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- 2026-04-20 23:21:47
- InterView
- [Reporter's View] Cut drug prices, expand R&D…SMEs 'exit pressure'
- by Choi Da Eun Apr 02, 2026 08:46am
- The government's recently announced "Drug Pricing System Improvement Plan" appears adequate in terms of its direction. The intent is to improve the market structure, which is currently centered on generics, to provide incentives for pharmaceutical companies to invest in R&D, and to promote self-sufficiency in raw materials. Furthermore, shifting the industrial constitution away from the simple, repetitive manufacturing of off-patent drugs is agreeable.However, the general opinion from the clinical settings is different. There is significant concern that the policy's incentives may actually act as a double burden for many pharmaceutical companies.The core value of this reform is a structure that guarantees relatively higher drug prices for companies with a high R&D investment ratio, in exchange for lower generic drug prices. The higher the ratio of R&D relative to sales, the more a company's generic prices are recognized, which directly correlates to corporate profitability.The problem is that this structure does not operate identically for all companies. While it may serve as a reward for top-tier pharmaceutical companies that have already secured a certain level of R&D capability and capital, it is highly likely to act as a barrier to entry for small and medium-sized enterprises (SMEs).This is because revenue is shrinking as the generic price calculation rate is lowered from 53.55% to 45%, and the timing of "tiered price reductions" for follow-on products applies to the 13th entry. If these tiered price cuts are applied to existing listed products as well, it will be difficult for many SMEs to avoid an immediate drop in cash flow.Of course, the government explains that it will provide incentives through 'Innovative' and 'New Innovative' pharmaceutical company designations. The plan is to guarantee drug prices at a maximum level of 60% for companies with high R&D ratios and apply preferential additions even to companies with a certain level of investment.However, pre-investment is required to meet these standards. A structure where one must increase R&D investment to receive benefits while revenues are decreasing is likely to become a selective incentive that is difficult for companies lacking financial flexibility to access.While the prices of generics, the immediate main source of revenue, are being cut, companies must conversely raise their R&D proportions, which requires pouring tens or hundreds of billions of won, to preserve their lowered profitability. It is a structure where companies are forced into natural extinction in the market if they fail to win the title of a 'New Innovative pharmaceutical company.'A bigger issue is that such a structure could deepen industrial polarization. While top-tier pharmaceutical companies with capital power maximize benefits by expanding R&D investment, SMEs may be pushed out of the market due to limited investment capacity.The government has stated that it will save approximately KRW 2.4 trillion in health insurance costs over the next 11 years through this move, but the price could be the collapse of the ecosystem for smaller pharmaceutical companies that have not yet built up R&D capacity. Some critics argue that this drug pricing reform is essentially a forced restructuring of the domestic pharmaceutical industry.One industry official stated, "While we agree with the direction, the current structure only allows companies with existing capacity to grow further," adding, "Unless realistic support measures that allow SMEs to participate in R&D are implemented as well, the policy effects will inevitably be limited."Pharmaceutical R&D is a long-distance race. It is difficult to evaluate based on short-term results, and the fruits only appear after investing enormous time and effort. In that sense, this drug pricing reform is like placing companies with different levels of physical fitness on the same track from the starting line and demanding they run faster.Furthermore, R&D investment carries the possibility of failure. It is not easy for a company with a weakened profit base to continue bold investments in an area where performance relative to investment is not guaranteed. Consequently, some companies may be driven to focus on securing short-term profits rather than on R&D, or even to downsize their businesses altogether for survival.There is no disagreement with the direction of reducing the overabundance of generics and advancing the industrial structure. However, speed and method are the problem. An approach that induces structural shift solely through uniform price cuts and selective incentives may result in side effects.Unless an environment is established where SMEs can gradually build R&D capabilities while maintaining a minimum investment capacity, this reform is likely to result in industrial contraction rather than promoting innovation. Ultimately, additional incentives must be planned so that policies aimed at lowering drug prices and increasing R&D do not contradict.
- InterView
- [Reporter's View] Let's focus on building 'solid pharmas'
- by Lee, Jeong-Hwan Apr 01, 2026 08:15am
- Why does the conflict between the Ministry of Health and Welfare (MOHW) and the pharmaceutical industry over drug pricing reforms repeat the same patterns? The MOHW finalized a reform plan at the Health Insurance Policy Review Committee, held in March, focusing on reducing generic drug prices while providing incentives for innovative pharmaceutical companies and those contributing to the supply of unstable essential medicines. However, the differences in position between the two parties do not seem to be clearly resolved.The MOHW promised to exchange information and gather opinions to design a reform plan that could also be favorable to the pharmaceutical industry, addressing the National Assembly, the media, and the industry. However, the prevailing assessment is that these efforts remained insufficient and incomplete.Of course, it is impossible to devise an administration or policy that satisfies everyone 100%. The MOHW's stance during deliberations on this drug-pricing reform was unsatisfactory.The MOHW's challenge is understandable. Lee Hyung-hoon, the 2nd Vice Minister of Health and Welfare and Chairman of the Health Insurance Policy Review Committee, expressed the hardship during the process of establishing the reform plan. Lee noted that it is not easy to achieve both the conflicting tasks of ensuring health insurance efficiency and fostering the pharmaceutical industry. Lee's sincere statement received positive responses from reporters, offering a chance to experience and empathize with the difficulties of operating executive branch policy.Despite this, the MOHW must seek better ways to engage the pharmaceutical industry when devising future drug pricing reforms. This is to minimize the aftereffects of exhaustive clashes between the government and industry, while improving the likelihood of a soft policy landing.Health economists point out that the MOHW has not made sufficient effort to design a drug-pricing system that balances equity between the domestic and multinational, foreign-capital pharmaceutical industries.Furthermore, they note that it is difficult to discern the MOHW's philosophy and specific direction for managing National Health Insurance finances. They stated that the administrative goals are so blunt and ambiguous that it is difficult to predict them. The criticism is that if the MOHW were to reveal its inner thoughts transparently, proper consultation would be possible.The MOHW emphasized the "structural improvement toward innovative new drugs" as the justification for this drug pricing reform and as a mechanism to appeal that it is inevitable to cut the prices of already-listed generics.While the direction might not be wrong, the slope was too steep. South Korea's pharmaceutical industry is still centered on generics. The quality and self-sufficiency rate of generics are high. In reality, hundreds of items are licensed, prescribed, and distributed for a single active ingredient.On the other hand, only 41 domestically developed new drugs have obtained marketing authorization. The first domestically developed new drug was Sunpla (SK Pharma), authorized in July 1999, and the most recent domestic new drug is Xcopri (Dong-A ST), which received its license in November 2025, making it the 41st. Among these, no new drug has achieved blockbuster-level sales.To demand that the domestic pharmaceutical industry, which has birthed 41 new drugs over 25 years and is still evaluated as being at a "high school level" or a "twenty-year-old" who has just removed the label of a minor, instantly stop manufacturing and selling generics to produce blockbuster results is an excessively harsh demand.The reform plan should have reflected more of the industry's concerns about how much new drug Research and Development (R&D) will be revitalized by this drug pricing reform, how negative it will be for the supply of price-stabilized medicines, and the potential causal link to employment stability.In MOHW data on the direction of drug pricing reform, one word stood out: "solid pharmaceutical companies."The MOHW expressed its ambition to use this reform as a turning point to cultivate and support robust pharmaceutical companies that are sincere about new drug development and the stable supply of essential medicines, rather than being buried only in generic sales competition.To achieve this ambition, the