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- 2025-12-19 15:20:56
- Opinion
- [Reporter's view]Promotion of pharmaceutical & bio-industry
- by Lee, Jeong-Hwan Oct 19, 2023 05:30am
- In the audit conducted by the National Assembly Health and Welfare Committee for the Ministry of Health and Welfare and the Ministry of Food and Drug Safety this year, it was difficult to find policy questions to foster the domestic pharmaceutical and bio-industry. There are still audits from the National Health Insurance Corporation, the Health Insurance Review and Assessment Service, the Health Industry Promotion Agency, and a general audit, but it seems that there is not enough time to deal with issues related to the pharmaceutical industry with weight. The Yoon Seok-yeol government has shown a blueprint for creating two global blockbuster-class new drugs and nurturing more than three global-level pharmaceutical bio companies by 2027 while showing its willingness to record 16 billion in drug exports, but the National Assembly's willingness to verify this was weak. On the second day of the Ministry of Health and Welfare's national audit and the day of the Ministry of Food and Drug Safety's national audit, the problem of vulnerability to the self-sufficiency rate of domestic raw materials and drugs was pointed out, but even this was only proposed as a solution to solve the problem of supply and demand unstable medicines that suffer from long-term out of stock. There were no questions related to the Prime Minister's BioHealth Innovation Committee, which will serve as a control tower to foster the pharmaceutical bio-industry, pointed out the direction of operating the pharmaceutical bio-industry megafund, and no concerns about the reduction of the budget to support the development of the pharmaceutical industry next year. It was difficult to look at the expression of the National Assembly, which is considering the reform of the innovation value compensation drug price system, which is a hot topic for domestic pharmaceutical companies and global pharmaceutical companies, preferential treatment for domestic raw materials, and ways to foster new domestic drugs. It was a pity that it was hard to find a reference to the agenda related to the pharmaceutical and bio-industry in the National Assembly's audit day of the Ministry of Appreciation Day between the Ministry of Welfare and the Ministry of Food and Drug Safety, which are in charge of nurturing the pharmaceutical and bio-industry. I feel that I have lost the opportunity to look into whether the Ministry of Health and Welfare and the Ministry of Food and Drug Safety are currently putting into practice their policy vision regarding the development of the domestic pharmaceutical and bio-industry. This national audit is the last audit of the 21st term of the National Assembly. The 21st National Assembly experienced the COVID-19 pandemic and felt the need and importance of securing domestic pharmaceutical, bio, and vaccine sovereignty more deeply than anyone else. During the three years following the pandemic, we continued our national activities, seeing that the pharmaceutical and bio-industry is an industry directly related to national security and a field that needs to be intensively nurtured for the future of the country. The National Assembly's interest in creating an R&D, drug price, and regulatory environment where domestic pharmaceutical bio companies can demonstrate sufficient capabilities in the global market is directly related to fostering domestic industry through policy improvement by government ministries. It's time to encourage the government's measures to foster the domestic pharmaceutical and bio-industry, which have unlimited growth potential during the rest of the national audit period, and to show a level of active interest and expertise that can monitor whether the administration is being carried out according to the promised blueprint.
