Reimbursed drugs hit four-year low amid regulatory changes

Significant drop in prescription drug approvals

The number of drugs on the health insurance reimbursement list has reached its lowest point in four and a half years.

 

Due to pricing revisions for generic drugs and regulations related to joint development, the introduction of new drugs is significantly reduced.

 

The number of approvals has decreased by more than 70% compared to the figures from four years ago.

 

According to the Health Insurance Review and Assessment Service (HIRA) report on the 16th, the total number of drugs listed on the reimbursement listing as of January 1st was 22,889.

 

This represents a decrease of 754 drugs compared to 23,643 drugs listed in January of the previous year.

 

Furthermore, the number of reimbursed drugs has reached its smallest in four years and four months, compared to 22,912 drugs reimbursed in September 2019.

 

The number of drugs listed for reimbursement peaked at 26,527 in October 2020 and has been steadily decreasing.

 

Over the course of three years and three months, there has been a decrease of 3,638 drugs.

 

In other words, 3,638 more drugs have been either withdrawn from or forced to exit the market compared to new drug entries into health insurance reimbursements in the past three years.

 

The number of listed drugs for reimbursement was 20,689 in November 2018, and it increased to 26,527 in October 2020, increasing by 5838 in just a year and eleven months.

 

Over this period, the volume of listed drugs for reimbursement expanded by 28.2%, demonstrating that new drug entries exceeded market exits.

 

Out of the 22 months from November 2018 to October 2020, December 2019 witnessed a decrease in the number of listed drugs compared to the previous year.

 

In other words, for the remaining 21 months, the scale of listed drugs was larger compared to previous months.

 

In contrast, the number of listed drugs for reimbursement has consistently declined.

 

While there was an increase of 497 more drugs listed over the two months from October to November 2023, this increase is a temporary phenomenon attributable to the opening of the generics market for diabetes drugs.

 

During this period, as the patent for the diabetes treatment ‘sitagliptin’ expired, a significant number of generic products entered the reimbursement listing.

 

Sitagliptin is an active ingredient in the DPP-4 inhibitor-class diabetes treatment ‘Januvia.’ The number of currently listed drugs reached its lowest point in 33 months, following a total of 25,694 in February 2020.

 

The number of listed drugs for reimbursement has significantly decreased as a result of the revision to the drug pricing system.

 

The decrease in the number of reimbursed drugs since 2020 was primarily initiated by the revised drug pricing system.

 

The revised drug pricing system, implemented in July 2020, requires generic products to meet both bioequivalence testing and the use of registered raw materials to maintain a maximum reimbursement price of 53.55% compared to the current patent-expired original drugs.

 

The revised drug pricing system includes a stepped pricing system, which involves a lower maximum reimbursement price for drugs that are newly listed for reimbursement.

 

If there are twenty or more generic versions available for a specific active ingredient in the market, the maximum reimbursement price for newly listed items can be set at up to 85% of the previous lowest price.

 

Because the drug pricing significantly decreases when a pharmaceutical company does not develop the drug itself or undergo bioequivalence testing, generics produced by Contract Manufacturing Organizations (CMOs) have seen a more substantial decline in approval.

 

Recently, the number of approvals for prescription drugs has significantly declined.

 

Last year, the number of approvals for prescription drugs was 1,046, showing a decrease of 6.4% compared to the previous year.

 

Compared to 2021, which had 1,600 approvals, there was a 34.6% decrease in approvals over two years.

 

Since 2019, when there were 4,195 approvals, the scale of approvals for prescription drugs has shrunk by 75.1% over four years.

 

Compared to four years ago, the number of approvals for prescription drugs decreased by 3,149.

 

The number of approvals for prescription drugs was 1,562 in 2018, averaging 130 approvals per month.

 

In 2019, this figure increased to 4,195, more than doubling to an average of 350 approvals per month.

 

By May 2019, the monthly approvals reached 584.

 

However, starting in 2020, it gradually declined and returned to the previous year’s level.

 

From October 2018 to July 2020, over 100 prescription drugs were approved each month.

 

However, in August 2020, after 23 months, the number of approvals for prescription drugs dropped to less than 100 per month.

 

Last year, there were only two months with over 100 approvals for prescription drugs.

 

The regulatory barriers for approvals have also been raised.

 

Starting in July 2021, with the implementation of the revised Pharmaceutical Affairs Act, the number of incrementally modified drugs (IMD) and generics that can be approved through a single clinical trial has been limited.

 

This new regulation, known as the '1+3' rule, restricts the number of IMD and generics approved through a single clinical trial.

 

When a pharmaceutical company conducts bioequivalence tests directly and manufactures the drug in the same facility using the same prescription and manufacturing method for all production processes, the utilization of bioequivalence data is restricted to three times.

 

In other words, only four generics can be approved based on one set of bioequivalence tests.

 

Clinical trial data is also limited to products from the pharmaceutical company that conducted the tests directly, in addition to three other products for which a clinical trial data agreement is possible.

 

In the past, when a particular pharmaceutical company obtained approval for generics through bioequivalence testing, other pharmaceutical companies frequently used the same documentation for obtaining approvals for CMO generics.

 

However, due to the regulation of joint development, the "unlimited copying phenomenon of generics" has become practically impossible.

 

There are criticisms suggesting that the government may have played a role in the increase in generic drug approvals in 2019 and 2020.

 

The government's measures at strengthening regulating generics may have resulted in this surge in generic approvals.

 

In 2018, there was a ban on the sale of 175 pharmaceutical products containing the active ingredient valsartan, used to treat high blood pressure, due to excessive impurities.

 

In response, the Ministry of Health and Welfare (MOHW) and the Ministry of Food and Drug Safety (MFDS) established the "Committee for Improving Generic Drugs Policies" to formulate measures to control the excessive production of generics.

 

However, as pharmaceutical companies attempted to secure generic products in advance, there was a temporary surge in generic approvals.

 

Following the government’s regulatory revision, the number of generic approvals returned to previous levels.