MOHW must set transparent, clear standards for what constitutes a "solid pharmaceutical company" and develop evaluation indicators. A process involving a public-private consultative body is necessary. This means that active administration and two-way communication are absolutely required to align the "zero point" regarding "robustness" with pharmaceutical companies.During the process of establishing drug pricing reform plan, many "solid" pharmaceutical companies that have secured R&D ratios criticized the government, saying, "It is doubtful whether the MOHW or the MFDS has the standards to distinguish innovative pharmaceutical companies that are sincere about industrial development and public health, or if they even have the evaluation data."The point was that government administration capable of distinguishing "paper companies" that rely on consigned generic production as their core revenue source from "real" pharmaceutical companies has not been properly carried out until now.In a situation where there is zero trust in whether the government has the criteria to distinguish the wheat from the chaff or the administrative power to do so, the MOHW suddenly pushed a reform plan to cut generic prices by up to 40% while favoring companies that have proven innovation. The industry voiced that they were told to just "sign it," which led to frustration and even fear.When promoting the reform plan, the MOHW must conduct follow-up oversight to develop a comprehensive report card that clearly distinguishes robust pharmaceutical companies and provides tailored support.The MOHW now faces the difficult task of communicating closely with the pharmaceutical industry to find and resolve the blind spots in government administration regarding the resolution of the multi-item generic structure, while recognizing that high-quality generics are the heart of K-Pharmaceuticals and the "two legs" that will support the future of industry and employment.We anticipate MOHW administration that identifies field-level clues to fundamentally shift the policy paradigm away from simply cutting generic prices. This would be catching two birds with one stone: health insurance cost savings and new drug development.
- InterView
- [Desk View] Generic bias influencing drug pricing policy
- by Chon, Seung-Hyun Mar 30, 2026 09:12am
- The government decided to lower the price calculation standard for generic drugs from the current 53.55% of the price of the original drug before the patent expiration to 45%. Despite strong opposition from the pharmaceutical industry, the final decision is reportedly similar to the initial draft proposed last year.In November 2023, the Ministry of Health and Welfare (MOHW) reported to the Health Insurance Policy Review Committee a plan to reduce generic pricing to approximately 40%. At that time, the MOHW suggested a plan to adjust drug prices to current levels, ranging from 45-50% to 40%. As products with prices above 45% are classified as targets of adjustment, the government intended that the prices of generic drugs should not exceed that threshold. The original plan was reflected in the final decision.The pharmaceutical industry proposed 48.20% (a 10% reduction from 53.55%) as the figure that they can endure. However, at a Health Insurance Policy Review Committee meeting on the 11th, the MOHW presented a calculation rate in the low-to-mid 40%. Ultimately, while the MOHW secured an alibi of communication over the past five months, the outcome remains largely unchanged from the draft presented nearly half a year ago.While this means that a 45% generic price standard would be reduced by 16.0%, the actual reduction rate grows exponentially when the government's complex price-cutting measures are applied.Under the drug-pricing reform system, the price-cut rate for failing to meet the "highest price requirement" will expand from 15% to 20%. Since July 2020, generic products must meet two conditions to receive the highest price: conducting bioequivalence (BE) studies and using Registered Drug Substances (DMF). For each unmet requirement, the ceiling price drops by a set percentage. Failing both requirements currently results in a 27.75% reduction from the maximum.When applying the new 45% base and the 20% penalty for unmet requirements, generics failing one requirement drop to 36% (a 20.9% drop), and generics failing both requirements drop to 28.8% (a 25.6% drop). By applying a reinforced tiered-pricing system to the drug pricing reform system, entry for late-mover generics would be completely blocked.According to the guidelines following the drug pricing reform in 2020, even if a product meets both standard requirements, if there are already 20 or more identical formulations listed, the 21st product is listed at 85% of the lowest price of the existing formulations or 38.69%, whichever is lower). Currently, the 21st generic drug is set at 32.86%. Compared to the 53.55% maximum, this represents a 38.6% drop for the first product subject to tiered pricing. Prices for the 22nd and 23rd generics drop even further.Under the new reform plan, the 13th generic drug (failing both requirements) would drop to 24.48%. Comparing the same 13th-entry generic, the ratio drops from 53.55% under the old system to less than half under the new reform. By the 13th and 14th entries, prices could drop to as low as KRW 14.98 and KRW 9.20, respectively.Additional mechanisms have been added for price cuts even if a drug was listed at the highest price. To prevent market overheating upon the entry of the first generic, the MOHW intends to apply tiered price cuts to any generic that causes the number of identical formulations to exceed 13. Even if a company is among the first 12 and receives the 45% maximum, if subsequent entries push the total past 13, that product's price will be cut by 15% after one year. This means even the very first generic could see its price drop to 38.25% within 12 months, a 28.58% reduction from the current industry maximum.The pharmaceutical industry argues that the government has meticulously designed to drop drug price over 20% while inhibiting genetic entry of generics.The government's prejudice against generics surfaced amid the drug price reform process. It was based on the prejudice that the increase in generic use could be problematic. Health authorities repeatedly cite rising generic drug expenditures as a threat to the stability of the National Health Insurance (NHI). In 2024, generic drug spending reached KRW 12.44 trillion, a 36.8% increase from KRW 9.09 trillion in 2020. However, the government's argument is that the increased use of generics, which are cheaper than originals, actually saves the NHI budget.Data show that for 14 of 16 dosages among the five most frequently prescribed active ingredients (including atorvastatin, clopidogrel, and rosuvastatin), the weighted-average price is lower than the price of the original drug. This structure demonstrates that as clinical sites prescribe more affordable generics, the overall weighted-average price falls below that of the originals, thereby contributing to fiscal savings. Critics argue the government has focused on statistics on total spending to justify price cuts while ignoring the per-unit savings generics provide.The industry also points out that the government is ignoring existing approvals and regulations.Since July 2020, the number of consigned generics has plummeted because companies must perform their own bioequivalence studies to secure higher prices. Since July 2021, the number of generics that can be approved using a single clinical trial is limited (so called '1+3'). In the past, it was common for dozens of pharmaceutical companies to obtain approval for consigned generics using the same data once a specific company received approval through its own BE testing. However, with the implementation of joint development regulations, 'unlimited replication of generics' is no longer possible.In fact, these regulations have already stifled the entry generics. The number of prescription drug approvals dropped 38% from 4,195 in 2019 to 2,616 in 2020. Last year, only 747 prescription drugs were approved, an 82% drop in six years.The MOHW rationalized the reform by pointing to excessive competition and significant increased number of small-scale firms. The MOHW noted that companies with annual production under KRW 1 billion grew from 54 in 2012 (18.9%). Then, the figure more than doubled to 121 in 2024 (39.3%). However, data details shows that the number of these small-scale firms is declining. The number of firms with an annual finished drug production value of less than KRW 1 billion increased from 51 in 2014 to 124 within just one year. While the growth of these firms slowed starting in 2016, it spiked again to 137 in 2020. Since then, the numbers have declined: down to 133 in 2021 (a decrease of 4 from the previous year) and to 121 in 2024, which is a reduction of 16 companies compared to 4 years prior.The government ignored the impact of the recent regulatory change and overestimated the entry of generics by comparing it with a figure from 10 years prior. Throughout the reform process, the pharmaceutical industry appealed for a policy compromise, citing concerns over reduced R&D investment and job losses.While the government introduced the term "New Innovative Pharmaceutical Company" to offer price incentives for R&D-Intensive firms, the industry remains skeptical of its effectiveness. The industry views the government as having failed to communicate and as having made the system more complex. Ultimately, the industry's distrust of the government has grown.
