"Disparity btwn innovation speed and policy… Economic Eval"

High-cost new drugs emerge one after another…disparity between the existing review framework and the real-world is intensifying

Gov't agrees on the need for modernization, not reinforcement…may likely strengthen flexibility and post-market evaluation

Forum

As the South Korean positive list system for pharmaceutical reimbursement marks its 20th anniversary, discussion has begun on how to reflect the value of innovative new drugs within the existing economic evaluation system.

 

With the acceleration of technological development and the surge of high-cost innovative treatments for ultra-rare diseases, critics argue that the current framework, which focuses on cost-effectiveness, can no longer sustain the balance between patient access and financial sustainability.

 

At the forum, '20 Years of the Positive List System for Pharmaceutical Reimbursement: Value-Based System Where Innovation Meets Regulation,' held in the National Assembly on November 21, academia, government, industry, and the media all agreed on the necessity of 'modernization of economic evaluation.' The event was jointly hosted by Democratic Party Rep.

 

Seo Young-seok and Rep.

 

Kim Yoon, and Reform Party Rep.

 

Lee Joo-young, and organized by the ISPOR Korea Chapter.

 

The system focused on cost-effectiveness limits evaluation of innovative new drugs Korea's economic evaluation system was introduced in 2006 with the government's announcement of the Drug Expenditure Rationalization Plan (DERP).

 

The PLS, introduced the following year, established the principle that all drugs must be jointly verified for clinical usefulness and economic value through the economic evaluation process, with only those drugs proven to be cost-effective included in the reimbursement list.

 

Although the Economic Evaluation Exemption track was established in 2015 to provide an exceptional pathway, the principle that cost-effectiveness proof is mandatory for new drug reimbursement has persisted for 20 years.

 

However, the industry points out that this cost-effectiveness-centric structure clashes with the rapidly evolving paradigm of innovative new drugs, creating a growing gap between regulation and technology that cannot be ignored.

 

BaeChan Kim, Unit Head at Boehringer Ingelheim Korea, directly criticized the current economic evaluation framework, stating that it has failed to keep pace with changes in treatment paradigms over the last decade.

 

Kim said, "The problem is that as the speed of innovation has accelerated, the complexity of clinical evidence has increased exponentially," and added, "The expansion of areas where standard Randomized Controlled Trials (RCTs) are practically impossible, such as ultra-rare disease treatments, has led to an increase in innovative new drugs approved based only on single-group trials.

 

However, the current economic evaluation and reimbursement system is still aligned with the RCT standard from 20 years ago.

 

Economic evaluation requires evolution, not reinforcement." Kim highlighted Korea's position by citing international comparisons.

 

According to data from the U.S.

 

Pharmaceutical Research and Manufacturers of America (PhRMA), analyzing reimbursement rates for innovative new drugs across nine developed countries, Australia, Korea, and Canada fall behind significantly, with reimbursement rates about half the average.

 

Kim pointed out, "It is a contradictory structure where countries called 'innovation leaders' are actually the furthest behind in access to innovative new drugs." There was also criticism that limiting economic evaluation to a cost-effectiveness-centric structure is no longer realistic.

 

Lee Sang-il, Head of the Department of Policy Planning at the National Evidence-based Healthcare Collaborating Agency (NECA), assessed, "The challenges of securing both patient access and financial sustainability have become incomparably difficult compared to the past, due to accelerated aging, the emergence of ultra-high-cost innovative drugs, and increased uncertainty in clinical evidence," and said, "We are in an era where cost-effectiveness alone cannot explain even half of the decision-making process." Lee particularly cited the absence of entry evaluations and the failure to establish a post-market evaluation system as the biggest structural problems.

 

Lee said, "For high-cost drugs where there is a disparity between RCT data and real-world clinical data, the insurer needs to conduct a health-economic evaluation directly or through objective verification by a third party.

 

The sustainability of drugs entering via the Risk-Sharing Agreement (RSA) or economic evaluation exemption tracks cannot be guaranteed without post-market management." He emphasized the need to establish a Korean-style Managed Entry Agreement (MEA) that defines the post-market evaluation system concurrently with the listing decision.

 

The event was jointly hosted by Democratic Party Rep.

 

Seo Young-seok and Rep.

 

Kim Yoon, and Reform Party Rep.

