dailypharmkorea

Policy
Voluntary price cuts of originals as ‘trade-offs’ an issue
by Lee, Tak-Sun Feb 25, 2022 05:57am
‘Discounting the price of existing drugs to list high-priced new drugs.’ Recently, the pharmaceutical industry has been buzzing with speculations that some companies are voluntarily reducing the price of their original drugs as a fiscal sharing strategy to receive reimbursement. This strategy, which was considered unimaginable before, is raising concern among generic companies, as the price drop of an original drug will threaten the price competitiveness of its generic items. According to the industry on the 24th, prices of 15 MSD Korea’s Januvia products and 2 Astellas Korea’s Vesicare products will be discounted from the 1st of next month. All the pricing decisions were voluntarily made by the company. The price caps of the products will fall from 3.2% to 77% at the most. The industry speculates that the voluntary price cuts are the results of negotiating with the insurance authorities to list their high-priced drugs for reimbursement, as a kind of "trade-off" strategy. In other words, the analysis is that MSD made a “trade-off” to reimburse ‘Keytruda’ as first-line treatment of NSCLC, which will cost at least 170 billion won in insurance finances, and Astellas to reimburse its acute myeloid leukemia treatment ‘Xostapa.’ However, the parties involved are refraining from making official statements regarding the matter. However still, the strategy will ultimately be a ‘win-win’ for both the insurance authorities and pharmaceutical companies, as it would save NHI finances and allow companies to list high-price drugs. But this was not good news for the generic companies. Due to the voluntary price cut of Vesicare, the ceiling price of 75 generics became 16-18 won more expensive than Vesicare. Only 2 generic products will have a lower price than Vesicare. Some hospitals and clinics prescribe products with a lower price cap among the same ingredient drugs in consideration of the patient’s economic status, and generic companies will have lost this price competitiveness due to the voluntary discounts. Moreover, as the well-known originals became cheaper than the less known generics, the generic companies are now more disadvantaged than before. Generic versions of MSD Korea’s Januvia tab. And Janumet tab. may be released upon patent expiry in September 2023. However, the voluntary price cut of the original products has lowered the list price of its generics, increasing the cost burden. Due to such reasons, the industry is seeing that there is a problem in companies voluntarily lowering drug prices of patented drugs for the ‘trade-offs’. A domestic industry official said, “The trade-offs were made in agreement between the insurance authorities and the pharmaceutical companies, but it is unreasonable that this may affect the profitability of other drugs that will be released in the future. The subjects of the trade-offs should be limited to off-patent drugs at the very least.”