- InterView
- Pneumonia prevention strategies need to be redesigned for the elderly
- by Son, Hyung Min Mar 23, 2026 08:41am
- As pneumonia emerges as a major disease that simultaneously causes death and functional decline in older adults, the need to redesign prevention strategies is growing.In particular, since the prognosis following pneumonia is more severe in older adults, there is a call to shift from a treatment-centered approach after diagnosis to a focus on prevention.Chang-oh Kim, Professor of Geriatric Medicine at Severance HospitalIn a recent interview with DailyPharm, Professor Chang-oh Kim of the Division of Geriatrics at Severance Hospital discussed the clinical risks of pneumonia in older adults, changes in vaccine strategy, and the need to improve the National Immunization Program (NIP).According to Statistics Korea, pneumonia was the third leading cause of death in Korea in 2024, following cancer and heart disease.Given the rapidly aging demographic structure of the country, the disease burden of pneumonia is likely to increase further in the future.In particular, pneumococcal infections carry a high risk of progressing to severe illness in older adults. It is known that the mortality rate from pneumococcal bacteremia among those aged 65 and older is approximately 60%, while meningitis reaches 80%. Even among survivors, there are numerous cases where neurological sequelae or functional impairment persist.Despite this burden, the adult immunization system remains limited. In the Korea Disease Control and Prevention Agency’s prioritization assessment for vaccines to be included in the national program, the pneumococcal vaccine ranked highly for those aged 65 and older, but that priority has not yet been sufficiently reflected in the actual system.Currently, Korea has approved 23-valent polysaccharide vaccine (PPSV23) and 13-, 15-, 20-, and 21-valent protein conjugate vaccines (PCV). In its 2025 recommendations, the Korean Society of Infectious Diseases recommends either a single PCV20 dose or sequential PCV15 and PPSV23 vaccination in adults aged 65 and older and in high-risk groups. This is interpreted as a trend toward reorganizing prevention strategies to focus on serotypes with a high disease burden.Need to expand adult NIP rises… ‘Finer age segmentation also proposed as an option’Professor Kim explains that despite changes in pneumococcal prevention strategies, the institutional framework has not fully reflected these changes.According to Professor Kim, while protein-conjugated vaccines are systematically administered to children through the National Immunization Program (NIP), the system for adults still relies on out-of-pocket payments. This has created a blind spot where adult vaccination is pushed down the priority list.Professor Kim pointed out, “Adult vaccination lies in a blind spot both institutionally and in terms of awareness. Policy support is needed so that prevention can be naturally incorporated into a treatment-centered healthcare structure.”He particularly stressed the need for a more finely segmented age-based approach. Professor Kim explained that while older adults are currently defined as those aged 65 and older, in actual clinical practice, functional decline often becomes distinctly apparent after the mid-70s.Professor Kim said, “While the number of vaccines intended for inclusion in the NIP is continuously increasing, financial limitations also exist. In that respect, a more realistic approach would be to segment age criteria more finely.”He added, “Considering the disease burden, hospitalization rate, severity, and functional decline in older adults, the social and economic benefits that can be gained through vaccination are substantial. We need to more actively consider expanding adult NIP. “Pneumonia in older adults: the problem lies after onset, not in diagnosis”Professor Kim defined pneumonia in older adults not as a simple infectious disease but as “a disease that can lead to risk of death and long-term functional decline.”In older adults, age-related decline in immune function acts as a basic vulnerability factor. As immune defenses weaken, pathogens such as pneumococcus can invade more easily, and even after infection, the inflammatory response cannot be effectively controlled, making severe progression more likely. The risk is further exacerbated by the presence of various underlying conditions, such as diabetes, cardiovascular disease, and chronic lung disease.The nonspecific nature of clinical symptoms is also cited as a problem.Professor Kim explained, “In elderly patients, typical pneumonia symptoms like fever or cough often do not appear; instead, they frequently seek medical care due to impaired consciousness or generalized weakness. As a result, delays in diagnosis and treatment are common.”Aspiration risk due to impaired swallowing function is also a major factor. Food or secretions can enter the airway and lead to aspiration pneumonia, which further increases disease severity.Above all, functional decline after recovery remains a major issue. Even if the infection itself improves, many patients experience reduced muscle strength and physical function, leading to a significant decline in their ability to perform activities of daily living, and many do not recover to their prior state.Kim emphasized, “In older adults, the prognosis following the onset of pneumonia is more critical than the pneumonia itself. This is why we must shift from a treatment-centered to a prevention-centered approach.”He added, “The key in pneumococcal prevention is not only preventing what happens after invasive infection occurs, but also reducing pneumonia itself by suppressing bacterial colonization and transmission at the mucosal stage.”He also mentioned changes in vaccine strategy. Recently, prevention strategies have evolved with the emergence of vaccines such as the 20-valent pneumococcal conjugate vaccine (Prevnar 20) that offers expanded serotype coverage. Compared with PCV13, PCV20 includes seven additional serotypes—8, 10A, 11A, 12F, 15B, 22F, and 33F—selected with consideration of invasive disease potential, disease severity, and antibiotic resistance.Professor Kim explained, “In the past, polysaccharide vaccines garnered attention due to the large number of serotypes they covered, but today, reducing infections through mucosal immunity has become more important. Protein-conjugated vaccines have now advanced to a stage where they can sufficiently fulfill this role.”He continued, “Considering these factors, the Korea Society of Infectious Diseases also recommends the 20-valent vaccine, and I believe discussions on improving the National Immunization Program (NIP) should be made based on these recommendations.”Korean studies have also shown that about 51% of adult invasive pneumococcal disease is caused by serotypes included in PCV20, supporting the importance of prevention strategies that reflect the actual disease burden.Professor Kim emphasized, “There are more than 100 pneumococcal serotypes, but what matters is not the number but how many of the serotypes with a high disease burden are covered. If dominant serotypes are covered, even a limited number of serotypes can prevent a significant portion of all infections.”
