Atozet follow-on drugs conflicted over price manipulation

Three generic companies claim Chong Kun Dang to have violated the Fair Trade Act, taking the case to the Fair Trade Commission

The South Korean dyslipidemia treatment Atozet market seems to be heating up with competition and conflict among consignment manufacturers.

 

Companies in process of preparing for the Atozet generic have stated they would take a legal action against Chong Kun Dang’s violation of Fair Trade Act, claiming the Korean company is rigging the follow-on drug pricing.

 

According to the pharmaceutical industry sources on Nov 23, three of South Korean pharmaceutical companies are considering on filing a complaint to the Fair Trade Commission about Chong Kun Dang’s attempt to fix the generic pricing.

 

The three companies argue Chong Kun Dang has tried to monopolize the generic pricing as it called for consignment manufacturers for the atorvastatin plus ezetimibe combination drug.

 

MSD’s dyslipidemia treatment Atozet

Chong Kun Dang has recently received a government approval on Atoezy, a combination of atorvastatin and ezetimibe, after finishing off a clinical trial.

 

The approved drug has the same substances as Atozet developed by MSD.

 

Chong Kun Dang announced its plan to have consignment manufacturing and called for manufacturers for the deal.

 

Basically, the company is to provide authorization to manufacture the generic to the manufacturers with the entire clinical data related to Atoezy.

 

An authorized generic would have exact same product as an original but in different packaging.

 

Chong Kun Dang has accepted total 22 manufacturers, who submitted an approval application on the authorized Atoezy generic.

 

But the three generic companies are claiming Chong Kun Dang is manipulating the market.

 

Apparently, the company included a condition to ‘apply for pricing to the Health Insurance Review and Assessment Service (HIRA) immediately after completing the approval process’ in the consignment contract, and the three companies say it violates the Fair Trade Act that forbids a ‘practice to decide, sustain or change pricing.’ In other words, they are arguing Chong Kun Dang is trying to bring down the follow-on drugs’ pricing by having the consigned manufacturers to agree on simultaneously apply for listed drug pricing.

 

The generic companies plan to take the case to the Fair Trade Commission this week along with a couple of law firms.

 

The key point of the conflict between Chong Kun Dang and generic companies centering the authorized Atoezy generic is in the pricing.

 

When 22 authorized Atoezy generics receive approval and reimbursed pricing, other drugs to be approved later would have significantly lower pricing.

 

The revised drug pricing system effective from last July stipulates a stepped drug pricing that reduces the upper limit pricing of the 21st generic drug with same substance down to 85 percent of a lowest priced drug.

 

When 22 authorized Atoezy generics complete the reimbursed pricing procedure, other following Atozet generics would be applied with the stepped drug pricing, which would bring down the pricing to 61.4 percent of the upper limit price of a drug with same substances.

 

According to the Ministry of Health and Welfare (MOHW), when the number of listed drugs with same substance exceeds 20, a new reimbursed pricing applicant drug would receive pricing of the lowest between ‘85 percent of drug pricing with two unmet qualifications,’ or ’85 percent of the lowest price among the same substance drugs.’ The 85 percent of drug pricing with two unmet qualifications is calculated as 61.4 percent of the upper limit pricing (upper limit pricing*0.85*0.85*0.85).

 

If one of authorized Atoezy generic drops the pricing greatly, other Atozet generic’s pricing would be priced even lower.

 

At the moment, Atozet generic cannot enter the market.

 

Some companies are preparing for a generic release by conducting a bioequivalence test with Atozet as reference drug, but they can only apply for approval after Jan.

 

22 next year when Atozet’s post-marketing surveillance period ends.

 

Because of the said complications, companies readying the Atozet generic products were sensitively monitoring the number of authorized Atoezy generics.

 

The Atozet generic companies question the Chong Kun Dang’s action and insist “Chong Kun Dang has intentionally called for over 20 manufacturers to push other generics’ pricing down.” In fact, some of companies that actually developed Atozet generics have joined the group of manufacturers signing the deals on authorized Atoezy generics.

 

An insider from an Atozet generic developer complained, “If any one of the authorized Atoezy generics takes a substantially low pricing, then other Atozet generics cannot even launch their products due to unprofitable income structure.

 

Due to the government’s stepped pricing, the companies’ immense effort to develop a generic could be gone instantly.”