- Opinion
- [Reporter’s View] KRPIA pulls out ‘structural reform' card
- by Eo, Yun-Ho Oct 12, 2023 05:37am
- The Korean Research-based Pharmaceutical Industry Association (KRPIA) has pulled out the ‘expenditure structure reform’ card as a solution to finance new drug expenditures. Although the message seems somewhat familiar, it is a new and unprecedented request. On the 4th, KPRIA released the results of 'A study on the analysis and rationalization of drug expenditures for new drugs in Korea' conducted by Professor Jong-Hyuk Lee from Chung-Ang University’s College of Pharmacy. Study results showed that the expenditures spent on new drugs from the national health insurance finances accounted for 8.5% of total drug costs and 2.1% of the total national health insurance medical costs. In particular, the financial impact made by new drugs on national health insurance finances was among the lowest when compared with other OECD countries. More specifically, the annual drug expenditure spent on each new drug amounted to KRW 6.1 billion whilst the total drug expenditure spent in Korea over the past 10 years amounted to KRW 164.2 trillion. In this analysis, the financial expenditures spent on items that were waived pharmacoeconomic evaluation data submissions and were subject to RSA, which account for most of the new drugs used to treat serious diseases such as cancer and rare diseases, were low, accounting for 0.3% and 2.7%, respectively, of the total drug cost. In addition, the financial impact of new drugs according to their serious disease classification status showed that drug expenditures spent on new drugs for severe and rare diseases (cancer, rare diseases) were found to only account for 3.3% of the total drug costs, suggesting the low treatment access available for domestic patients with severe and rare diseases. If so, why are studies and claims that should have been made a long time ago being raised and regarded as unusual now? The fact that new drugs account for a small portion of drug expenditures means that drug costs of existing drugs, not new drugs, account for a sizable portion of the expenditures. In other words, Korea spends 91.5% of its drug expenditures on drugs that are not new. The direction of improving the expenditure structure, which the KRPIA has suggested, is to increase the proportion of new drugs and to reduce the proportion of drug expenditures spent on drugs that are not new. It is an agenda that is bound to bring conflict of interest between new drug developers and non-developer pharmaceutical companies. However, there is no doubt that new drugs are important to Korea’s society as a whole. Prior to pointing out the limitations and reliability of the research published this time; it is necessary to consider Korea’s current expenditure structure. However, the number of expensive drugs is indeed increasing, and the number of drugs that remain non-reimbursed due to their potential financial impact is also rising. Korea has been known for its strong health insurance coverage supported by the national health insurance system framework. Even if the government had been a little insensitive to the changes in trends in related industries, new drugs have now surely become mainstream. Therefore, it is now time to consider adapting and evolving Korea’s expenditure structure and priorities accordingly.
- Opinion
- [Reporter's view] Paid-in capital increase & bio ventures
- by Lee, Seok-Jun Sep 26, 2023 05:49am
- Bio ventures have recently begun to raise funds through paid-in capital increases allotted to shareholders as promised. This is a phenomenon that has recently emerged as the bio market is not doing well, making it difficult to attract investment from institutional investors such as VCs (venture capitals) or specific third parties. Shareholders express the current situation as a ‘crying train’. Even though there is a high possibility that the stock price will fall, it is because of the worry. Just looking at the past three to four months, there are numerous bio ventures that have completed or are in the process of capital increase. CJ Bioscience, PCL, SCM Life Science, Cellid, Voronoi, SD Biosensor, and Noul have completed the paid-in capital increase. MedPacto, Micobiomed, Lunit, EDGC, Kangstem, Vaxcell-bio, Medi-post, etc. are in progress. Among them, SD Biosensor (10.4 billion won), Lunit (201.9 billion won), Medi-post (120 billion won), MedPacto (115.9 billion won), and Vaxcell Bio (100.6 billion won) decided to increase paid-in capital on a large scale of more than 100 billion won. Honestly, it is difficult to identify bio ventures. This is because it is virtually impossible to judge technological capabilities. We only rely on the data disclosed by the company and judge its value by referring to technology exports, partners, research team history, etc. While watching the paid-in capital increase trend, we believe that it may be possible to separate bio ventures in other ways. For example, it is possible to understand valuation through ▲how often financing is raised, ▲how well the fund use plan matches reality, and ▲whether the financing plan announced through IR, etc. has been reversed. In addition, ▲how often management changes, ▲whether the securities report at the time of IPO is implemented, ▲the largest shareholder's participation in bequests, etc. can be objective factors. Of course, financing is also an important element of corporate management. However, the problem is that even as the years go by, more and more companies rely on financing rather than their own ability to survive. In a time where paid-in capital increases are rampant, why not try creating an opportunity for bio ventures to separate the pros and cons? There are not many factors that can determine a company's valuation as much as financing issues. This is especially true for bio ventures where liquidity is vital.