- InterView
- [Reporter’s View] MOHW-Industry clash over reform plan
- by Lee, Jeong-Hwan Mar 17, 2026 09:22am
- The biggest justification for the drug pricing reform plan, which the Ministry of Health and Welfare is accelerating, is “improving the structure of the domestic pharmaceutical industry with a focus on domestically developed new drugs.”Minister Eun Kyoung Jeong and Second Vice Minister Hyung-Hoon Lee have expressed their ambition to create a drug pricing environment that properly rewards pharmaceutical companies that generate innovative value through new drugs, as well as those that are willing to develop medicines essential for public health and life despite low profitability.The ministry has also emphasized the need for a swift overhaul of Korea’s pharmaceutical ecosystem, in which more than 100 companies obtain generic approvals for each active ingredient in a scattered and individual manner, resulting in excessive sales-promotion competition.The domestic pharmaceutical industry, however, is strongly opposing the reform plan, questioning its effectiveness. Companies that have built clinical achievements in new drugs and improved drugs and contributed to the development of Korean new drugs argue that the reform plan, which centers on price cuts for already listed generics and preferential pricing for innovative pharmaceutical companies, will, in fact, bring considerable regression to the domestic pharmaceutical industry.They point out that both the reform plan first unveiled by the Ministry on November 28 of last year and the revised version presented at the Health Insurance Policy Deliberation Committee’s subcommittee meeting on the 11th of this month are far removed from policies that genuinely benefit the “real pharmaceutical companies” that have demonstrated tangible achievements in advancing the domestic pharmaceutical industry and improving public health.A closer look at the domestic industry’s position shows that there is no disagreement with the broad policy direction of rewarding companies that have produced new drug R&D outcomes and contributed to manufacturing drugs vulnerable to supply instability, while cutting prices for those that have not, thereby encouraging new drug creation and a stable supply of essential medicines.The problem is that the Ministry of Health and Welfare’s reform plan cannot escape criticism that “the devil is in the details”—a cliché, but one that rings true.The main point of criticism from pharmaceutical companies regarding the Ministry’s reform plan is the “price cuts for already listed generics.”The Ministry has proposed a policy that uniformly cuts the prices of already listed generics without significant differentiation between pharmaceutical companies that have consistently maintained innovation and continued financial investment, and those that have relied on contract manufacturing of generics to generate profits.That is precisely the clause in the reform plan first disclosed on November 28 last year, which proposed lowering the current generic pricing ratio of 53.55% uniformly to the 40% range.Later, in the revised proposal presented at the HIPDC subcommittee on the 11th, the ministry adjusted the generic pricing ratio from the 40% range to the low-to-mid 40% range, while at the same time establishing a provision to temporarily defer price cuts for already listed generics for certified innovative pharmaceutical companies and companies deemed equivalent to innovative pharmaceutical firms.However, this was accompanied by a proviso stating that the deferment would not apply to ingredients with ‘21 or more listed products.’Pharmaceutical companies argue that the price reduction deferral for innovative pharmaceutical companies does not offer significant merit or benefit, and that, given the proviso regarding the 21-product threshold, the actual benefit effectively converges to zero.They argue that the price reduction deferral provision for innovative pharmaceutical companies appears, at first glance, to be a perfectly fine and sweet piece of fruit, but when you cut it open and look inside, it is rotten to the core—a regulation that has no real substance.Pharmaceutical companies also express dissatisfaction with the preferential drug pricing regulations designed by the Ministry of Health and Welfare, claiming that they are constrained by a piecemeal surcharge system and cannot generate any substantial price benefits, no matter how hard they try. The logic goes that if the government truly wants to build an innovative pharmaceutical ecosystem, it must go beyond mere drug price markups. Through inter-ministerial consultations, the government needs to dramatically strengthen tax benefits and create policies that allow pharmaceutical companies to see tangible benefits, such as regulatory exemptions for those contributing to the production of high-quality medicines, so that companies can generate profits that can then be reinvested into new drug R&D.Then why are the Ministry of Health and Welfare and the pharmaceutical industry clashing so sharply over the same reform plan when they share the same policy objective?Ultimately, it is due to insufficient public-private consultation between the government and the industry before the draft reform plan was disclosed on November 28, resulting in a drug pricing system that started strong but fizzled out.Despite growing backlash from the pharmaceutical industry immediately after the draft was released, the Ministry of Health and Welfare did not engage in any meaningful consultations with pharmaceutical companies until the revised proposal was prepared. The only face-to-face case between the ministry and the pharmaceutical industry was a single working-level consultation in which officials from around 20 pharmaceutical companies were gathered and asked to submit fragmented opinions.Multiple pricing managers at pharmaceutical companies say, “We have worked in market access and drug pricing policy for 10 or even over 15 years, but we have never seen the ministry put forward such a sweeping and unilateral drug pricing reform plan and then make so little effort at mutual consultation.”There is also strong criticism saying, “We don’t understand why the Ministry is turning a deaf ear and continuing with unilateral administration. If this continues, a pricing system will be established in which generic prices for domestic pharmaceutical companies are cut in order to fund innovative new drugs from global pharmaceutical companies. That would be the exact opposite of the ministry’s stated policy goal of fostering the domestic pharmaceutical industry and building a pharmaceutical environment based on new drugs.”There are even accusations that the ministry is merely kowtowing to the Trump administration’s pressure regarding reciprocal drug tariffs, having drafted a drug pricing reform plan out of fear of offending the US, and is now refusing to respond to any requests for revisions.The one thing the domestic pharmaceutical industry is asking of the ministry is a pause on the drug pricing reform plan that has been pushed forward hastily without mutual consultation.Pharmaceutical companies are calling on the ministry that, if it truly intends to design and operate the reform plan with the real goal of pharmaceutical industry innovation, it should stop insisting on a unilateral and coercive proposal and instead set a final timetable even now, promptly launch a public-private joint governance framework on the drug pricing reform plan, and derive a fully revised version.The unwavering stance of solid domestic pharmaceutical companies dedicated to innovation is that the reform plan and amendments presented by the Ministry of Health and Welfare to date are absolutely insufficient to create global blockbuster-level domestic new drugs, resolve crises involving essential medicines and medicines with unstable supply, solve the problem of generic drug proliferation, and eradicate rebate competition caused by pharmaceutical companies trapped in contract generic manufacturing, all of which are necessary to protect both a healthy domestic pharmaceutical environment and the public’s right to health.The words of one pricing manager that I heard while covering the reform continue to ring in my ears. “If the goal of this price cut is simply to reduce drug spending in the National Health Insurance budget, then there is nothing more to say. But we cannot agree at all with the ministry’s claim that its administrative rationale is preferential treatment for innovative pharmaceutical companies and building a new drug ecosystem. If the goal is to foster the pharmaceutical industry and reward real pharmaceutical companies, why are drug prices being cut across the board? Why does the ministry insist on turning a blind eye to the reality where only global big pharma companies end up laughing while domestic pharmaceutical companies are sweating bullets, calculating their losses? Rather than engaging in media stunts, wouldn’t it be the proper attitude for an administrator to put their heads together with industry practitioners and design a proper system?”
