First round of listed-drug reassessment results open for NOV preview

MOHW, HIRA brief pharmaceutical companies on the 11th

Companies to be allowed to set product-specific adjusted prices before December committee review

Around 16% price reduction may qualify for shift from Phase 1 to Phase 2…case-by-case review

PVA still applies after 45% target reached…only actual transaction price cuts exempted

Pharmaceutical companies will be able to review the products subject to the first phase of reassessment of previously listed drugs and their actual adjusted prices in November.

The government plans to provide companies with a preliminary review of the reassessment results in November before submitting them to the Drug Reimbursment Evaluation Committee in December.

The Ministry of Health and Welfare (MOHW) and the Health Insurance Review & Assessment Service (HIRA) held a briefing on the reassessment of ceiling prices for previously listed drugs for pharmaceutical companies at the Korea Pharmaceutical and Bio-Pharma Manufacturers Association on the 11th.

At the briefing, Lee Jong-hwan, head of HIRA’s Pharmaceutical Evaluation Department, provided an overview of the reassessment, followed by questions from industry representatives.

More exclusions expected, including sole-listed and previously price-increased products

When the initial first-round reassessment list was recently released, sole-listed products, products that had previously received price increases, and national essential medicines with three or fewer companies supplying the same product were not excluded from the reassessment. The government said excluding them in advance could create confusion because changes in applicable conditions could change whether or not they ultimately qualify for exclusion.

As a result, the number of products excluded from the finalized first-round reassessment list is expected to increase. An updated list reflecting additional exclusions is scheduled to be released before the Chuseok holiday.

What qualifies as a ‘substantial price cut’ allowing a shift from Phase 1 to Phase 2?

Using the drug price level of 53.55% applied in 2014 as the benchmark, products whose current ceiling prices have already fallen to around 45% are being considered for adjustment to a later reassessment phase.

This corresponds to a roughly 16% price reduction. However, reductions resulting from reassessments of single-use eye drops, reimbursement appropriateness reassessments or rebate-related price cuts will not be counted.

Lee said, “Because reductions are calculated based on the highest price among products with the same formulation, companies can apply for an adjustment if that highest price has already been reduced substantially, and we will evaluate the request. As reduction rates may differ by dosage strength and result in different reassessment phases, each application will need to be reviewed individually.

Individual reviews are also expected when companies apply for adjustments involving Phase 1 drugs that require stable supply.

Separate benchmark to apply to products under tiered pricing system

For products already subject to the tiered pricing system, a benchmark price will be established regardless of whether they meet the standard requirements, and products already priced below that level will not face additional reductions.The benchmark will be set at 85% of the lower of the price for products that do not meet the standard requirements and the lowest price among products with the same formulation. Only products priced above the benchmark will be reduced to that level.

Prices above the benchmark will not be cut all at once. Lee said, “The reductions will be phased in over 4 years (for general pharmaceutical companies).”

Price cuts to stop if drug gains essential or orphan status during reassessment

Changes in a product’s status during the reassessment that make it eligible for exclusion will also be reflected. If a drug is newly designated as a drug requiring protection from market withdrawal before implementation in April 2027, it will ultimately be excluded even if it was originally subject to reassessment.

The same applies to orphan drug designations. However, even if phased reductions are halted, ceiling prices already reduced will not be restored to their previous levels. In other words, special designation will stop future reductions but will not retroactively reverse those already implemented.

Upgrade from semi-innovative to innovative status may raise price during reassessment

Changes in a company’s status during the reassessment may also affect the applicable drug price. For example, if a quasi-innovative company subject to a 47% rate in 2029 subsequently receives innovative pharmaceutical company certification, the 49% preferential rate would apply, potentially raising the ceiling price from the 47% level to 49%. Conversely, if a company loses preferential status as an innovative or semi-innovative pharmaceutical company, its drug price will immediately be adjusted to the 45/53.55% level.

No conditional compliance with standard requirements…exemptions must be documented

For standard requirements such as bioequivalence testing, only products that actually meet the requirements at the time of evaluation will be recognized as compliant. Conditional compliance will not be granted merely because testing or regulatory changes are still underway.

Products previously determined to meet the requirements in an earlier reassessment do not need to resubmit documentation. Products previously found noncompliant may also be recognized as exempt if changes to Ministry of Food and Drug Safety regulations now exempt them from bioequivalence testing or Drug Master File (DMF) requirements, provided that supporting documentation is submitted.

PVA and other post-listing price cuts still apply after the 45% level is reached

Even if the reassessment lowers a drug’s ceiling price to the 45% level, this does not mean it will be exempt from all future price reductions. While the 45% floor applies to adjustments based on actual transaction prices, other post-listing price management mechanisms, including price-volume agreements (PVA), will continue to apply.

The reassessment’s ultimate target of 45% therefore does not constitute an absolute floor for all subsequent drug price adjustments.

Preferential treatment unlikely for companies leading stable drug supply

Asked whether companies designated as leaders in ensuring stable drug supply could receive preferential treatment similar to innovative and semi-innovative pharmaceutical companies, HIRA expressed reservations. Unlike innovative and semi-innovative companies, the list of companies recognized for stable supply can change each year, making it difficult to apply preferential treatment to price reductions implemented over several years.

Lee said, “There were suggestions to that effect, but we concluded that it would be difficult to reflect preferential treatment in a multi-year price reduction process because the companies designated as stable-supply leaders change every year,” Lee said.