- Opinion
- [Reporter’s View] Biobetters to prosper with better prices
- by Eo, Yun-Ho Sep 21, 2023 05:23am
- A series of cases where preferential pricing has been applied to biobetter drugs are being introduced to Korea. In 2016, the government announced a plan to provide preferential pricing for biosimilars and biobetters, which are improved versions of already approved biopharmaceuticals, that have contributed to the improvement of Korea’s healthcare. Considering how biobetters are more difficult to develop compared to incrementally modified drugs (chemical drugs), the government decided to set the overall price of biobetters at the 100-120% range of the original drug. However, no drug had reaped the benefit until recently. And then in September, Sanofi-Aventis Korea’s Nexviazyme (avalglucosidase alfa-ngpt) made the start. Nexviazyme is an improved biological drug that offers improved dosing and administration compared to Myozyme (alglucosidase alfa), a recombinant human acid alpha-glucosidase (rhGAA), that is developed by the same company, Sanofi. The drug has increased the amount of M6P, which plays an important role in the intracellular uptake of drugs, by about 15-fold compared to Myozyme through the glycol-engineering technology. Nexviazyme’s increased M6P increases drug uptake over Myozyme and GAA activity to enable more effective glycogenolysis and less damage to muscle cells. Also, the increase in surface M6P contributes to improved immunogenicity, providing benefits in terms of safety. And another drug is soon to be added to the list. The second to benefit is expected to be Roche Korea’s subcutaneous fixed-dose combination injection Phesgo (pertuzumab, trastuzumab), which combines the company’s ‘Perjeta’ and ‘Herceptin.’ The drug passed the Health Insurance Review and Assessment Service’s Cancer Disease Deliberation Committee review last month. If listed, Phesgo will become the first anticancer drug and the second drug to benefit from the biobetter preferential treatment plan. Phesgo was recognized for its innovation in improving patient convenience and reducing treatment time by changing the IV-injected Herceptin and Perjeta into a fixed-dose subcutaneous injection and was named as the first biobetter approved for cancer in Korea. Metastatic HER2-positive breast cancer patients who had received maintenance therapy with IV Herceptin and Perjeta injections every three weeks may reduce their administration and monitoring time by 90% from 270 minutes (90min+180min) to 20 minutes (5min+15min) when switching to Phesgo. Also, as Phesgo is a subcutaneous formulation injected in the thigh rather than into the veins, it can reduce blood vessel and nerve damage that can be caused by repeated intravenous injections. Biobetters are much more difficult to develop than IMDs. It mainly offers improved convenience over the existing original drugs, but the improvement in convenience of injectable drugs has a greater impact on patients compared to orally administered synthetic drugs. Although the first case had been implemented so late, it is encouraging that more cases are starting to emerge. In addition, domestic companies are also developing biobetters. As the likelihood of success is higher for biobetters than new drugs, we expect more to benefit in the future. Amid the many imminent patent expiries of blockbuster drugs, this is now the time for companies to take the opportunity.