- InterView
- ‘Broader access to CAR-T cell therapy needed for DLBCL’
- by Son, Hyung Min Mar 12, 2026 08:34am
- Diffuse large B-cell lymphoma (DLBCL) is a highly aggressive hematologic malignancy in which a significant number of patients achieve a cure with first-line therapy, but prognosis worsens sharply once relapse or treatment resistance occurs.In particular, patients who relapse or become refractory within 12 months after first-line therapy often struggle to achieve meaningful outcomes with conventional high-dose chemotherapy followed by autologous stem cell transplantation alone. Experts therefore stress the importance of shifting treatment strategies at an earlier stage.Against this backdrop, Gilead’s CAR-T therapy Yescarta (axicabtagene ciloleucel) is emerging as a new alternative based on clinical evidence accumulated in second- and third-line treatment settings.Professor Yun-seok Choi of Seoul St. Mary’s Hospital and Tony Li, Executive Director and Head of Medical Affairs at Kite International Region (Gilead’s oncology subsidiary), emphasized in a recent meeting with Dailypharm, “For DLBCL, the time to relapse and the number of treatment lines directly correlate with prognosis. This is why we must actively consider introducing CAR-T cell therapy at the second-line treatment stage.”Tony Li, Head of Medical Affairs at Kite International Region; Yun-seok Choi, Professor of Hematology-Oncology at Seoul St. Mary’s HospitalDLBCL is the most common subtype of aggressive non-Hodgkin lymphoma. Despite the standard first-line therapy R-CHOP (rituximab, cyclophosphamide, vincristine, prednisone), a substantial number of patients either relapse or become refractory to treatment.The problem is that after just one relapse, treatment response rates and survival prospects decline rapidly. High-dose chemotherapy and autologous hematopoietic stem cell transplantation, which have been the mainstay second-line therapy, require stringent patient selection and still carry a considerable risk of relapse even after treatment.In Korea, Yescarta was approved in August last year for DLBCL and primary mediastinal B-cell lymphoma (PMBCL), and its reimbursement criteria were established in January for third-line treatment by the Cancer Disease Deliberation Committee. However, reimbursement criteria for second-line use in patients who relapse or become refractory within 12 months of first-line therapy have not yet been established.Experts highlight unmet needs in the DLBCL treatment landscape, emphasizing the clinical value of Yescarta and the need for earlier CAR-T introduction in the second-line setting.Q. What are the practical difficulties or limitations of conventional treatments for DLBCL patients who relapse or become refractory after first-line therapy?[Professor Choi] Traditional second-line therapy consists of high-dose chemotherapy followed by autologous stem cell transplantation. However, this approach can only be applied to patients who meet certain conditions, such as being relatively young and having good overall health. Furthermore, relapsed DLBCL is often biologically aggressive, making treatment challenging.[Executive Director Tony Li] Standard first-line regimens like R-CHOP are highly effective, with about 70% of patients achieving a cure. However, treatment becomes increasingly difficult for patients with relapsed or refractory disease. Cure rates inevitably decline with each subsequent treatment line.Stem cell transplantation requires high-dose chemotherapy before the transplant, meaning patients must be in excellent physical condition to endure the entire process. They must be able to withstand the process of receiving anticancer treatment, responding to it, and then undergoing the transplant. Even among patients who successfully undergo transplantation, about 50% eventually relapse, and the prognosis for these patients is not optimistic.Q. In some countries, CAR-T or bispecific antibodies are reimbursed as second-line therapy. What clinical value does Yescarta have in real-world practice?Tony Li[Executive Director Tony Li] Yescarta has been approved in more than 20 countries and is recommended as a Category 1 option for second-line treatment of DLBCL in the National Comprehensive Cancer Network (NCCN) guidelines. This demonstrates that Yescarta has established itself as an evidence-based treatment option in the global clinical setting.Yescarta’s efficacy as a second-line therapy was demonstrated in the ZUMA-7 clinical trial. In this prospective controlled trial comparing Yescarta with standard stem cell transplantation therapy, Yescarta achieved results surpassing the existing standard therapy for the first time in 25 years. The median event-free survival (EFS), the primary endpoint, was 8.3 months in the Yescarta group, representing a significant improvement of approximately four times compared to the 2 months observed in the transplant group.It is also the first and only currently available CAR-T therapy to demonstrate statistically significant overall survival (OS) in a second-line setting.The drug also has accumulated meaningful long-term data. ZUMA-7 has accumulated nearly four years of follow-up data, showing a flattening of the OS curve. In the third-line setting, the 5-year follow-up results from ZUMA-1 confirmed that approximately 43% of patients survived, suggesting the potential for long-term survival.[Professor Choi] DLBCL is a disease with a high likelihood of death if the condition is not adequately controlled in the first line. This is the natural course of DLBCL observed in clinical practice.Even when high-dose chemotherapy followed by autologous stem cell transplantation is performed, the success rate is about 50%, meaning the number of patients rescued by this treatment is limited. In ZUMA-7, the OS curve for the standard-treatment group did not reach a complete plateau.In this context, Yescarta demonstrated statistically significant survival benefits compared to standard treatment, reducing the risk of death. Particularly significant is that CAR-T therapy has, for the first time in the history of DLBCL salvage therapy, presented survival data in a patient population with high mortality risk.Furthermore, the 5-year follow-up analysis of ZUMA-1 reported a 5-year OS estimate of 42.6% for patients treated with Yescarta. This suggests that approximately 4 out of 10 patients can expect long-term survival. Additionally, the fact that Yescarta demonstrated a survival benefit in the second-line setting in the ZUMA-7 study is also significant.Q. In January, reimbursement criteria for third-line Yescarta were established. How might this change third-line treatment strategies?[Professor Choi] Comparing the OS curves, Yescarta's data shows a relatively higher position compared to Kymriah (tisagenlecleucel). Although this was not confirmed through a direct head-to-head trial, many clinicians believe Yescarta may have stronger anti-lymphoma activity, not only in DLBCL but also in follicular lymphoma. This perception could influence drug selection decisions to some extent going forward.Another factor is that Yescarta transports cells to manufacturing facilities without freezing them, which reduces certain regulatory burdens associated with human cell handling permits (such as GMP) required for some CAR-T therapies, potentially enhancing accessibility from the healthcare provider's perspective. This characteristic could also influence future drug selection and market share to some extent.Q. I understand that some countries overseas have approved Yescarta’s reimbursement as a second-line treatment. What are the benefits of using Yescarta in second-line therapy?