The Answer is in RSA expansion and undisclosed pricing

[Special Report by DP pt3] “Korea Passing shouldn’t justify creating listing loopholes”

Government says in-depth discussion needed and other options should be explored

Maybe the answer has been before our very eyes all along.

 

If Korea Passing occurs when other foreign countries start referring to Korean drug pricing, then it could be avoided by preventing them from referencing.

 

Otherwise, drug could be price at a moderate level to avoid Korea Passing regardless of other countries.

 

Theoretically they are both simple, but realistically they are not.

 

It is close to impossible for Korea to bring up the pricing level immediately.

 

So the second option of making Korean pricing system unattractive for external reference pricing, or in other words, increasing number of ‘undisclosed drug pricing’ could be a better option.

 

Ultimately, the industry is leaning towards risk sharing agreement (RSA).

 

Daily Pharm’s survey on 21 market access personnel from multinational pharmaceutical companies clearly showed their intention.

 

16 out of 21 companies suggested ‘RSA expansion or splitting out the refund type’, or ‘undisclosed drug pricing’ as solutions for Korea Passing.

 

RSA has a room to grow, “make the right decision for the people” Increase number of listed drugs with dual pricing to prevent disclosure of actual price.

 

Raise the externally referenced pricing with higher labeled price.

 

Dual pricing for refund type RSA system in Korea undergoes economic evaluation like any other generally listed drug, and receives actual price according to ICER value.

 

In other words, the government may provide dual pricing, but it does not affect National Health Insurance financially.

 

But the civic groups are opposing fiercely and the government cannot blindly ignore it.

 

The government has also shown strong will to expand RSA.

 

Korean Ministry of Health and Welfare (MOHW) recently presented three conditions for RSA application eligibility, regardless of treating ‘life-threatening level of health condition’ or not.

 

Expanding scope of subject disease was one of the most demanded changes the industry has been asking for, besides making follow-on drug eligible.

 

The government, reportedly, has ongoing discussions about additional expansion plan.

 

The industry is welcoming the government’s action for now.

 

But many are still craving for more changes.

 

The pharmaceutical industry is urging the government to increase ratio of undisclosed drug pricing.

 

One change they are pressing on is ‘splitting out the refund type RSA’.

 

The industry demands the refund type RSA should not be a conditional listing route, but another route of general listing procedure.

 

In fact, Korea’s RSA has narrower scope than other countries.

 

On the contrary, foreign countries are deciding to keep more number of drug pricing undisclosed.

 

A common example that multinational companies like to take are Italy and Australia.

 

The European country now has more than 300 drug items with undisclosed pricing, and Australia has 95 items.

 

Taiwan and Malaysia, following Singapore, amended their regulations for pharmaceutical companies to freely apply for dual pricing.

 

Some are also pointing fingers at the labeled price itself.

 

A pharmaceutical company can propose a labeled price in Korea, but under the limitation of ‘less than A7 adjusted average price’.

 

The industry explains the existing labeled pricing model could become a reason for Korea Passing in a long term.

 

A global pharmaceutical company’s market access expert claimed, “Many countries caring about their own people are trying to secure access to new drugs by expanding the ratio of undisclosed drug pricing, despite it being a second best option.

 

Although the title of ‘transparent pricing’ in global community is admirable, Korean government should make a decision for their patients as well”.

 

Views and criticism on Korea Passing All of the arguments mentioned make sense.

 

But accepting all demands at once is impractical.

 

Their demands need a series of discussions to reach a satisfying solution.

 

As the survey study showed, China is playing the most prominent role in the Korea Passing phenomenon the industry is worried about.

 

China refers to Korean drug pricing, but still there are two to three years of gap in point of listing between two countries.

 

But as the gap is narrowing, the pharmaceutical companies are now feeling the pressure.

 

Not all drug items are instantly faced with risk of Korea Passing.

 

Some say RSA expansion is not the only option.

 

MOHW, for instance, recently presented an option of ‘trade-off’.

 

The ministry intends to save expenditure from drug with expired patent, and reinvest the saved finance on securing access to new drug.

 

However, pharmaceutical industry expressed anxiousness as they claimed it is another means of reducing drug price.

 

It makes a sense for companies who have experienced a series of regulatory changes centering drug expenditure control.

 

But, could it be that the companies are more concerned about risking lowered sales profit from their drugs with expired patent?

 

Recently, a company refused to hand in a list of items with expired patent to trade off with a compensation for new drug pricing.

 

The company presented a list of items with expired patent but expected to drop price due to expanded indication.

 

It was basically the company turning down the trade-off offer.

 

“We wonder if RSA is the only option.

 

The current RSA regulation has expanded its subject scope recently, and yet the government is constantly reviewing other means of improving the system, including another expansion of subject.

 

We need put everyone’s heads together for this problem”, a government official said.

 

Surely, there is something wrong with foreign country’s external reference pricing creating uneasy tension and causing Korea Passing.

 

But the multinational pharmaceutical companies are not selling designer bags or luxurious cars.

 

And some drugs are actually priced higher in comparatively less developed country, or countries with weaker negotiation power.

 

World Health Organization (WHO) convened ‘Fair Pricing Forum’ and adopted a resolution on “improving the transparency of markets for medicines, vaccines, and other health products”.

 

What the global community strives to achieve with ‘drug pricing’ may differ from the multinational pharmaceutical companies.

 

Korea Passing should never justify pharmaceutical companies trying to generate a loophole in the reimbursement listing system in Korea.

 

We need to get a clearer view on the matter.

 

Is there a certain headquarters passing the Korean market with a slightest inconvenience?

 

Are executives and MA experts at Korean offshoots indeed trying to convince headquarters while they urge the government to amend regulation?

 

They are some questions to ponder on.

 

Another multinational company’s MA expert said, “It depends on pipelines, but each multinational company’s different nature has also affected Korea Passing.

 

Government regulation should be improved, but it should be backed up by pharmaceutical industry’s effort as well”.