[Reporter’s View] Gvn't policies hinder KOR pharma growth

Are pharmaceutical companies an exception when it comes to the government’s application of pro-business policies?

It seems that the pro-business policy the new administration has been implementing to promote Korea’s industries is not benefiting the domestic pharmaceutical companies at all.

 

Rather, the companies have expressed their regrets on how the authorities have been implementing policies that hinder their corporate activities, such as those that lower generic drug prices.

 

Although the policy to reduce the price of generics has not been implemented yet, the industry believes the policy will surface with the release of the 2nd Comprehensive National Health Insurance Plan in the second half of this year.

 

In particular, the drug price-reducing policy is expected to come to the fore because Professor Jinhyun from Seoul National University who has been at the forefront in arguing for generic drug price reductions, has been appointed the joint head of the 2nd Comprehensive National Health Insurance Plan Promotion Team with Korea’s 2nd Vice-Minister of Health and Welfare, Minsoo Park.

 

Therefore, the industry also expressed concerns about the rumors that Vice Minister Park is revamping the drug pricing system to reduce the number of generic items on the market.

 

All in all, it seems that a series of policies unfavorable to domestic pharmaceutical companies will be introduced to Korea in the near future, along with the reorganization of the generic drug pricing system, the complete revision of the actual transaction price discount system, and comparison with overseas generic drug prices.

 

Therefore, it is only natural that domestic pharmaceutical companies are expressing their dissatisfaction regarding the changes being made.

 

The companies have pointed out that the policies are in direct contrast to the government’s goal of becoming one of the 6 global biohealth powerhouses and developing two homegrown new blockbuster drugs that can bring in annual sales of over KRW 1 trillion in 5 years.

 

The Korean pharmaceutical industry has constantly stressed that Korea’s generic drug industry is the driving force behind the self-sufficiency of Korea’s pharmaceutical market.

 

Therefore, adopting a direct comparison model that compares Korea’s situation with other countries that gave way to cheap imported generics is illogical.

 

Also, the companies implored that they cannot fund the long-term research and development required for the introduction of new blockbuster drugs if the government reduces the sales revenue from generic drugs, as it is the major driving force for R&D in most domestic pharmaceutical companies.

 

Therefore, the Korean pharmaceutical industry plans to take action and relay its message on the need to protect the domestic industry before the government implements its generic drug price reform plan.

 

Policies to reduce generic drug prices have been steadily proposed by every administration, regardless of their political tendencies, liberal or conservative.

 

However, the impact made by the conservative governments has been stronger.

 

One leading example is the lump-sum drug price cuts in 2012 made during the Lee Myung Bak administration.

 

The industry, therefore, is more worried that the Yoon Suk Yeol administration will also come up with a policy similar to Lee’s lump sum drug price cut.

 

Of course, the companies are also welcoming some policies that they have longed for, such as regulatory reform.

 

However, most domestic pharmaceutical companies seem to believe that the positive effects of other policies are offset by the generic drug price cut that will inevitably affect most pharmaceutical companies.

 

The Korean pharmaceutical industry is not understanding why the government is so obsessed with measures to reduce Korea’s drug use volume and generic drug prices.

 

One official emphasized, “The company needs to first do well for it to pay the corporate taxes and contribute to the national wealth.

 

However, domestic pharmaceutical companies are applied the lowest rate for corporate taxes due to low revenue.

 

In this context, are policies that further reduce profit really right and necessary?

 

With pharmaceutical companies that have no money to pay corporate taxes, and the unwavering government pushing to cut their profits, this reporter must ask, are pharmaceutical companies included in the government’s business-friendly policies?