 

Lee Joo-young, and organized by the ISPOR Korea Chapter.

It has been confirmed that such a problem exists not only in the industry but also in the media covering the regulatory sector.

 

This suggests that the difficulties in the field are repeatedly exposed in official discussions and in practical, real-world cases.

 

Yun-Ho Eo, a journalist at DailyPharm, pointed out, "The core message from the field is that the reason for the increase in economic evaluation exemptions is not that companies want the exemption, but that the current health-economic evaluation itself has become impossibly difficult to handle." Eo added, "Companies are mobilizing law firms, economic evaluation expert agencies, and external consultants because they cannot manage the process using only in-house personnel," and stated, "This shows that Korea's economic evaluation procedures are extremely complicated and rigid on a global scale.

 

Korea's low drug prices and slow listing speed are recognized as a policy reality by the industry." Agrees on modernizing the economic evaluation system...Has proposed directions to strengthen review and evaluation In response to concerns raised by industry and academia, the government acknowledged the limitations of the existing economic evaluation framework and agreed on the need for institutional improvement.

 

However, it clarified that what is needed is not the reinforcement of the system, but its refined modernization.

 

The government highlighted securing evaluation flexibility and expertise, and establishing a post-market management system that reflects actual clinical outcomes after listing, as the core directions for reform.

 

(from left) Sook-hyun Lee, Head of HIRA

Yeon-sook Kim, Director of Pharmaceutical Management Division at MOHW, said, "Korea was the first country in Asia to adopt the economic evaluation system and has steadily expanded access through institutional evolution, including the Risk-Sharing Agreement (RSA) and Economic Evaluation Exemption." Kim noted, "However, the pace of change recently is fundamentally different from when the system was designed." Kim said, "In an era where innovative new drugs based on uncertainty are surging, the current evaluation method is no longer manageable.

 

I realized the limitations firsthand after working in the field for five months," and added, "We cannot be satisfied with the current system." Kim then presented two tasks: first, the need to define 'innovativeness' more clearly and precisely in the guidelines adopted by HIRA; and second, the need to establish a structure that systematically evaluates actual clinical outcomes after listing and feeds that back into reimbursement.

 

Kim said, "Post-market evaluation is fundamental to all healthcare programs, but it is not yet fully established in Korea.

 

We must create a structure that confirms actual efficacy while minimizing the burden on the clinical and industrial sectors," and added, "Our system lacks flexibility and expertise compared to those of developed countries." We will develop the system in the most practical way possible." The Health Insurance Review & Assessment Service (HIRA) also acknowledged the conflict between technological innovation and the existing evaluation framework, stating that an adjustment to the evaluation structure is unavoidable.

 

Sook-hyun Lee, Head of HIRA's New DRG Review Division, said, "Ultra-high-cost innovative new drugs like cell and gene therapies, ADCs, and one-shot treatments are entering the actual listing stage," and added, "The question is whether the cost-effectiveness evaluation alone is sufficient to determine the appropriate price for these drugs." Lee stated, "We cannot process all drugs through the economic evaluation system, nor can we exempt all drugs from it," explaining the currently operating hybrid management system.

 

She emphasized that various forms of conditional reimbursement models have been introduced, including the refund-type RSA, the pre-listing/post-evaluation model, and the requirement for post-listing submission of clinical data.

 

Regarding the recent increase in economic evaluation exemptions, Lee stressed that this should be understood not as a hurdle-free passage, but as a conditional system intended to expand access.

 

Lee explained, "The uncertainty of ultra-high-cost/ultra-rare drugs cannot be resolved simply by increasing the ICER threshold or reinforcing the economic evaluation system," and concluded, "Given the variance in RWD quality, the gap in evidence levels, and the difficulty of quantitative evaluation, a comprehensive adjustment of the evaluation structure is necessary." Lee then added, "Economic evaluation and its exemption cannot be viewed as a simple dichotomy.

 

We will expand post-market management and value-based evaluation to match technological changes." The government largely agrees with industry and academia on the problems and has repeatedly emphasized that the time calls for a more sophisticated evaluation method, not for strengthening regulations.

 

The assessment is that the core task for the next 20 years will be precisely balancing the conflicting policy goals of access, sustainability, innovation, uncertainty, and pre- and post-market evaluation.