A heated panel discussion on indication-basis drug pricing

[The 40th Future Forum by Daily Pharm—pre-recorded streaming]

“Treatment access in three to five years to be problematic, the discussion should be sped up”

“Pressure on the shift in paradigm, administrative effort and abuse could be caused as well.”

In this day and age of a single drug offering a variety of indications, the problem now lies on the drug pricing.

 

The negotiation between the South Korean government and pharmaceutical company is slowing down and the patients have to wait longer as the country’s drug pricing system cuts the pricing when a drug expands its uses.

 

From left: Professor Suh Dong-churl as speaker, Professor Park Mi Hye, Deputy Director Choi Kyung-ho, Director Lee Young-hee and Senior Manager Ryu Chiyoung

On Nov.

 

11, Daily Pharm convened the 40th Future Forum on the topic of priorities in introducing the drug pricing system by indication.

 

The pharmaceutical industry, government and academic society representatives gathered to find the answer of unending question of treatment access and appropriate pricing.

 

Professor Suh Dong-churl of Chung-ang University College of Pharmacy led the forum as a speaker, where Professor Park Mi Hye gave a keynote speech on ‘Introducing Indication-basis Drug Pricing to Improve Patient Access,’ followed by a heated discussion among panelists like Deputy Director Choi Kyung-ho of the Ministry of Health and Welfare (MOHW) Pharmaceutical Benefits Division, Director Lee Young-hee of National Health Insurance Service (NHIS) Drug Pricing System Improvement Division and Senior Manager Ryu Chiyoung of Korean Research-based Pharmaceutical Industry Association (KRPIA).

 

Senior Manager Ryu Chiyoung

◆The need of introducing the indication-basis drug pricing system: The indication-basis drug pricing system decides the price of a drug by each indication and its innovativeness.

 

Last month, the industry finally solved the problem of applying risk sharing agreement on follow-on drugs that have treatment level on par with a first-in-class drug and favorable cost-effectiveness.

 

However, the government has added another condition; while allowing follow-on drugs to sign RSA, any drug seeking to expand reimbursement, regardless of being the RSA subject, would have to prove cost-effectiveness (administration cost comparison or pharmacoeconomic (PE) analysis).

 

In other words, when the Health Insurance Review and Assessment Service (HIRA) requires cost-effectiveness evaluation, a drug would be priced at lowest level compared to either PE or clinical evidence with reference drug, and have the price reduced according to the same standard as the first-in-class drug.

 

Senior Manager Ryu Chiyoung stated, “These days, a single drug now gains 15 to 20 indications through various researches.

 

But if their pricing drops as they expand indications, then which company would voluntarily take an additional action to actually expand the indication?

 

KRPIA proposes the government to apply weighted average pricing by indication or to adjust refund rate, if it looks for cost-effectiveness when approving additional indication.”

Deputy Director Choi Kyung-ho

He added, “Besides the system revision, many of market access managers in multinational companies are struggling to negotiate with the headquarters on supplying new drugs in South Korea.

 

Increasing number of other countries using the international reference pricing (IRP) is worsening the risk of the ‘Korea Passing’ phenomenon.” ◆The unavoidable issue of ‘financial burden’: When the reimbursement scope of a drug is extended, patients receive the benefit, but at the same time the financial burden also gets bigger.

 

Under the National Health Insurance (NHI) system, the government has to contemplate on cost-effectiveness whenever it lists a new drug.

 

The controversial premise of ‘reducing drug pricing when use is expanded’ is also a result of the contemplation.

 

Deputy Director Choi Kyung-ho said, “Taking a look at immunotherapy, the indication expansion of the drug in South Korea has been sluggish compared to the company’s expectation.

 

Two to three indications are added a year.

 

If the talks on reimbursement are delayed, more and more indications would be left non-reimbursed.” But the deputy director also explained, “The additional expenditure for the expanded reimbursement is through the roof and the indication-basis pricing is unprecedented.

 

The government does see the issue, and it would try to find the point of agreement through thorough discussion.” Regardless, the academic scholars highlighted another means of approaching the issue.

 

Director Lee Young-hee

Professor Park Mi Hye advised, “The NHI finance is both about drug pricing and the use.

 

But the country heavily relies on the drug pricing that it is losing flexibility in the financial management, which is also why the industry and the government are in a deadlock for a longer period of time.

 

It may be better to shift the paradigm away from reducing the expenditure simply through drug pricing.” However, the government is also highly concerned of the drug pricing increase due to the indication-basis pricing.

 

Director Lee Young-hee claimed, “The drug pricing could be increased when a number of indications receive weighted average pricing or differentiated refund rate on a single labeled pricing.

 

NHIS can only pay when it has money.

 

The agency has no choice but to be careful about the indication-basis pricing as it is directly related to the sustainability of NHI.” The industry representative gave a clear answer on the government’s concern.

 

Senior Manager Ryu disputed, “No company would demand for pricing increase, when adding an indication with the revised system.

 

But, what we are saying now is that we need to adjust the current pricing reduction measure.” ◆The realistic difficulties and hastiness: The change in administration could only be cumbersome.

 

Giving different pricing for each indication would have to input two to three codes for a single drug.

 

Accordingly, the billing system HIRA and NHIS operate would have to undergo a significant change, and even the healthcare institute could get confused by inputting the major and minor disease codes.

 

Professor Park Mi Hye

Director Lee noted, “When applying differentiated refund rate, various side effects, such as erroneous claim, claim omission and the system abuse by the healthcare institute, could break out.

 

Generally considering the detailed execution plan, the indication-basis pricing requires comprehensive revision on the system and other supplementary actions.” Some argue introducing the indication-basis drug pricing to the South Korean market could be a hasty decision at the moment.

 

Director Lee elaborated, “From 2013 through 2017, total 45 novel anticancer treatments were released in the Korean market, and the number indications surged from 265 to 935.

 

So far, only six countries have adopted the indication-basis pricing, although all countries are experiencing the same issue with indications and pricing.

 

It testifies how the system is difficult for everyone accept.” KRPIA official rebutted the claim straight on.

 

Senior Manager Ryu said, “The current billing system in South Korea allows input up to top ten.

 

I beg to differ that the disease code monitoring could get difficult and cause confusion.

 

South Korea is one of the few countries that have successfully unified and systematized the billing system.

 

Only because other countries are not adopting the system, it would not make sense for Korea to be hesitant to take the lead and revise the system.”