- Opinion
- [Reporter’s View] Industry suffers from ‘Re-eval Neurosis'
- by Kim, Jin-Gu Sep 20, 2023 05:36am
- The era of reevaluations has dawned on Korea. Reevaluation of reimbursement adequacy, clinical reevaluations, and generic drug pricing reevaluations are being carried out simultaneously. The Ministry of Health and Welfare and its affiliated organizations appear to be scrambling to reevaluate and reduce drug pricing expenditures as if they have received orders from somewhere. The reevaluation of the reimbursement adequacy began with choline alfoscerate preparations in 2020, and then reviewed 4 ingredients including silymarin and avocado-soya in 2021, then 7 ingredients including streptokinase in 2022, and then 8 ingredients including hyaluronic acid eye drops, and rebamipide this year. In addition, the reimbursement adequacy of 7 ingredients, including sarpogrelate and mosapride will be reevaluated next year. At the same time, the Ministry of Food and Drug Safety is conducting its clinical reevaluations. Clinical safety and efficacy reevaluation of choline alfoscerate, acetyl L-carnitine, oxiracetam, streptokinase, and streptodornase has been conducted or is in progress. Not long ago, reevaluations on the reimbursement ceiling price of drugs, also known as the reevaluation of generic drug prices, had been carried out. This reevaluation was conducted to apply the new drug pricing system implemented in July 2020 to already listed generics. More than 20,000 items were subject to reevaluation. As a result, as of the 5th of this month, the prices of 7,355 generic drugs were reduced by up to 28%. Due to so many items being reevaluated at the same time, much confusion has been occurring in the field. The biggest problem pointed out was the redundancy of reevaluation targets. Choline alfoscerate, streptokinase, streptodornase, acetyl L-carnitine, and oxiracetam were selected simultaneously as subjects for clinical reevaluation and the reevaluation of reimbursement adequacy. As a result, acetyl L-carnitine and oxiracetam were withdrawn from the market after failing to prove clinical utility and were naturally excluded from receiving reevaluation on their reimbursement adequacy. In the case of streptokinase, some indications that failed to prove clinical usefulness were removed, and there is a high possibility that the remaining indications will also be deleted following the other reevaluations. Employees in charge of related affairs express extreme fatigue caused by the excessive and redundant reevaluations. Although the government claims that the legal basis and purpose of each reassessment are clearly different, the pharmaceutical industry's criticism is that there is no significant difference in the methods each uses to select subject drugs, assess the adequacy of reimbursement, and prove clinical usefulness. In addition, the officials had to painstakingly reevaluate the prices of 20,000 generic drugs. Even though these drugs were legally approved and listed for reimbursement, the pharmaceutical industry had no choice but to conduct bioequivalence tests for the sole purpose of maintaining drug prices. Even though the generic drug pricing re-evaluation is not complete, pharmaceutical industry officials say they have no time to rest. This is because a bigger wave of ‘overseas drug price comparison reevaluation’ is expected to land soon. The MOHW had announced that it will conduct a reevaluation and compare the price of listed drugs with their overseas prices next year. The MOHW plans to finalize the reevaluation criteria within the year, report it to the Health Insurance Policy Deliberation Committee, and implement it in earnest next year. This means that next year, in addition to the ongoing reimbursement adequacy reevaluations and clinical reevaluations, a reevaluation for comparison with overseas drug prices will also be carried out simultaneously. In particular, anxiety appears to be rising as the scope and range of drug price cuts are expected to be larger than that made by the existing reevaluations. In addition to anxiety, uncertainty is also rising due to repeated reevaluations every year and the various accompanying measures that follow. But above all, constant reevaluations are serving as the largest barrier. Complaints are rising constantly on how so many reevaluations are taking place simultaneously. The data that must be submitted amounts to hundreds or thousands of pages. Some have been cynically joking that a department dedicated to reevaluation should be established. And so it seems fair to say that the pharmaceutical industry is indeed suffering from reevaluation neurosis.