[Executive Director Tony Lee] In the A8 countries referenced by Korea for drug pricing, Yescarta is reimbursed for both second- and third-line treatments. Clinical study results have consistently shown that using CAR-T therapies at earlier stages is associated with superior treatment outcomes. This trend was reported in studies ranging from ZUMA-1 to ZUMA-7.Additionally, the ZUMA-12 study, which evaluated Yescarta's efficacy in the first-line treatment of LBCL patients, also yielded positive results. The ZUMA-23 study, comparing standard therapy with Yescarta in first-line treatment, is also underway.The healthier the T cells, the higher the likelihood of producing effective CAR-T therapies. This is because patients are less exposed to chemotherapy at earlier stages, meaning their overall condition is likely better, and their immune function is more preserved. These conditions provide the rationale for earlier use of CAR-T therapy, as better treatment outcomes can be expected when CAR-T is administered under such circumstances.Q. Why is reimbursement for Yescarta necessary in second-line treatment?Yun-seok Choi[Professor Choi] Yescarta is a therapy that has demonstrated clinical efficacy in the second-line setting through clinical studies. Based on this evidence, it is evaluated as a meaningful treatment option for clinicians.For immunotherapies that rely on T-cell activation, T-cell fitness is extremely important. While it is challenging to quantitatively assess a patient's T-cell status, this remains an area of ongoing research.Anticancer drugs used in lymphoma treatment are agents that can selectively affect lymphocytes. Therefore, the more a patient is repeatedly exposed to anticancer therapy, the more the fitness of the patient's T cells, which serve as the material for CAR-T, or the patient's own T cells that should attack cancer cells when dual-specific antibodies are administered, inevitably decreases.Considering this, T-cell–based immunotherapy should ideally be introduced earlier, when immune function is still relatively preserved. Applying CAR-T therapy under normal immune conditions can yield better treatment outcomes, offering advantages in terms of long-term patient prognosis and quality of life.Reimbursement decisions should also consider treatment outcomes rather than focusing solely on drug prices. Patients who responded well in the ZUMA-1 and ZUMA-7 studies were able to return to daily life and resume economic activity. Given the unique disease course and therapeutic innovation in DLBCL, reimbursement decisions should proceed more quickly.Q. With the emergence of various new drugs like bispecific antibodies and early-stage CAR-T cell therapy, treatment options have broadened. Specifically, what are the criteria for patient groups where early-stage CAR-T therapy is deemed more urgent and suitable than conventional standard therapy?[Professor Choi] Patients at the second-line treatment stage, particularly cases where patients relapse within 12 months after first-line therapy. Through large-scale clinical trials, only Yescarta demonstrated effective results in patients who relapse or become refractory within 12 months after first-line treatment. It is the sole option with an approved indication for this patient group. Bispecific antibodies currently lack prospective evidence focused specifically on this patient population.However, CAR-T is not an immediately available treatment, requiring turnaround time (TAT).Should evidence for bispecific antibodies accumulate in the future, making both options available, clinicians will need to carefully consider treatment strategies. A cautious approach is warranted, weighing CAR-T's TAT against the biological aggressiveness of DLBCL in the relapse patient population and the rationale for bispecific antibodies in this setting.Q: What insights do you believe the global experience accumulated with Yescarta could provide for the domestic treatment environment?[Executive Director Tony Lee] The approval of Yescarta as a third-line therapy in Korea is a significant advancement, which can serve as a starting point that can open new treatment opportunities for both patients and healthcare providers. As experience with Yescarta accumulates in the third-line setting, we expect Korean healthcare providers' understanding of the drug's efficacy and characteristics to deepen.In addition, real-world data (RWD) continue to accumulate globally, and this evidence may support future discussions on second-line reimbursement in Korea. Given that approval and reimbursement have already been granted in several countries, we anticipate that discussions in Korea will also proceed based on an evaluation of the drug's clinical value.Q. How do you expect the DLBCL treatment landscape to evolve?[Professor Choi] About 70% of DLBCL patients can expect cure, but the remaining 30% fall into a high-risk group. Future research will likely focus on more precise identification of high-risk patients and tailored treatment strategies based on risk level.In particular, we anticipate a shift where T-cell-based immunotherapies, such as CAR-T, move to earlier treatment lines and are introduced earlier for high-risk patients.
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- [Reporter’s View] Precision over severity required for the GMP regulation
- by Hwang, byoung woo Mar 11, 2026 08:29am
- The system for revoking GMP (Good Manufacturing Practice) compliance certification is approaching a turning point.This policy, often referred to as a “one-strike-out” rule, reflects the government’s intention to apply a zero-tolerance principle against companies that obtain GMP certification through intentional data manipulation or fraudulent means.The system was born in response to incidents of arbitrary manufacturing, where companies falsified manufacturing records and produced drugs disregarding established procedures.The government’s intent is understandable. GMP is the most fundamental system underpinning trust in the pharmaceutical industry, and it is only natural that strict standards are applied to quality control in the manufacturing process.Some evaluations suggest that implementing this system has elevated the status of quality control organizations within pharmaceutical companies and provided an opportunity to reorganize their data and documentation management systems.However, as time passes, new questions have emerged in the field. There is growing reflection on whether strong regulations are actually functioning in a way that strengthens the quality culture.Some in the industry point out that the regulatory structure, which fails to sufficiently differentiate the types and severity levels of GMP violations, may not align with on-site realities.Questions are being raised about whether it is reasonable for intentional quality manipulation or serious manufacturing violations to be discussed within the same regulatory framework as simple management oversights, without distinguishing their relative gravity.For these reasons, discussions are currently underway in the National Assembly to amend the Pharmaceutical Affairs Act, proposing the introduction of intermediate measures within the system for revoking GMP certification. The core focus is on refining the units of administrative penalties that can be imposed for GMP violations beyond the current system.There is also growing interest in whether such discussions can preserve the intent of the system while adding greater regulatory precision.In fact, global pharmaceutical regulatory environments have recently been moving toward risk-based management. This approach determines the level of response by comprehensively considering factors such as the intent of the violation, its impact on patient safety, and the likelihood of recurrence.Compared to the US or Europe, which apply regulations in stages depending on the severity of the violation, the one-strike-out system has drawn criticism that it could excessively stifle the field, regardless of its necessity.Of course, this does not mean deregulation is the solution. Pharmaceutical quality regulation is an area where public trust can collapse from a single incident.Therefore, what matters more than the intensity of regulation itself is its precision. Quality regulation should function not as a system that stifles the field, but as one that strengthens a culture of quality.The GMP one-strike system also faces the same question. Beyond delivering a strong message, it needs to be examined whether it actually functions as a policy that improves real quality standards.Ultimately, what matters is not the mere existence of regulation, but the direction it creates. This reporter hopes that the proposed reform will bring the precision needed to both breathe life into the industry and safeguard the final bastion of pharmaceutical safety.
