Discussion on "Indication-specific drug pricing system"

Kim Gook-hee, Director of the Pharmaceutical Benefits Department at HIRA, says, "Measures to minimize confusion in clinical settings are needed"

Lee So-young, Director of the Pharmaceutical Performance Assessment Department, says, "The re-evaluation of drugs exempted from cost-effectiveness evaluation has not yet been specifically reviewed"

Kim Gook-hee, Director of the Pharmaceutical Benefits Department at HIRA (left) and Lee So-young, Director of the Pharmaceutical Performance Assessment Department, (right) are answering to questions during the Q&A session.

The Health Insurance Review & Assessment Service (HIRA) announced that the issue of 'indication-specific drug pricing system' proposed by the pharmaceutical industry may require further discussion, and the immeditate implementation is difficult.

 

They explained that further discussion is needed, particularly regarding the prevention of confusion in clinical practice and post-market management.

 

Kim Gook-hee, Director of the Pharmaceutical Benefits Department at HIRA, stated this at a press conference with specialized journalists held on July 8th at the main office in Wonju.

 

The press conference was held with the Pharmaceutical Management Department and the Pharmaceutical Performance Assessment Department (TF), with Director Kim and Lee So-young, Director of the Pharmaceutical Performance Assessment Department, participating in the Q&A session.

 

Kim explained the need for introducing an indication-specific drug pricing system: "Multi-indication drugs refer to cases where 'a single product has two or more indications,' and the current system applies a single reimbursement cap regardless of the number of indications." She added, "I understand that the need for an indication-specific drug pricing system is emerging due to the increasing trend of adding indications after approval and expanding reimbursement after listing, especially for anticancer drugs." Kim emphasized, "Regarding this system, it is necessary to review it cautiously, considering the appropriateness of setting different drug prices per indication and its actual applicability." Currently, countries that have adopted an indication-specific drug pricing system either apply differentiated refund rates per indication or calculate a weighted average price based on the prices of individual drugs per indication.

 

Countries applying differentiated refund rates per indication include Italy, Switzerland, Australia, and Belgium.

 

Countries using weighted average prices per indication include Italy, France, Australia, and Japan.

 

Kim stated, "Measures to minimize confusion in clinical settings, such as issues of fairness among patients and concerns about prescription distortion that could arise if a single product's drug price varies by indication, must be prepared concurrently." Kim also added, "Even when applying a single weighted average price, careful discussion must precede regarding data collection methods for weighted average price calculation, drug price setting methods, and post-market management." Regarding the criticism that domestic natural new drugs are included in the re-evaluation targets for drug reimbursement appropriateness this year, which is contrary to industrial promotion policies, Kim stated there is no issue.

 

She explained, "When reviewing clinical usefulness, we comprehensively examine not only overseas data but also domestic materials such as local medical textbooks, clinical practice guidelines, and domestic clinical literature listed in SCIE journals." Furthermore, regarding the reimbursement application for combination therapies of new drugs, Kim explained, "Combination therapies of new drugs lead to a significant cost increase compared to monotherapies.

 

Therefore, reimbursement will only be possible in cases where a clear improvement in clinical efficacy is demonstrated." Kim also stated, "Regarding the reimbursement evaluation of new drugs used in combination with already listed drugs from other companies, if one pharmaceutical company applies for reimbursement, we request relevant data from the other company involved in the combination.

 

However, if the other company has no intention of expanding reimbursement, it is difficult to mandate reimbursement under the current selective listing system." Meanwhile, Lee So-young, Director of the Pharmaceutical Performance Evaluation Office, stated that re-evaluation of drugs exempted from cost-effectiveness evaluation has not yet been specifically reviewed.

 

Lee added, "A commissioned research study on 'Guidelines for Generating Real-World Evidence (RWE) for Pharmaceutical Performance Evaluation' has been underway since March and is expected to conclude in November." She explained, "We plan to prepare the guidelines through sufficient discussion with stakeholders during the research process." Once the research results are available, the plan is to discuss specific implementation directions with relevant organizations, including the Ministry of Health and Welfare (MOHW), as well as pharmaceutical companies.

 

The following is a summary of the Q&A session: 1.

 

Related to Proposals for Improving Medical Reimbursement Criteria Last year, 57 improvement suggestions were submitted by 7 associations and academic societies (including 7 sub-associations/societies).

