Health ministry cautious on timing of generic drug price cuts, reaffirms ‘no-exception’ principle

Amid mounting opposition from the pharmaceutical industry over the government's proposed “drug pricing system improvement plan,” the Ministry of Health and Welfare reaffirmed that the core issue of generic drug price reductions is a “principle with no exceptions.”

However, the ministry took a cautious stance on potentially postponing the implementation of the revised plan, leaving the possibility open.

Kim Yeon-sook, director of the Insurance and Pharmaceutical Division at the Ministry of Health and Welfare, said this during a telephone interview with Korea Biomedical Review on Tuesday.

Kim Yeon-sook, director of the Insurance and Pharmaceutical Division at the Ministry of Health and Welfare, speaks during a telephone interview with Korea Biomedical Review on Tuesday about the progress of the proposed drug pricing system improvement plan. She said the implementation date, currently scheduled for July, will be decided cautiously after gathering opinions from the industry and other stakeholders. (KBR photo)

Director Kim explained that more input from the industry, experts, and civil society needs to be gathered before a decision is finalized. She noted that a subcommittee meeting will further discuss the plan and consider input from various stakeholders, including the emergency task force of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA).

Kim added that the subcommittee will focus on the drug pricing system improvement plan, carefully considering all opinions, including the option of postponing the implementation date.

Regarding the proposal to lower generic drug prices to the 40 percent range, she stated, “We must monitor the progress of discussions, but it is important to note that this figure was prepared through a comprehensive review conducted since 2019,” adding, “From the perspective of policy implementation, principles are important.”

Last November, the ministry announced plans to implement the drug pricing system improvement plan starting this July. The policy aims to restructure the generic drug market, potentially affecting the pricing and availability of generics, and redirect national health insurance resources toward innovative treatments while controlling overall healthcare spending.

Key elements of the improvement plan include significantly lowering the generic drug pricing calculation rate, reviewing drug pricing systems by indication, and introducing expedited listing for treatments for severe and rare diseases. Notably, the proposal would lower the generic drug pricing calculation rate from the current 53.55 percent of the originator drug price to the 40 percent range.

However, the pharmaceutical industry has strongly opposed the plan since its announcement, warning of significant negative impacts on the sector. The KPBMA emergency committee has highlighted concerns that the policy may undermine the domestic pharmaceutical ecosystem if enacted.

At a press conference, the emergency committee noted that under high exchange rates, rising oil prices, and increasing costs, further drug price cuts would make industry survival difficult. They argued that while the government aims for a “virtuous cycle of drug price cuts and innovation support” through the improvement plan, the policy could instead lead to adverse effects, including a loss of momentum for new drug development.

Therefore, rather than hastily implementing the revised plan, the group proposed working closely with industry to develop appropriate policies and suggested conducting joint research to that end. They also stated that they could tolerate generic drug prices being up to 48 percent lower than those of originator drugs.