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- [Reporter’s View] Polypharmacy management no longer a pilot project
- by Jung, Heung-Jun Mar 04, 2026 05:41pm
- Launched in 2018 as the “Proper Medication Use Support Program,” the National Health Insurance Service’s polypharmacy management project has now entered its ninth year.Although it remains designated as a pilot program, the time has come for the government to make the decision and transition it into a full-scale program.With the Integrated Care Support Act taking effect this year, the government must expand community-based medical and care services. This is a critical window to formally incorporate the polypharmacy management program, which has long remained outside the institutional mainstream.Elderly individuals who require integrated care services often take multiple medications due to frequent hospitalizations or outpatient visits. To achieve a truly home-centered, integrated care model, proper management must begin at an earlier stage.In other words, minimizing medication-related issues that arise (or may arise) as elderly patients move between medical institutions and home is essential to improving the overall quality of home-based services.For this reason, the hospital-based polypharmacy management model should be prioritized for transition to a full-scale program. Since 2020, participation and patient coverage have steadily expanded, while multidisciplinary collaboration among physicians, pharmacists, and nurses has become well established.Because the program operates through inpatient/discharge and outpatient models, it can significantly contribute to managing patients returning to their residences after receiving medical services.If the support is integrated care for elderly patients who have already received primary management, local governments can provide the service relatively easily. It also enables a smoother link between hospital-based and community-based models.The effectiveness of the polypharmacy management program has been sufficiently demonstrated over the past 9 years. Research results show not only a reduction in the risk of adverse drug reactions but also cost savings.Considering the financial benefits from reduced patient readmissions and additional outpatient visits, the budget required for full-scale implementation would not be substantial.At a time when the sustainability of the national health insurance system is becoming increasingly important, strengthening polypharmacy management can serve as a safeguard against unnecessary spending. While expanding participating institutions remains important, the program should now be scaled into a nationwide service through full implementation.A pilot program is meant to test effectiveness and reduce trial and error. After 9 years of validation, it is now time to transition to full-scale implementation, starting with the hospital model and gradually incorporating insurance funding.
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- "Precision medicines accelerate for treating atopic dermatitis"
- by Son, Hyung Min Feb 26, 2026 07:47am
- Korea's treatment landscape for atopic dermatitis is facing a clear turning point. For the past 10 years, treatment strategies have centered on moisturizers, topical therapies, and immunosuppressants, which have remained the standard of care. The rapid introduction of new drugs, such as biologics and JAK inhibitors, is fundamentally changing the management of moderate-to-severe patients.Professor Yang-Won Lee of the Department of Dermatology at Konkuk University Medical CenterProfessor Yang-Won Lee of the Department of Dermatology at Konkuk University Medical Center, recently appointed as the President of the Korean Atopic Dermatitis Association, emphasized, "We have entered an era where the paradigm of atopic treatment is shifting," adding, "Insurance, policy, and clinical applications must be adjusted by reflecting the changes in patient groups and waves of new drug introductions."The patient population for atopic dermatitis in Korea has changed significantly compared to the past. The prevalence has increased, and in particular, the proportion of adult atopic patients has expanded greatly, making a realignment of treatment strategies inevitable. Adult patients face long disease courses and a high proportion of chronic cases, creating a need for long-term treatment options that satisfy both safety and efficacy.Related to this, the successive launches of biologics have provided a new alternative. Following the introduction of 'Dupixent (dupilumab, an IL-4/IL-13 inhibitor)' as the first interleukin agent in 2018, various biologics, including LEO Pharma's 'Adtralza (tralokinumab, an IL-13 inhibitor)', have emerged, expanding treatment options incomparably compared to the past.With the addition of new drugs that are Janus kinase (JAK) inhibitors, the field of systemic treatment for moderate-to-severe patients has effectively entered a new phase.However, despite the expanded treatment options, the common consensus in the field is that patient accessibility remains limited.Professor Lee identified the 'restriction on switching therapies' as an area for improvement. While switching between biologics and JAK inhibitors has been permitted under certain conditions, switching within the same class remains prohibited, which is pointed out as narrowing the range of choices for patients.Professor Lee expressed his concerns, stating, "Given the characteristics of atopic dermatitis patients who have complex pathophysiology, there seem to be many constraints on tailored treatment. This is an area that requires improvement."Q. How do you feel about starting your term as the new President, and what is your opinion?I have been active in the Korean Atopic Dermatitis Association for a long time. In particular, I participated from the very beginning in the process of creating a diagnostic code for severe atopic dermatitis in Korea, as none had existed previously. I also remember making my best efforts to ensure that severe atopic dermatitis could be covered under the 'Special Case Medical Expense Coverage System' system.It feels like those events were just yesterday, and I am honored to be serving as President. Iplant to improve the rights and interests of patients with atopic dermatitis, the treatments they desire, and research into the disease.Q. What are the primary goals or tasks that the Association will focus on during this term?There are largely two main goals. The first is improving the rights and interests of patients with atopic dermatitis. Recently, many new atopic dermatitis drugs, such as biologics and JAK inhibitors, have been launched. However, due to high costs, many patients suffering from the disease are unable to receive treatment with these new drugs.The Association will make every effort to ensure that health insurance and the 'Special Case Medical Expense Coverage System' system are applied to new drugs as quickly as possible.The other goal is to promote research on atopic dermatitis. As the Korean Atopic Dermatitis Association is an academic organization, I intend to fulfill my responsibilities, including supporting researchers dedicated to identifying the causes of atopy and developing treatments, and conducting collaborative research.Q. How do you think the patient population and disease patterns of atopic dermatitis in Korea have changed compared to the past? How do you think these changes have influenced the treatment paradigm?The first change is that the prevalence has increased. This is partly due to more patients proactively visiting dermatology clinics as the medical environment has developed, but environmental changes driven by industrialization and other factors also play a role.Another point is the increase in the number of adult patients with atopic dermatitis. As prevalence has increased and adult patients have become more numerous, the treatment paradigm has required new drugs that can ensure efficacy and safety for long-term treatment. In this context, the recently launched new drugs are playing a significant role.Atopic dermatitis can be divided into mild, moderate, and severe stages. Mild patients are treated proactively with moisturizers and topical treatments. For moderate-to-severe cases, topical treatments and systemic treatments are used together.Recently, new drugs such as biologics and JAK inhibitors have emerged, providing significant therapeutic benefit.Q. While treating moderate-to-severe atopic dermatitis patients, what are the limitations of existing treatment strategies. What are unresolved unmet needs?The biggest concern is the safety of existing conventional treatments.In many cases, moderate-to-severe patients become chronic and require long-term treatment. However, there are safety concerns regarding the long-term use of conventional therapies such as existing immunomodulators.Most of these issues are being addressed by new drugs such as biologics and JAK inhibitors. However, while the side effects of these new drugs are not severe, it seems necessary to be well-informed about the specific side effects of each drug to select the appropriate medication.Currently, many atopic dermatitis treatments are being developed, and clinical trials are underway. The main direction is the development of targeted therapies that can secure higher safety and efficacy. In my opinion, the treatment of atopic dermatitis will evolve toward reducing side effects and increasing therapeutic effects through the development of targeted therapies that precisely target its pathophysiology.Q. How can IL-13 single-target drugs change patient management?Atopic dermatitis is a complex disease involving multiple immune pathways, but at its core, IL-13 plays a critical role in inflammation and skin barrier dysfunction.Single-target IL-13 therapy, such as Adtralza, specialized for the pathophysiology, has the advantage of precisely regulating the core inflammatory pathway while minimizing unnecessary immunosuppression. In particular, with Adtralza, the physician can adjust the administration cycle after 16 weeks of treatment, providing advantages in terms of patient convenience and economic factors.Q. Is there anything that needs to be improved in terms of treatment accessibility, insurance policy, or education?I would like to speak about the issue of switching therapies. Since December 2024, switching between biologics and JAK inhibitors has been permitted under certain conditions, expanding the range of treatment options.However, switching between a biologic and another biologic, or between JAK inhibitors, is still not allowed, and I hope this part will be improved. Regrettably, this seems to limit the tailored treatment of patients with atopic dermatitis who have complex pathophysiologies.Q. Do you have any hope or advice you would like to send to patients and families suffering from atopic dermatitis?Many patients and guardians still have much distrust, believing that atopic dermatitis treatments are toxic or that only corticosteroids are used.With the recent development and launch of new drugs such as biologics and JAK inhibitors, the paradigm of atopic dermatitis treatment has changed and advanced. That progress is continuing today.I hope that patients suffering from atopic dermatitis do not hesitate due to negative experiences from the past and instead visit a nearby dermatologist to receive proactive treatment.
