Ineffective dual pricing system to be revised

"Drug eligibility criteria need to be expanded"

After the system was implemented in March, no drug met the requirement…criticism arose at the Parliamentary Inspection

Industry says, "Entry hurdle is high for the system, thus lacking motivation"…requirements are expected to be eased

A revision to the drug pricing system will be reviewed at the Health Insurance Policy Review Committee meeting on Nov. 28…implementation is being discussed for the second half of next year

The government has acknowledged the failure of the 'Separate Contracting System: Dual Pricing System', implemented last March to support the export of domestically developed new drugs.

 

It will soon introduce a revised plan under a new name.

 

The revised plan is expected to be submitted as an agenda item to the Health Insurance Policy Review Committee meeting on November 28 of this month, with the option to allow dual pricing for drugs other than those for severe and rare diseases being strongly considered.

 

According to industry sources November 19, the government plans to significantly relax requirements for the dual pricing system, including conditions for ▲new drugs developed by companies that received Innovative Pharmaceutical Companies designation ▲eligibility for expedited review ▲domestic clinical trial requirements.

 

Currently, no product meets all three requirements to use the dual pricing system.

 

The system, though well-intentioned to support the development of domestic new drugs, has essentially remained a regulation without practical use.

 

An official from pharmaceutical company A explained, "There were many restrictions.

 

The number of new drug developments by domestic companies is at a low point, and few multinational pharmaceutical companies have received innovativeness designation," and added, "Moreover, the target for expedited review is often narrowed to severe and rare disease drugs, meaning ultimately, there are no drugs utilizing the dual pricing system." Currently, 45 domestic pharmaceutical and biotechnology companies of South Korea and four multinational pharmaceutical companies have received the innovativeness designation.

 

Only drugs held by these companies that are also eligible for expedited review and have undergone domestic clinical trials could apply for the dual pricing system.

 

Multinational pharmaceutical companies also assessed the original dual pricing system as insufficiently incentivizing.

 

Since many multinational companies already utilize the refund-type Risk-Sharing Agreement (RSA), they were not interested in the dual pricing system, which offered no additional benefit.

 

An official from multinational pharmaceutical company B assessed, "When the policy direction came out, we thought it would be widely used, but when we actually looked into it, there was no major advantage," and added, "There was many opportunity to utilize the RSA refund type, and since (applying the dual pricing system) did not grant an exemption from health-economic evaluation, it was difficult to see any added value." Following criticism in the National Assembly that the system lacked practical effectiveness due to zero uptake, the government is revising the regulation and renaming it the 'Flexible Drug Pricing Contracting System'.

 

To avoid repeating the mistake of merely changing the name without addressing the lack of efficacy, incorporating field feedback is critical.

 

The National Health Insurance Service (NHIS) is currently conducting internal reviews and gathering industry opinions for the introduction of the Flexible Drug Pricing Contracting System.

 

Prospective expansion for eligible drugs for the dual pricing...will be gradually introduced to RSA drugs Even before the government announced the finalized plan, there was already discussion about the prospective expansion of the drugs eligible for the dual pricing system.

 

Some predict that market-entry hurdles, such as the requirement for innovativeness designation and eligibility for expedited review, will be entirely removed.

 

A multinational company official said, "The direction will likely be to allow it even for companies outside of the innovativeness designation.

 

We anticipate that a wide range of products from pharmaceutical companies that show commitment will be permitted." The official also predicted, "We expect that RSA drugs will switch to the dual pricing system when their cost-sharing period ends or when the listing of a subsequent drug mandates the disclosure of their official listed price." Domestic pharmaceutical companies preparing for overseas export are also awaiting the government's detailed plan.

 

They are, however, optimistic about the decision to expand eligibility.

 

A domestic company official stated, "Since there are countries that reference our drug prices, it is beneficial if the official external price is higher.

 

If implemented, we plan to enter the flexible contract system," and added, "Although the number of items for domestic companies is limited, it is much better than nothing.

 

We will have to wait and see exactly how much they relax the rules, but I understand they are going to expand the scope of application proactively." This official estimated, "They seem to be aiming for implementation around the second half of next year, after consulting with the industry for necessary adjustments." Another industry official commented, "Given the external issues, the Lee Jae Myung administration is also interested in the dual pricing system, so I think it will be discussed as a priority item in the drug pricing reform." The commenter strongly suggested that the plan be submitted to the committee on the 28th of this month.

 

The Ministry of Health and Welfare (MOHW) is being cautious ahead of the official announcement.

 

A MOHW official said, "We are preparing improvements, and because the announcement will be made soon, it is difficult to disclose the details," and added, "We are discussing with the personnel in charge at the executive agency (NHIS) and are in the process of gathering opinions from stakeholders regarding the system improvement."