 

This year, 42 suggestions were submitted by 8 associations and academic institutions (including 21 sub-associations/societies).

 

All 57 improvement suggestions submitted last year have been reviewed.

 

Among them, 28 items have either had their notices or announcements revised, or are undergoing subsequent procedures.

 

For other items involving misunderstandings, the medical community has been properly informed.

 

Among the 42 improvement suggestions submitted this year, 32 related to general drugs were proposed.

 

For instance, the Korean Association of Internal Medicine requested a general revision of the principles governing diabetes medications, and the Korean Hospital Association requested clarification of the diagnostic criteria for osteoporosis.

 

For anticancer drugs, a total of 10 suggestions were made.

 

These included the Korean Association of Internal Medicine (KAIM)'s opinion on the need to improve the eligibility criteria for treatment regimens to align with clinical reality, and requests to clarify phrases like 'refractory' or 'surgical or local treatment impossible' where interpretation differences might arise.

 

In response, HIRA prioritizes reviewing items where numerous claim adjustments occur due to unreasonable or unclear criteria, or where prompt guidance is needed to address misunderstandings in interpretation.

 

2.

 

Related to Indication-Specific Drug Pricing System Multi-indication drugs refer to cases where 'a single product has two or more indications,' and the current system applies a single reimbursement cap regardless of the number of indications.

 

Recently, I am aware that the need for an indication-specific drug pricing system is emerging due to the increasing trend of adding indications after approval and expanding reimbursement after listing, particularly for anti-cancer drugs.

 

Regarding this system, it is necessary to review it cautiously, considering the appropriateness of setting different drug prices per indication and its actual applicability.

 

Measures to minimize confusion in clinical settings, such as addressing issues of fairness among patients and concerns about prescription distortion that could arise if the drug price of a single product varies by indication, must be prepared concurrently.

 

Even when applying a single weighted average price, careful discussion must precede regarding data collection methods for weighted average price calculation, drug price setting methods, and post-market management.

 

3.

 

Related to Requests for Reimbursement of Combination Therapies The trend of increasing anticancer combination therapies has been significant recently.

 

To expand treatment opportunities for patients, the Ministry of Health and Welfare's notice in May and HIRA's announcement in June improved the system to allow reimbursement for existing anticancer drugs when combined with new anticancer drugs, thereby strengthening access to anticancer combination therapies.

 

Combination therapies of new drugs incur a significant cost increase compared to monotherapies, etc.

 

Therefore, reimbursement will only be possible in cases where a clear improvement in clinical efficacy is demonstrated.

 

Combination therapies of new drugs incur a significant cost increase compared to monotherapies, etc.

 

Therefore, reimbursement will only be possible in cases where a clear improvement in clinical efficacy is demonstrated.

 

Furthermore, regarding the reimbursement evaluation of new drugs administered in combination with already listed drugs from other companies, if one pharmaceutical company applies for reimbursement, relevant data is requested from the other company involved in the combination.

 

However, if the other company has no intention of expanding reimbursement, it is difficult to mandate reimbursement under the current selective listing system.

 

4.

 

Related to Re-evaluation of Reimbursement Appropriateness for Domestic Natural New Drugs Eight ingredients are targeted for reimbursement appropriateness re-evaluation in 2025.

 

Currently, a practical review is underway based on data submitted by pharmaceutical companies, relevant evidence, and academic opinions.

 

The Drug Reimbursement Evaluation Committee (DREC)'s review is scheduled for the second half of this year.

 

The re-evaluation targets include all drugs that meet the selection criteria and are not selected based on the original country of development of the ingredient.

 

Among the 8 ingredients targeted for re-evaluation this year, Clematis root, Trichosanthes root, Prunella spike, and Mugwort extract are classified as natural new drugs.

 

Even if these drugs are selected for evaluation, their reimbursement will be maintained if clinical usefulness is recognized during re-evaluation.

 

Additionally, when reviewing clinical usefulness, not only overseas data but also domestic materials such as local medical textbooks, clinical practice guidelines, and domestic clinical literature listed in SCIE journals are comprehensively examined.

 

5.

 

Related to Delays in Drug Evaluation for Concurrent Approval-Evaluation-Negotiation Pilot Program The 'Concurrent Approval-Evaluation-Negotiation Pilot Program' was initiated to expedite the reimbursement listing time by simultaneously conducting the review processes of the Ministry of Food and Drug Safety, HIRA, and the National Health Insurance Service.