- Opinion
- [Reporter’s View] MFDS makes changes ahead PIC/S reeval
- by Lee, Hye-Kyung Sep 13, 2023 05:28am
- The Ministry of Food and Drug Safety will be amending the ‘Regulations for Good Manufacturing Practices for Medicinal Products’ as preannounced ahead of PIC/S re-evaluations. The main point of the amendment is to amend the GMP for sterile medicinal products to align with those of the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S). This includes the establishment of a contamination control strategy through quality risk management and the establishment of management standards for the latest aseptic manufacturing equipment and technology. The main purpose of the amendment is for the MFDS to prepare for the PIC/S reevaluations that will be held next year. This is because member countries are obligated to implement the PIC/S’s GMP regulations to maintain their member status. PIC/S is the only organization worldwide that promotes the international harmonization of GMP and inspection procedures. Since its establishment in 1995, 56 regulatory agencies from 53 countries, including the US FDA, the UK, France, Germany, and Japan, have joined as members. Korea became the 42nd country to join in 2014 but will be subject to reevaluation of its PIC/S member state requirements starting in H2 of this year. As part of the reevaluation process, the PIC/S will visit Korea in H1 next year. In order to receive a good evaluation, the latest revisions to PIC/S GMP regulations must be reflected in Korea’s regulations as well. This is why the MFDS prepared ‘Regulations for Good Manufacturing Practices for Medicinal Products (Plan) that reflect the latest PIC/S GMP regulations that include improvements to the GMP for sterile medicinal products. PIC/S member countries can receive benefits such as the waiver of some procedures including on-site GMP inspections when exporting pharmaceutical products to other member countries. Therefore, the membership status can strengthen the competitiveness of domestic pharmaceutical companies seeking to export products to other countries. Therefore, the MFDS has been preparing to amend the regulations since 2021 ahead of the PIC/S reevaluations. The Ministry of Food and Drug Safety expects that there will be no difficulties in implementing the amended regulations, as it has set a sufficient grace period for its enforcement in consideration of industry opinion on their need for ample time to prepare for regulatory implementation. However, there are bound to be difficulties following the introduction of new systems, due to the addition of new personnel or new facilities such as lyophilizers and sterilization equipment. At the information session MFDS will be holding for managers of domestic sterile medicinal product manufacturing plants from the 19th to the 20th, the reporter hopes that the authorities will hold an ear out to the voices in the industry and make efforts to reflect the opinions into the system.
- Opinion
- [Reporter's view] What is the solution
- by Eo, Yun-Ho Sep 13, 2023 05:28am
- A drug is so effective that it is difficult to discuss listing it for insurance benefits. Although it has proven a very large improvement in survival rate compared to existing drugs, this actually increases uncertainty in health insurance, making it difficult to estimate cost-effectiveness. Since no patients die in clinical trials, costs increase. The important point is effect estimation. OS can only be counted when the patient dies, but since no one dies, calculating OS becomes difficult. Paradoxically, if the effect of the drug is too good, the cost will definitely increase, but the problem of not knowing how much the effect will increase arises. However, the clinical results are excellent. Drugs that are truly the best of all time are emerging right now. So what is the solution to these drugs? Currently, the government is requesting a financial sharing plan, but this is not a regular regulation. I think it is time to consider establishing a fundamental evaluation system for the value of social requirements themselves. Decisions related to healthcare are a process of compromise between many complex and conflicting factors. Multiple-criteria decision analysis (MCDA) is a type of decision analysis designed to transparently integrate multiple considerations in decision-making situations where multiple criteria act simultaneously. Using such a structured and explicit approach can improve the quality of decision-making, and its application in the medical field has recently been increasing. There is an increasing discussion on the introduction of MCDA as a decision-making support tool related to pharmaceutical reimbursement in countries other than these countries. In Spain, MCDA is referred to as a method of systematic evaluation procedure that helps consistent decision-making and ensures equity in access to medicines when evaluating early access to medicines and indications before approval and reimbursement. MCDA faced opposition domestically. However, on the other hand, it is already being used domestically. In accordance with the National Health Insurance Comprehensive Plan, the Ministry of Health and Welfare is conducting a reevaluation of drug coverage adequacy every year, starting with Choline alfoscerate, a brain function improvement drug, in 2020. At this time, clinical usefulness, cost-effectiveness, and social needs are used as criteria to evaluate the adequacy of benefits. Comprehensive evaluations such as MCDA may have interpretation difficulties depending on the weights and methodology, but the reality is that the current new drug registration method relies too much on cost-effectiveness and does not reflect the characteristics of each drug. Now is the time to take action.