- InterView
- [Desk View] Need for transparency toward drug price reform
- by Chon, Seung-Hyun Feb 23, 2026 09:15am
- The Ministry of Health and Welfare (MOHW) has reportedly delayed a decision on the drug pricing reform agenda at the Health Insurance Policy Deliberation Committee. In November last year, the MOHW reported to the HIPDC a plan to lower the price calculation rate for generics and patent-expired drugs from the current 53.55% to 40%, announcing a final decision in February and implementation by July of this year. While it was expected that the reform plan would be finalized at the HIPDC subcommittee held on the 20th to initiate the institutional reform, the process has been delayed by at least a month.The industry appears relieved by the MOHW's decision to defer the HIPDC discussion. Expectations are emerging that the ministry may have felt burdened by the prospect of forcing through the reform while receiving strong opposition from the pharmaceutical sector. On the 10th, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) unanimously adopted a resolution during its board of directors meeting, urging the deferment of the resolution and implementation of the drug pricing system reform.Through its resolution, the KBPMA Board of Directors urged the government to ▲ delay the vote and implementation of the large-scale drug price reduction plan by the Health Insurance Policy Deliberation Committee ▲an impact assessment on how these cuts would affect public health and employment ▲the abolition of the market-linked actual transaction price implementation plan ▲ support measures to help small and medium-sized pharmaceutical companies upgrade their business structures ▲a formal governance structure between the government and industry to regularly discuss drug pricing policies and industrial growth.Labor organizations have also voiced opposition against the government regarding the reform. On the 29th, the Federation of Korean Trade Unions (FKTU) issued a statement warning, "The government must transparently disclose the basis and financial effects of the drug pricing system reform and immediately establish a social discussion structure where the opinions of stakeholders are reflected," adding, "We will not remain passive regarding any attempts to rollback labor conditions or increase job insecurity under the guise of this policy."The Korean Democratic Pharmaceutical Union (KDPU), primarily composed of labor unions from multinational pharmaceutical companies, also formalized its opposition last month by holding a picket protest in front of the Health Insurance Review and Assessment Service (HIRA) in Seocho-dong, Seoul.Critics point out that the government has not disclosed specific details since announcing the reform, further fueling anxiety among pharmaceutical companies.The MOHW has not released a specific position regarding the industry's demands for deferment or cancellation of the reform. An industry official stated, "The MOHW has not once presented a specific figure for the generic price reduction since reporting the reform plan in November last year."If the generic price standard is adjusted from 53.55% to 45%, the maximum price of a generic is mathematically calculated to drop by 16.0%. If the reform standard is set at 40%, the price drops from KRW 53.55 KRW to KRW 40, increasing the reduction rate for the maximum generic price to 25.3% compared to the previous standard. Given that the profit margin for a single generic product would drop by more than 20%, pharmaceutical companies' losses would inevitably be substantial. However, because specific reduction rates have not been presented, pharmaceutical companies are unable to estimate loss scenarios resulting from the reform.A detailed roadmap for whether price cuts will apply to currently listed drugs has also not been disclosed. If the reformed pricing system is applied to currently listed drugs, pharmaceutical companies' losses will be even greater. For example, if the price of a product with annual sales of KRW 10 is reduced from 53.55% to 40%, KRW 2.5 billion in annual revenue would evaporate.The MOHW plans to sequentially implement the reformed pricing system, starting with listed generics that have maintained a calculation standard of over 50% for more than 13 years since the blanket price reduction in 2012. The vision is to adjust approximately 3,000 items over three years, starting from the second half of next year, and sequentially reduce 1,500 items that have maintained a rate of 45% or higher starting from the second half of 2027.According to this scenario, the targets for price reduction differ across generic products with the same ingredient, depending on their market entry timing. For example, a total of 156 items have been approved for the single-agent antiplatelet agent clopidogrel, with approvals ranging from 2005 to 2021. The clopidogrel generic market formed, with 19 items approved in 2005 and 29 in 2006. From 2014 to 2018, 5 to 9 generics entered the market each year, and in 2019, new approvals surged to 17. At that time, as the government set out to reform the pricing system, including tiered pricing and criteria, there was a flood of new approvals.If the government pursues price reductions for generics listed before 2012, it is estimated that 64 items approved between 2005 and 2011 would be subject to price cuts, while 92 items approved from 2012 onwards would be excluded. In this case, a very strange situation would arise where different pricing systems apply to the same product. Issues of equity would inevitably surface, as the system would disadvantage only specific products and companies.The industry also raises the possibility that targets for price reductions could be categorized by ingredient based on when the generic market opened. This is a scenario in which, if even one generic were listed before 2012, all drugs containing that ingredient would be categorized as targets for price reduction. In this case, the losses pharmaceutical companies would incur from price cuts would be even greater. If the criteria requirements, such as bioequivalence tests, are also applied, the scale of losses could expand exponentially.In its press release announcing the drug pricing system reform, the MOHW problematized the 'generic-centered industrial ecosystem.' The justification is that to create a virtuous cycle of an innovative ecosystem through R&D activation, an urgent overhaul of the drug pricing system is needed to balance appropriate compensation for value. The view is that only when pharmaceutical companies move away from a generic-centered business model and focus on new drug development can South Korea become a pharmaceutical powerhouse.However, the ministry has yet presented any measures regarding the anxiety over the threat to pharmaceutical companies' survival. Communication is necessary. Deferring the resolution process for the drug pricing reform by a month or two, to observe the industry's response, does not mean the efforts at communication are recognized. The government must specifically disclose its policy goals and content and engage in substantive communication with the industry. If the government’s policy is justified and legitimate, it should at least make an effort to persuade companies. The communication process must also be transparently disclosed. Under the President Lee Jae Myung administration, which makes Cabinet meetings and business reports public, we hope that policies will not be pursued in secret.
