[Desk’s View] No external reference pricing next year?

External reference pricing reevaluations may not be possible even next year

The plan to reevaluate drug prices based on foreign drug prices (external reference pricing), which was expected to be announced by the end of the year, has been delayed.

 

The agenda did not make this year's list at the last Health Insurance Policy Review Committee meeting set for Friday (27th).

 

It is unlikely that the plan will proceed as scheduled due to the impeachment of the president and the government's transition to an emergency system.

 

This does not mean that the reevaluation plan for the next year has been completely scrapped.

 

The government initially planned to announce the plan within the year with the goal to conduct the reevaluations next year and adjusting the drug price in the second half of the year.

 

Due to the political situation, the announcement of the reevaluation plan has been delayed, but the goal of adjusting drug prices in the second half of next year may still be intact.

 

The reevaluation plan could resurface at any time once the situation stabilizes.

 

For the government, which prioritizes the stabilization of health insurance finances, reducing drug prices to save finances can be an attractive card.

 

After freezing the health insurance premium 2 years in a row, the government is unlikely to expand government support in the face of a tight budget.

 

Also, the authorities will not dare touch the rebellious physicians' service fees in the current state, so the easy way out would be to tighten the pharmaceutical companies' pockets.

 

But the situation is not easy at all.

 

Since the political turmoil following the imposition of martial law on December 3, economic growth forecasts for the next year have been lowered to 1%.

 

Year-end specials have also disappeared, with group dinners being canceled one after another due to the unrest.

 

Many have said that they cannot feel the Christmas spirit this year.

 

Pharmaceutical companies are also worried about their livelihood next year.

 

With the won-dollar exchange rate soaring to KRW 1,450, domestic pharmaceutical companies that rely on imports for raw materials are facing a heavy cost burden.

 

Last year, the self-sufficiency rate of raw drug materials reached 75%.

 

Under such circumstances, it is obvious that reducing the price of domestic chronic disease drugs with expired patents compared to foreign drug prices will further deteriorate the profitability of pharmaceutical companies.

 

The industry expects losses worth tens of billions of won per company.

 

While healthcare finances are important, we also need to look at the companies' pocket situation.

 

Korean pharmaceutical companies have recently begun to show results in overseas markets based on their excellent human resources.

 

The performance of pharmaceutical companies comes from research and development.

 

However, if profits cannot support R&D, new drug development will have to be reduced.

 

The government should not postpone the announcement of the external reference pricing reevaluation business plan, but at least declare that it will not be carried out within 2025 due to the recession and uncertainties.

 

Delaying the announcement of the business plan will only increase the uncertainty of pharmaceutical companies' livelihoods next year.

 

The government should urgently scrap next year's plan to conduct external reference pricing reevaluations, at least to revitalize the economy.