Multinational pharma union 'We oppose drug pricing reform'

"Reform poses threat to job security and essential drugs"

Picket protest ahead of the Health Insurance Policy Deliberation Committee meeting…urged for full reconsideration of the drug pricing system reform

Concerns over reduced R&D investment·discontinued essential medicine production…"Must review the impact on the field"

On January 29, the Korean Democratic Pharmaceutical Union (KDPU) held a picket protest in front of the Health Insurance Review & Assessment Service (HIRA) in Seocho-dong, Seoul.

Both domestic pharmaceutical companies and labor unions of multinational pharmaceutical corporations in Korea have strongly opposed the government's proposed drug pricing reform.

The pharmaceutical industry is calling for a reconsideration of the drug pricing reform policy, claiming that the proposal will directly lead to job insecurity, reduced R&D investment, and disruptions in the supply of essential medicines.

At 1:00 PM on the 29th, ahead of the Health Insurance Policy Deliberation Committee meeting, the Korean Democratic Pharmaceutical Union (KDPU) held a picket protest in front of the Health Insurance Review & Assessment Service (HIRA) in Seocho-dong, Seoul. The KDPU, an organization composed of labor union members from major multinational pharmaceutical companies, took action to deliver the message about the impact the government's drug pricing reform would have.

​"The nightmare of the 2012 layoff will repeat"

The protest site was lined with pickets warning of the policy's impact, featuring slogans such as "If domestic medicine disappears, national health also disappears," "Chasing cheap drug prices leads to limited access to essential medicine," and "Drug price cuts cost the livelihood of workers." The KDPU specifically stated that workers at multinational firms also perceive this drug pricing reform as a direct employment risk.

Park Ki-il, Chairman of the KDPU, stated, "The pharmaceutical union was created because of the large-scale restructuring at each company triggered by the 2012 drug price cuts," added, "At that time, companies began downsizing, and even now, the pharmaceutical industry is exposed to the risk of restructuring due to constant drug price reductions. The impact of this reform may be even greater than back then."

In particular, Park pointed out that the government is overlooking the structural risk of 'revenue decrease → R&D reduction → cessation of essential medicine production.'

Park emphasized, "If the prices of all products are forcibly lowered, revenue will inevitably decrease, and if there is no profit, R&D investment stops." He added, "Companies may give up production of drugs that are not financially viable. This is an issue that could lead to supply disruptions even for essential medicines."

Picket protest by the Korean Democratic Pharmaceutical Union (KDPU). 

He also expressed concern regarding the government's proposed restructuring of the generic drug pricing structure.

Park criticized, "If generic drug prices are reduced to around 40%, it will eventually put pressure to lower the prices of original products even further. This is a measure that shakes the profit structure of the entire industry."

Furthermore, he stated that the government is interpreting the issue of CSO (sales agency) costs in an excessively simplified manner.

Park stated, "Judging that the entire industry is affluent just because some companies spend heavily on CSO costs is an error. We have consistently demanded improvements from companies because such misunderstandings could lead to further drug price cuts."

He continued, "Drug price cuts without employment stability measures are a disaster for both workers and the industry. If the government truly cares about public safety, it must completely reconsider the policy."

Concerns over large-scale layoffs and weakening industrial competitiveness

The Federation of Korean Chemical Workers' Unions, to which the KDPU belongs, issued a statement on the 15th strongly opposing the government's proposed drug pricing system reform, claiming it fails to adequately reflect the characteristics of the pharmaceutical industry and the realities of labor.

The Federation emphasized that the pharmaceutical industry has a high employment-to-revenue ratio and analyzed that if drug price cuts are realized, there is a possibility of approximately 14,000 job losses, centered on research, production, quality, and sales positions.

In particular, they pointed out that, given the industry characteristic of fixed costs accounting for a large share, a decrease in revenue can directly lead to workforce reductions and the expansion of irregular positions, making a negative impact on local economies inevitable.

The Federation also emphasized that, contrary to the government's goal of creating a new drug development ecosystem, expanding R&D in a situation of decreasing profits is unrealistic.

In fact, the net profit margin of the top 100 domestic pharmaceutical companies is only around 3%. If the reform is implemented as initially proposed, an annual revenue decline of up to KRW 3.6 trillion is expected, further reducing the capacity for R&D investment.

The Federation demanded that the government ▲reconsider the drug pricing system reform ▲establish a social discussion body in which labor unions participate ▲prepare employment stability measures ▲establish comprehensive measures linked to R&D and strengthening the competitiveness of domestic pharmaceuticals.

Picket protest by the Korean Democratic Pharmaceutical Union (KDPU). Park Ki-il (on the right), Chairman of the KDPU, argued for full reconsideration of the drug pricing system reform