No companies apply for domestic API pricing premium

7 months after the launch of the domestic API pricing incentive system

Despite the March implementation, no pharmaceutical companies or products apply for benefits…debated as a dead letter

Industry calls for retroactive benefits and inclusion of combination drugs

Rep. Jong-heon Baek: “Improvements are urgently needed for public health and national security”

Although the Ministry of Health and Welfare has implemented a policy since March this year offering a 68% pricing premium on essential medicines made with domestic APIs, it has been confirmed that as of October—7 months after implementation—not a single pharmaceutical company has benefited.

 

Criticism is mounting that the Ministry's overly stringent criteria for applying the pricing premium to domestically produced raw materials severely undermine the policy's effectiveness and hinder the development of the domestic API industry, which is directly linked to public health and national security.

 

According to the ‘Status of Domestic API Drug Price Preferential Treatment’ submitted to People Power Party lawmaker Jong-heon Baek by the Ministry of Health and Welfare on the 10th, despite several months since the policy's implementation, not a single pharmaceutical company has applied for the preferential treatment.

 

The MOHW stated that since the relevant regulations were revised last December and the policy took effect this March, the number of applications for the ‘68% pricing premium for domestically produced active pharmaceutical ingredients used in national essential drugs’ and the number of drugs receiving the benefit are both zero.

 

Although the system aims to promote the use of domestically produced APIs, reduce dependence on foreign APIs, and foster the development of the pharmaceutical industry, it has effectively failed 7 months after its implementation.

 

The domestic pharmaceutical industry is voicing concerns that unless the Ministry revises the relevant price discount regulations, the policy will become a dead letter, effectively meaningless.

 

Reasons behind the domestic API price preferential policy fail National Essential Medicines are defined under the Pharmaceutical Affairs Act as ‘medicines essential for public health, such as disease management and radiation disaster prevention, but for which stable supply is difficult through market mechanisms alone, which are designated by the Minister of Health and Welfare and the Minister of Food and Drug Safety in consultation with the heads of relevant central administrative agencies.’ As of August this year, 473 drugs are designated as National Essential Drugs in Korea.

 

Despite how a policy is in place that adds 68% to the drug price when domestic APIs are used to manufacture these National Essential Drugs, with the benefit lasting up to 10 years, domestic pharmaceutical companies claim the reason there are no applicants or items is because the Ministry of Health and Welfare's standards are excessively stringent.

 

The domestic pharmaceutical industry has long demanded that the 68% drug price advantage be applied even to pharmaceutical companies already producing essential medicines using domestic APIs.

 

They are also calling for regulations to be established that would allow the benefits to be applied retroactively to drugs manufactured before the pricing premium policy was implemented this March.

 

Notably, compound drugs that use both domestic and imported APIs from multiple sources, not just one, are excluded from the 68% price discount.

 

The MOHW currently requires that all major active ingredients contributing to pharmacological efficacy must be individually recognized as domestic APIs to qualify for the price advantage.

 

Pharmaceutical companies criticized that such conditions are unrealistic, warning that very few medicines could ever meet the 68% incentive criteria under the current framework.

 

Politicians agree on the need to improve drug pricing system regulations Some political circles also agree with the domestic pharmaceutical industry's arguments and are urging the Ministry of Health and Welfare to improve the system.

 

Rep.

 

Jong-heon Baek plans to summon Ssang-Soo Han, CEO of Inist ST, as a witness during the upcoming National Assembly audit of the Ministry of Health and Welfare on the 15th.

 

He intends to question him about the inadequacies of the domestic API drug price premium policy and measures to foster the domestic API drug industry.

 

Baek emphasized that in the wake of the COVID-19 pandemic, global protectionism in pharmaceutical supply chains has intensified, and the Korean government must treat the domestic API sector as a matter of public health and national security, not merely industrial policy.

 

Accordingly, Rep.

 

Baek urged the Ministry to prepare countermeasures against the risk of the domestic API preferential pricing policy becoming obsolete.

 

The Ministry has only stated a general position, indicating it will seek solutions by thoroughly gathering opinions from the industry, experts, and the field regarding the demands of the pharmaceutical sector and Rep.

 

Baek.

 

This includes exploring new measures such as retroactive application rules or preferential regulations for compound drugs.

 

Rep Baek pointed out, “The fact that not a single pharmaceutical company has applied for the preferential pricing as essential medicines with domestically produced APIs for 7 months is proof that this is a nominal system.

 

Despite ongoing complaints from the pharmaceutical industry that the application criteria are excessively stringent, if the Ministry of Health and Welfare does not move to make the regulations more realistic, the policy to foster the domestic API drug industry will fail.” He added, “During the NA audit, I plan to question the Minister of Health and Welfare's perception of the API industry and demand that the system be revised, viewing it as an issue concerning public health and national security.”