GOV “Drug price reform needed for industry growth”

Director Yeon-sook Kim, “100 generic versions for a product with sales under KRW 100 billion approved on average in Korea”

“Goal is restructuring the pharmaceutical industry—not just reducing NHIS finances—but ensuring new drug supply and stability”

Director Yeon-sook Kim

“Korea has an excessive amount of generic products per ingredient. For example, ingredients with annual market sales under KRW 100 billion have an average of 19 approved products; those under KRW 500 billion have 56 products; and those under KRW 1 trillion have more than 100 on average. Given this reality, we need a serious discussion on how to reform the drug pricing system to create growth momentum for the Korean pharmaceutical industry to reach a global level.”

Yeon-sook Kim, Director of the Pharmaceutical Benefits Division at the Ministry of Health and Welfare, repeatedly emphasized that the objective of the drug pricing reform is not to reduce National Health Insurance spending, but to encourage new drug development, secure cost recovery for withdrawal-prevention and essential medicines, and strengthen patient access.

She expressed that the domestic pharmaceutical industry's claim that the Ministry of Health and Welfare brought up drug price reductions to save NHIS funds is partly based on misunderstanding, urging understanding that the policy goal is a structural reform of the drug pricing system to spur innovation in the pharmaceutical and biotech industries.

In particular, Kim pointed out that Korea has an excessively high number of generic products per ingredient and stressed the need for reform of the generic pricing system to stimulate industrial growth.

At a policy National Assembly policy forum on the drug pricing system reform held on the 26th, Kim said, “We designed the reform plan with a sense of crisis and concern that the current drug pricing system has reached its limits, unable to guarantee the supply of essential medicines to the public, let alone new drugs.”

Kim emphasized that this drug pricing system reform should serve as an opportunity to strengthen patient access to treatments, enhance the stable supply of essential medicines, and boost the innovation capacity of the pharmaceutical industry.

In other words, the goal of this drug pricing policy is not merely a cost-cutting overhaul, but rather a fundamental restructuring and improvement of the pharmaceutical industry's foundation.

Kim also expressed pride in Korea’s high level of generic self-sufficiency compared to other countries.

However, she acknowledged that the current situation, where an excessive number of generics are approved and marketed for each ingredient, needs to be addressed.

Ultimately, she argued that adjusting the number of generics per ingredient through the pricing reform is necessary to create momentum for the Korean pharmaceutical industry’s global expansion.

Kim offered no specific response or explanation regarding the postponement or modification of the reform plan's implementation.

Kim said, “There was a broad drug-price adjustment policy in 2012, but overall drug costs or the absolute amount itself have not declined since then. Given the increase in chronic disease patients, this is natural. The goal of this drug pricing system reform is not to reduce the proportion of drug costs. The goal is to induce structural reform of the pharmaceutical industry.”

Kim concluded, “We must also consider that no comprehensive pricing reform has taken place since 2012. Furthermore, given the reality of an excessive number of domestic generic drug items, we must consider a drug pricing system that enables the domestic pharmaceutical industry to expand globally. We will deliberate on which approach is most effective, achieve the desired results, and reflect the realities of the pharmaceutical industry.”