugs listed from 2013 onwards will be categorized under Phase 2 regardless of their Phase 1 component combinations.  

However, industry requests to adjust combination drug prices based on the combined sum of the 45%-reduced single-agent components were not accepted. The maximum price ceiling for combination drugs will be reduced to 45% based on the standard benchmark of 53.55%. 

'​Innovative and semi-innovative pharmaceuticals' special rates applied even to drugs failing evaluation criteria  

​During the re-evaluation of listed drugs, the government granted a special rate of 49% for four years to Innovative Pharmaceutical Companies and 47% for three years to Semi-Innovative Pharmaceutical Companies.

​Although proposals previously discussed excluding drugs that fail to meet baseline evaluation criteria from these special cuts, the government decided to maintain special rates as intended. 

​However, the 20% price penalty for non-compliance with evaluation criteria will apply to the 49% and 47% thresholds. For instance, if an Innovative Pharmaceutical Company holds a product that fails the baseline criteria, the reimbursement price will be reduced to 80% of the 49% rate.  

​Additionally, products failing baseline criteria due to consigned bioequivalence testing will be recognized if in-house bioequivalence studies are conducted before the listed drug re-evaluation is implemented.  

​Because Phase 1 will be implemented in April of next year and Phase 2 in October 2030, fulfilling baseline criteria before those dates will be credited in the re-evaluation pricing.  

​Incrementally modified drugs among dossier-submission products excluded from re-evaluation 

​The scope of exemptions from re-evaluation has expanded. Previously, exempt categories were restricted to single-listed products, low-priced pharmaceuticals, drugs designated to prevent market withdrawal, and orphan drugs.  

​Incrementally modified drugs (IMDs) among dossier-submission products have now been exempted from re-evaluation. Additionally, pharmaceuticals designated separately by the MOHW to ensure stable healthcare supply are also excluded.  

​Other categories exempt from re-evaluation include ▲identical formulation products without a history of ex officio price adjustments ▲products whose prices were increased within the past five years ▲biologics and emergency-use imported pharmaceuticals ▲basic IV fluids, narcotics, medical oxygen, nitrous oxide, radiopharmaceuticals, and artificial irrigation solutions.  

​Benchmark price set for September of this Year...Heavily discounted drugs adjusted to Phase 2  

​The methodology for determining the benchmark maximum ceiling price based on the Drug Reimbursement List as of September of this year, and reducing prices to 45%, will remain in place.  

​Although the pharmaceutical industry requested that benchmark pricing be set based on drug prices at the time of the 2012 blanket price reduction, the government did not accept this proposal.  

​However, for pharmaceuticals that have previously experienced substantial cumulative price cuts, the government plans to accept manufacturer applications to reclassify them as Phase 2 products.

​The government will accept adjustment applications after the official re-evaluation announcement. Because the criteria defining 'excessively adjusted prices' remain ambiguous, further industry feedback and petitions are expected.  

​Phase 1 re-evaluation implemented in April...Phase 2 in October 2030  

The implementation timeline for the Phase 1 re-evaluation has been deferred to April of next year. While December of this year was previously the primary target, the schedule was postponed to allow for industry feedback.  

​The re-evaluation will be officially announced this month, followed by deliberations by the Pharmaceutical Reimbursement Evaluation Committee and the Health Insurance Policy Deliberative Committee in February of next year. The price cuts will be executed in April to align with the regularized post-marketing price adjustment schedule (April and October).  

​Companies certified as Innovative Pharmaceutical Companies in December of this year are also slated to receive the special grace provisions. Furthermore, enterprises certified under the Semi-Innovative designation are also expected to qualify for the special provisions.

​Re-evaluation for Phase 2 pharmaceuticals is scheduled to commence in October 2030 and conclude by October 2036.