 

It primarily selected drugs that showed superior efficacy for life-threatening diseases without alternative treatments, and reimbursement for the pilot program's target drugs was not a prerequisite.

 

However, if changes occur during the approval and reimbursement evaluation process or supplementary data is submitted after a drug has been selected as a pilot program target based on the pharmaceutical company's application data, additional review time may be required.

 

Unlike medical procedures or treatment materials, drugs are subject to a selective listing system that applies health insurance coverage to drugs with excellent therapeutic and economic value.

 

This is operated through HIRA's reimbursement evaluation and the National Health Insurance Service's negotiation procedures.

 

6.

 

NHIS's Stance on Participation in DREC As the NHIS is the insurer and a direct party to negotiating drug reimbursement caps with pharmaceutical companies, if the NHIS were to participate in the committee's composition, concerns might arise regarding the fairness and objectivity of the decisions made.

 

Currently, the NHIS attends and monitors every meeting of the DREC, and relevant data is shared periodically.

 

We will continue to collaborate with the NHIS for efficient drug management.

 

7.

 

Related to Revision of Indirect Comparison Guidelines If a clinical study has been conducted to evaluate the clinical usefulness of a new drug, such as its improvement in efficacy, as a single-arm study of the applicant drug, or if there is no direct comparison data with an alternative drug, objective evidence derived through a valid indirect comparison is required.

 

To this end, HIRA conducted the "Research on Revising Indirect Comparison Guidelines (March-December 2024)" in 2024, and the final research report was published on our website in February this year.

 

Furthermore, an expert advisory meeting regarding the guideline revision was held in early May.

 

Based on this, a draft will be prepared, and the guideline revision will be pursued this year after gathering internal and external opinions.

 

8.

 

Pharmaceutical Performance Assessment Department Organization and One-Year Achievements Last year, the Pharmaceutical Performance Assessment Division operated with one department, the Pharmaceutical Performance Evaluation Department.

 

However, starting this year, it has been reorganized into a one-office, two-department system.

 

A new Pharmaceutical Performance Assessment Department was established to strengthen development functions, including RWD data analysis methods, performance evaluation models, and guidelines for generating real-world evidence (RWE).

 

We have focused on establishing a system to ensure patient access to high-cost severe disease treatments while managing evidence uncertainty through post-listing performance evaluation.

 

Following the review stage of a drug reimbursement application, the head of the Pharmaceutical Performance Assessment Department participates in discussions within the relevant three subcommittees to select target drugs for performance evaluation.

 

To date, performance evaluations have been conducted for drugs such as Kymriah and Zolgensma, and we have efficiently managed high-cost severe disease treatments.

 

Based on the revised risk-sharing agreement (RSA) type notification in March this year, the system is being operated to create good models for pharmaceutical performance evaluation, aiming for complete system completion by appropriately selecting and reviewing evaluation targets.

 

We will also strive to standardize the entire performance evaluation review process to establish it as a rational and acceptable system.

 

9.

 

Related to RWD Drug Evaluation Procedures If the DREC approves a submitted drug with a condition for post-marketing collection of RWD.

 

In that case, the pharmaceutical company must submit a performance evaluation plan, detailing specific conditions such as collection period, frequency, and indicators, after consultation with the Pharmaceutical Performance Assessment Department.

 

Subsequently, the pharmaceutical company periodically submits the collected data (RWD) to HIRA, and HIRA cross-validates it with claims and review data to verify reliability.

 

Before the end of the risk-sharing agreement period, the pharmaceutical company submits the performance evaluation results, analyzing the collected data (RWD) according to the predefined plan, to HIRA.

 

After that, the DREC then evaluates these results.

 

10.

 

Related to RWE Guidelines and Re-evaluation of Cost-effectiveness Evaluation Exempted Drugs The commissioned research on 'Guidelines for Generating Real-World Evidence (RWE) for Pharmaceutical Performance Evaluation' has been underway since March and is expected to conclude in November.

 

We plan to develop the guidelines through thorough discussions with stakeholders during the research process.

 

Once the research results are available, the plan is to discuss specific implementation directions with relevant organizations, including the MOHW and pharmaceutical companies.

 

The re-evaluation of drugs exempt from cost-effectiveness evaluation has not yet been specifically reviewed.