KPBMA “Exempt transferred originals from pricing reduction"

An official statement opposing against the stepped drug pricing system to be submitted

“Korean generic maker resorting to expedient is extremely limited, unfitting to the original objective of the system

All of pharmaceutical industry is responding against the risk in pricing reduction on original drugs transferred due to a split-off.

 

Pharmaceutical industry sources reported, Korea Pharmaceutical and Bio-pharma Manufacturers Association (KPBMA) plans to deliver an official statement to the health authority demanding the government to exempt items transferred due to corporate restructuring from the soon-to-be enforced drug pricing reduction system.

 

The stepped drug pricing system to come in effect from July stipulates pricing 21st drug to be listed within the same substance group at 85 percent of either the lower price between the lowest price of the drugs or 38.69 percent of the original’s price, despite qualifying two differentiated pricing standards.

 

However, a conflict fired up among the industry as the government is seemingly endorsing the legal interpretation enabling the pricing system to reduce pricing on an original drug transferred due to corporate division.

 

Korean Research-based Pharmaceutical Industry Association (KRPIA) has already submitted a similar statement on Apr.

 

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KPBMA’s statement specifically requests the Section Ma (마) of the drug pricing notice revised last February to add ‘corporate division’ as one of the exemption conditions.

 

The Section Ma of the revised drug pricing notice stipulates an item applying for pricing decision, listed previously but de-listed, would be priced at its latest maximum price, if it is either a drug transferred by inheritance, business transfer or merge as stated by the Pharmaceutical Affairs Act Paragraph 1 of Article 89, or transferred by importer’s inheritance, business transfer or merge as stated by the Pharmaceutical Affairs Act Paragraph 2 of Article 42.

 

Therefore, the pricing reduction would not be applied on an item transferred, along with the business license, to or by a manufacturer (typically a Korean company) or an importer (multinational company).

 

Nevertheless, the Section Ba (바) of the notice stipulates a drug applying for pricing decision, listed previously but de-listed, would be priced at a lower price between its latest maximum price or newly calculated price, if it is transferred by the manufacturer’s business transfer as defined by the Pharmaceutical Affairs Act Paragraph 2 of Article 89.

 

This could mean the drug reapplying for pricing could face pricing reduction depending on the number of listed generics and standard qualification stated by the drug pricing notice.

 

But KPBMA argues the legal interpretation contradicts the true objective of stepping away from the ‘same substance-same pricing’ approach and applying differentiated pricing to value the effort of developing new drug and preventing relisting of a generic evading administrative measure and drug pricing reduction.

 

KPBMA official said, “The number of cases where generic manufacturers resort to an expedient is also very limited.

 

Regardless of a Korean or global company, the status of first-in-class drug (mostly new drug) should be sustained.

 

The government needs to promptly reconsider the interpretation to prevent any confusion in the market and to follow the original objective of the regulation.”