Flexible pricing extended to listed drugs…boosts new drug exports

HIPDC decides to expand flexible pricing agreements in the first half, approved on the 25th

Will impact reference prices for exports... Expansion beyond K-CAB expected

The government’s decision to expand the dual-pricing “flexible pricing agreement scheme” to already-listed drugs is expected to support the global expansion of Korean new drugs.

With the broader application of the scheme, cases like HK Inno.N’s K-CAB are likely to increase. Domestic pharmaceutical companies preparing for exports are already gearing up for the expansion.

On the 25th, the MOHW decided at the Health Insurance Policy Deliberation Committee (HIPDC) to push to expand the flexible drug pricing scheme in the first half of this year to enhance the global competitiveness of new drugs.

The Medical Care Benefit Rules will be revised to expand the flexible drug pricing contract system, currently applied to ‘new drugs developed by innovative pharmaceutical companies, etc.’, to cover ‘new drugs and biosimilars, etc.’.

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Although the eligible products were not specified in detail, already-listed medicines are included among the targets.

This means that Korean new drugs with established reimbursement ceiling prices will also qualify. Contracting a higher official listed price can work favorably when setting prices for exports.

K-CAB, for example, had been subject to a price reduction under the price-volume agreement system, but maintained its listed price through negotiations with the NHIS. While not a treatment for severe diseases, the product’s expanding overseas exports meant that a price cut would have had significant repercussions.

As the only Korean new drug granted dual pricing (flexible pricing), K-CAB was able to preserve competitiveness in overseas price negotiations.

An industry official at the domestic pharmaceutical company A commented, “For listed medicines, the ceiling price is already visible, but if a product is being prepared for export, raising the listed price is highly beneficial. The domestic listed price serves as a reference when determining prices abroad. Companies are already expecting the inclusion of already-listed medicines and already preparing for this.”

Because biosimilars are also included in the expanded scope, Korean companies such as Celltrion and Samsung Bioepis are likewise expected to benefit from expanding their global sales channels.

Above all, the greatest beneficiaries are multinational pharmaceutical companies' new drugs and patients with rare and severe diseases. Maintaining a higher listed price in Korea helps avoid disrupting global drug pricing policies, thereby reducing the risk of “Korea passing” in launch strategies.

The HIPDC materials also include plans to “continuously improve cost-effectiveness evaluations to better reflect the innovation and value of new drugs,” suggesting that access to new drugs from multinational pharmaceutical companies will likely improve further this year.