New Year's drug pricing policy highlights

Stillen Revaluation – Preferential treatment of homegrown new drugs

The maximum price cut rate for PVA adjusted to 12.5%

Essential medicines made with domestic raw materials will also be favored

The new drug pricing system in 2025 is expected to be volatile due to Korea’s political turmoil.

 

Whether the external reference pricing reevaluations and re-evaluation of the listed PE exemption drugs, which were reviewed or discussed last year, will be carried out this year is also the focus of attention.

 

However, as most of the detailed measures for 'Reflecting the Innovative Value of New Drugs and Improving the Drug Pricing System for Health Security' have been revised, the revisions are expected to be implemented in earnest this year.

 

In particular, the partial revision of the 'Criteria for the Determination and Adjustment of Drugs (administrative notice issued in October 2024), which contains the most relevant contents, is likely to be applied before March, and it is expected that the preferential measures for homegrown new drugs will be applied this year.

 

Dailypharm has collected the drug pricing policies and systems that will be applied this year, which are as follows.

 

2025 Drug Reimbursement Adequacy Reevaluations The drug reimbursement adequacy reevaluations that began in 2020 will continue this year.

 

This year, 8 ingredients will be subject to review: olopatadine hydrochloride; clematis root-trichosanthis radix-prunella vulgaris L; bepotastine; spherical absorptive carbon; artemisia princeps leaf extract; l-Ornithine-l-Asparate; sulglycotide; and chenodeoxycholic acid-ursodeoxycholic acid trihydrate magnesium salt.

 

Among them, the 3-year average claims amount for the artemisia princeps leaf extract has been the highest at KRW 112.5 billion, so the outcome of the reevaluation is expected to be of interest.

 

There are 142 artemisia princeps leaf extracts listed on the reimbursement list, including Dong-A ST’s original, Stillen Tab.

 

If the reimbursement adequacy for the ingredient is not recognized in this year's reevaluations, it is expected to hit the relevant pharmaceutical companies hard.

 

In particular, the artemisia princeps leaf extract is also undergoing MFDS’s bioequivalence reevaluations, so the reimbursement adequacy reevaluations will have a further impact.

 

In addition, the results of the reimbursement of olopatadine hydrochloride, worth KRW 66.4 billion, and bepotastine, worth KRW 54.8 billion, are also gaining attention.

 

The reimbursement adequacy reevaluations are expected to begin in earnest in March after the Health Insurance Review and Assessment Service report at the beginning of the year.

 

Price-Voume Agreement system’s maximum reduction rate raised to 12.5% In October last year, the Ministry of Health and Welfare announced a partial amendment to the 'Criteria for Determining and Adjusting Drug Prices' to raise the maximum reduction rate for drugs subject to PVA negotiations from 10% to 15%.

 

However, the adjustment rate stays at the 12.5% level until December 31, 2025, which is a lower rate, given the early stage of its implementation.

 

Therefore, the maximum reduction rate of 12.5% is expected to be applied upon the notification of the amendment this year.

 

As the maximum reduction rate is 2.5% higher than the current 10%, the intensity of losses the companies will bear due to drug price cuts is expected to be greater.   Preferential treatment for homegrown new drugs developed by Korea Innovative Pharmaceutical company Similarly, if the amendments to the 'Criteria for Determining and Adjusting Drug Prices' are promulgated, preferential drug pricing for domestically developed new drugs will also be then applied.

 

In particular, non-inferior new drugs by Korea Innovative Pharmaceutical Companies will be priced at the ‘lower of the highest price of the upper limit of alternative drugs or the amount added to the weighted average price of substitute drugs (X100/53.55, approximately 1.8 times).’ This is expected to be significantly higher than the current price, which is set below the weighted average price of alternative drugs, resulting in higher profit margins for drugs covered by the proposal.

 

It will be interesting to see if Shinpoong Pharmaceutical's 'Hyal Flex Inj' will receive preferential treatment.

 

On the other hand, homegrown new drugs will be able to apply the dual pricing system when negotiating their price, paving the way for them to enter overseas markets at higher prices.

 

Preferential measures for national essential medicines that use domestic raw materials In addition to the preferential plan for homegrown new drugs, a preferential plan for national essential medicines that use domestic ingredients will also be established.

 

It will also be applied when some amendments to the MOHW’s 'Standards for Determination and Adjustment of Pharmaceuticals' are published.

 

Specifically, it has been decided that nationally essential medicines that use domestic raw materials will be considered to have met all the criteria for preferential pricing.

 

In addition, a (68/53.55 - 1)×100% premium will be added to the calculated amount, which would render the price of eligible drugs higher than now.

 

The government expects this to increase the domestic self-sufficiency rate of national essential medicines.

 

Designation of 7 new Korea Innovative Pharmaceutical Companies Designation as a Korea Innovative Pharmaceutical Company serves as the basis for premium pricing during drug reimbursement listings.

 

Therefore, the ‘innovative’ title is directly linked to profits.

 

This year, Dong-A ST, Amgen Korea, Onconic Therapeutics, Curocell, Hahnall Biopharma, SK Bioscience, and SK Biopharm were newly designated, bringing the total to 49 companies recognized as Korea Innovative Pharmaceutical Companies.

 

On the other hand, as 4 pharmaceutical companies were eliminated during the recertification process for Korea Innovative Pharmaceutical Companies in June last year, they will unable to receive incentives such as drug pricing premiums that they had been previously granted as existing innovative pharmaceutical companies.

 

The government plans to improve the criteria for the decertification of innovative pharmaceutical companies this year.

 

In particular, it is expected to ease the certification requirements for rebates.

 

New subjects added for prescreening for reimbursement benefits The government has recently been actively adjusting the drugs that are subject to pre-review for reimbursement benefits, and last year, reimbursement of Strensiq Inj and Soliris-Ultomiris for the PNH (paroxysmal nocturnal hemoglobinuria) indication was converted to general review.

 

As of this month, Ultomiris for the atypical hemolytic uremic syndrome indication will require prior authorizations.

 

Soliris had been the drug that required prior authorizations in the atypical hemolytic uremic syndrome category, which has been controversial due to its low prior authorization rate.

 

Therefore, it will be interesting to see if the addition of Ultomiris will change the landscape.

 

As a result, Soliris, Ultomiris, Spinraza, Zolgensma, Crysvita, Evrysdi, and Luxturna, and drugs used for immune tolerance therapy must pass prior authorization to be reimbursed.