- Opinion
- [Reporter's view] Obesity-themed stocks
- by Lee, Seok-Jun Sep 11, 2023 05:29am
- The theme stock craze is happening again. This time it is related to obesity treatment. Companies that ride on theme stocks easily hit the upper price limit. There is also a bio venture that recorded the upper limit three times, ‘up, up, up’ on the full moon. It is easy to find companies whose market capitalization has doubled in just a few months. As obesity treatment has recently become a global issue, the corporate value of related theme stocks is also increasing. In fact, Eli Lilly ranked first in market capitalization among global pharmaceutical companies as its diabetes treatment (Maunjaro) showed effectiveness in treating obesity. It can be seen as ‘theme stock = future growth potential’. The possibility leads to a rise in ransom prices. Everyone can understand the upper price limit phenomenon to some extent. However, we need to take a closer look. Above all, attention should be paid to the feasibility of realization (commercialization). This is because most of the theme companies only discovered the possibility of treating obesity in the early stages of clinical trials. These are materials that have potential but still require time and money to create substance. Hanmi Pharmaceuticals, which is preparing for phase 3, is only in late-stage clinical trials for some products, including 'Efpeglenatide'. Even if it is developed, it must be checked whether it is the first in class, the best new drug (best in class), or simply a drug in the same class. You should also look at the development status of other competitors. Only then can you truly know the corporate value of theme stocks. Some companies launch large-scale promotions related to themed stocks. “We discovered the potential for an innovative new drug in preclinical trials,” “We are negotiating with a number of global companies for technology transfer,” and “We have overcome the limitations of the world’s No. 1 obesity formulation.” Just looking at the press release, it appears that it has already achieved innovative new drug status. At this time, stock prices fluctuate. Some even feel pressured to promote even the slightest possibility in order to belong to a themed stock. In reality, Pharmaceutical Company A is under pressure from its owner. Bio ventures that need financing are also active. Companies under put option pressure are busy riding theme stocks. Raising the stock price makes it easier to raise funds and avoid put option pressure. “It is safe to say that corporate value is based on theme stocks. Objective figures such as performance do not apply. I believe rapid fluctuations are determined simply by whether influence is brought in or not. This is why companies related to theme stocks are excessively promoting them. In particular, to raise funds, etc. “Bio ventures that need to raise their stock prices sometimes throw unreasonable numbers.” This is not an unconditional criticism of the theme stock craze. In the case of a company, it must make its value known. However, what is unfortunate is that companies are often found to focus on increasing market capitalization by riding the bandwagon of theme stocks rather than the company's original value. It is also unfortunate that the market trend is ‘theme stocks, power = market cap’ rather than ‘performance, potential = market cap’. On the other side the surge in theme stock prices is a bitter reality.
- Opinion
- [Reporter's view] Massive drug price cuts
- by Kim, Jin-Gu Sep 06, 2023 05:36am
- Generic proliferation. It is the root of all evil. At least that's the case from the government's perspective. When the valsartan incident occurred in 2018 and the ranitidine incident the following year, everyone knew that the essence of the incident was impurities, but the government continued to point out that the proliferation of generics was the problem. The government said it would reduce the proliferation of generic drugs. A new drug pricing system was proposed in July 2020. The new rule set by the government was that the drug price would be reduced if one of the two was not done, whether it was conducting an in-house BA test or using registered raw drug products. It is an ambitious plan by the government to prevent the proliferation of generics. Finally, the time has come to reevaluate already registered generics. The government proposed qualifications such as its own BA testing and use of registered raw drug substances. They said they would reduce the price of drugs by up to 27% for drugs that do not have these two pieces of data. Approximately 23,000 generics suddenly underwent this qualification verification. Pharmaceutical companies face a moment of choice. More than 7,000 generic drugs accepted the fate of lower drug prices. As of September 5, the government lowered the prices of 7,355 generic products. The pharmaceutical industry is expected to lose more than 300 billion won per year. Can the government, which seeks to resolve the proliferation of generic drugs and further secure the financial soundness of health insurance, be free? Initially, the government proposed a new drug pricing system, saying it would solve the proliferation of generics, and at the same time gave a grace period of nearly two years. During the grace period, pharmaceutical companies approved generics as if it were their last chance. Pharmaceutical companies received approval for insurance use of drugs they had no intention of selling, and these products became the subject of this reevaluation of generic drug prices. It is time for generics to be sorted out. Many of the targets of this drug price cut were for insurance purposes, not for sales. The government is required to take a more responsible attitude. A sufficient explanation is needed to resolve the issue caused by incorrect policy judgment using a different logic. It is difficult to look at the direct and indirect losses to the pharmaceutical industry, distribution industry, and pharmacy prices resulting from the price reduction of 7,000 generic drugs as if it were someone else's problem.
