'Drug pricing reform will improve patient access'

[The 55th Dailypharm Future Forum]

Limited access to high-priced innovative drugs highlighted… “stronger value assessment needed”

“Fiscal-centered framework has limitations… system must shift toward patient-centered access”

As global pharmaceutical R&D trends rapidly shift toward high-priced anticancer and rare disease therapies, attention is focused on how the government's proposed drug pricing system reform will impact domestic patient access and the competitiveness of the pharmaceutical industry.

On the 21st, Dailypharm held a Future Forum at the Catholic University of Korea's Songeui Campus Institute of Biomedical Industry. At the forum, Jaeho Jung, Head of Value and Access at Novartis, presented the perspective of multinational pharmaceutical companies on the proposed drug pricing reform.

Jung said, “The reform plan is in line with global R&D trends. If appropriate value-based compensation and faster reimbursement listing are achieved, it will send a positive signal not only for patient access but also for Korea’s R&D ecosystem.”

On the 21st, Dailypharm held its 55th Future Forum at the Catholic University of Korea's Songeui Campus Institute of Biomedical Industry.

Development of high-cost anticancer drugs and rare disease treatments active... “Current drug pricing and reimbursement systems struggle to accommodate innovation.”

Jung first highlighted the scale of clinical development in oncology and rare disease therapies. Currently, oncology accounts for 41% of all global clinical trials, of which 35% involve innovative drugs.

The rare disease treatment market is expected to reach KRW 542 trillion by 2023, while rare cancer trials account for 74% of all ongoing rare disease studies.

Despite this projected expansion of the high-cost new drug market, securing insurance coverage, which is a core value for patient access in Korea, remains inadequate. Among 460 new drugs approved in major countries from 2012 to 2021, the coverage rate averaged 28% across G20 nations and 29% in OECD countries, while Korea lagged at just 17%.

Jung said, “Korea is facing a triple burden of ensuring universal welfare with limited resources, expanding access to new drugs, and guaranteeing patients’ right to treatment. The government has not been idle. The system has been continuously revised since 2007, but it has now reached its limits.”

Examining the time required for reimbursement by treatment type, rare disease treatments took 23.6 months, anticancer drugs 31.6 months, and general new drugs 18.3 months. Even after new drug approval, a lengthy period remains before patients really gain reimbursement.

At the same time, global R&D trends have driven the rise of antibody-drug conjugates (ADCs), bispecific antibodies, and biologics, many of which now hold multiple indications. Some immuno-oncology drugs have more than 20 approved indications.

In response, the government has proposed reforms aimed at improving access to new drugs. These include an indication-based pricing, strengthening value-based drug reimbursement, and shortening the reimbursement listing period for rare diseases. In particular, the reimbursement listing period for rare disease therapies is expected to be reduced from an average of 240 days to within 100 days.

Jung assessed, “With the proportion of high-cost new drugs rapidly increasing, it is difficult to guarantee patient access solely with limited national health insurance funds. As more drugs secure multiple indications, an indication-based pricing system is in line with global standards”

He added, "The current system focuses on increasing reimbursement rates within the existing framework; it remains finance-centered from a patient access perspective. Although the government’s approach is understandable given budget constraints, the system must be operated with the patients in mind.”

“Reform will create synergy, not suppress R&D”

Jaeho Jung, Head of Value and Access at Novartis Korea

He also expressed the view that the drug pricing reform could improve the domestic investment environment.

Korean pharmaceutical companies, whose portfolios are largely centered on generics, have repeatedly voiced concerns that the proposed drug pricing reform could significantly stifle R&D.

However, Jung emphasized the potential advantage that improved access to new drugs could expand investment by global pharmaceutical companies.

He explained that currently, only two global pharmaceutical companies have production facilities in Korea, and attracting global-level R&D centers remains challenging.

Jung stated, “Even when reviewing potential sites for our flagship one-shot treatment Kymriah, we received feedback that Korea was not suitable. If the system becomes more predictable and the value of R&D is properly recognized, direct investment and partnerships with Korean companies will expand.”

He added, “If drug pricing improves in terms of value recognition and patient access, direct investment by global pharmaceutical companies will increase, as well as partnerships with Korean companies.”

“Looking at Boston or New Jersey, which have rapidly emerged as global bioclusters, their R&D centers are well-established. This is because they are clustered together in terms of the collaborative R&D value. Looking at the domestic R&D environment, it feels like everyone is working hard, but individually. If the drug pricing reform system is well-established, I believe synergies will grow further, including joint R&D centers between global and domestic companies.”

Furthermore, Jung pointed out that discussions on reimbursing high-value new drugs like ADCs and one-shot gene therapies have repeatedly faced difficulties within the existing framework. “The reform plan has a high potential to contribute to improving patient access, aligning with future global R&D trends.”

Jung stated, “Operational execution is as crucial as the system's design. I hope a patient-centered system can take root through continuous dialogue between the government and industry.”