- Opinion
- [Desk’s View] Compensate for the value of novel drugs
- by Lee, Tak-Sun Sep 06, 2023 05:36am
- The Ministry of Health of Welfare plans to soon announce an appropriate compensation plan for the innovative value of new drugs, including novel homegrown drugs. The health authorities’ plan is to deliberate its plan by the Health Insurance Policy Review Committee within the month and release the results to the public soon. The domestic pharmaceutical industry is hoping that this measure will provide additional points to non-inferior new drugs. Non-inferior new drugs contain new active ingredients and have proven to be non-inferior to existing drugs. Most new drugs developed in the domestic pharmaceutical industry fall into this category. The novel homegrown drugs, No. 36 'Envlo Tab,' No. 34 'Fexuclue Tab,' and No. 30 'K-CAB' have all demonstrated their noninferiority to existing drugs in clinical trials. However, the insurance price ceiling for these drugs had been set below the weighted average price of their alternatives because they were unable to demonstrate superiority over existing drugs. As a result, the price of Envlo Tab was set below 90% of previously released SGLT-2 inhibitors in the same class, and Fexuclue Tab was priced below the weighted average price of previously released P-CAB class drugs and PPI class drugs. K-CAB, which was listed with reimbursement in March 2019, was able to receive a relatively high price as it had benefitted from the ‘global innovative new drug pricing premium’ that was applied at the time. However, the preferential pricing plan for global innovative new drugs arose as a discriminatory element during the Korea-US FTA negotiations and was nearly non-existent at the time. The pharmaceutical industry has been criticizing how the current price calculation method for domestically produced new drugs is not sufficient to compensate for the industry’s new drug development efforts. The MOHW’s compensation plan for the innovative value of new drugs under review this time is the result of the continuous efforts of the domestic industry that has continuously raised the need to provide preferential pricing for domestically produced new drugs. In 2013, the MOHW reported to the National Assembly that the development of a domestic new drug costs an average of KRW 22.2 billion and takes 9 years and 8 months. As these results were from 10 years ago, the average cost of new drug development would have only increased further since then. In Korea, where drugs are covered by health insurance, companies need to receive a high insurance drug price to make up for the enormous costs of developing new drugs. The companies can determine when they could retrieve their investment according to drug price. Moreover, as the companies that developed the homegrown new drugs seek to expand overseas after initial release into the domestic market, it is beneficial for the companies to receive a high insurance price for their drugs in Korea, as it will serve as a future reference price for their price abroad as well. Above all, if the government wants to foster and improve the competitiveness of Korea’s pharmaceutical industry, it has to provide preferential treatment to these homegrown new drugs. The profit margins of the domestic pharmaceutical industry have been dropping significantly as generic drugs, which had been the main driver of the industry until now, are not making enough profit as they are constantly subject to price cuts to ensure the financial soundness of the National Health Insurance. The losses arising from the price ceiling reevaluations that were conducted this time are expected to amount to KRW 300 billion. In this environment, who would want to develop a new drug and suffer the huge amount of costs incurred? If lowering the price of generic drugs, which companies depend on to fund new drug development, is inevitable, the value of new drugs must be recognized to create a virtuous cycle that encourages new drug development. In addition to providing preferential drug pricing at the time of initial listing, the government should fully compensate for the value of homegrown new drugs by ensuring that the prices are not later reduced through post-marketing control measures such as price-volume agreements. We need new drugs to raise the competitiveness of the Korean pharmaceutical industry in overseas markets. If the government has set its sights on fostering homegrown new drugs, it should focus on what it needs to support and stop being indecisive.
