[2020 National Audit] "Pharmaceutical Companies' Litigation Delays Cause Billions to Hundreds of Millions KRW Loss to Health Insurance Finances"

Status of Administrative Litigation between Pharmaceutical Companies and the Ministry of Health and Welfare Regarding Drug Price Reduction (2018~July 2020, Provided by Assemblyman In Jae-geun's Office)

[Asia Economy Reporter Choi Dae-yeol] Concerns have been raised that the national health insurance finances are suffering losses as some pharmaceutical companies are filing lawsuits to delay the government's drug price reductions.

According to data disclosed on the 13th by In Jae-geun, a member of the National Assembly’s Health and Welfare Committee from the Democratic Party of Korea, the government took drug price reduction measures after re-evaluating single-use eye drops in 2018. However, 21 companies including Kukje Pharmaceutical filed administrative lawsuits and requested suspension of execution against the measure. The government won in the first and second trials, and the third trial is currently ongoing.

The problem is that due to the suspension of execution, since September of that year, health insurance benefits have been paid at the pre-reduction prices. During the suspension period, the total benefits paid amounted to 339.2 billion KRW, and it is estimated that an additional 100.2 billion KRW was paid due to the delayed price reduction, according to Representative In. In December of the same year, eight companies including Daewoo Pharmaceutical also filed administrative lawsuits regarding single-use eye drops, resulting in an additional 12 billion KRW paid during the suspension period. The government won all three trials in this lawsuit.

17 Administrative Lawsuits and Suspensions of Execution on Drug Price Reductions Since 2018
Government Won All 8 First-Trial Cases... "Time-Delaying Tactics"

The government’s drug price reductions are measures to adjust or lower prices when the patent of an original product listed in the health insurance benefit list expires or when there are re-evaluation factors such as changes in approval conditions. According to regulations, prices can be lowered, but pharmaceutical companies file administrative lawsuits and requests for suspension of execution against these measures. When courts accept these requests, the drug prices are paid at the existing benefit rates during the trial period.

According to data provided to Representative In by the Ministry of Health and Welfare, from 2018 until July of this year, there have been a total of 17 cases where administrative lawsuits and suspensions of execution related to drug price reductions were accepted. Due to the suspension of execution delaying timely price reductions, the estimated amount of benefits paid during this period reached 150 billion KRW. This amount increases as the litigation period extends. By lawsuit type, 12 cases involved the Ministry’s authority adjustment of the first-listed products due to generic drug listings, two cases involved price reductions from re-evaluation of single-use eye drops, and two cases involved selective benefit conversion following re-evaluation of cholin alfoscerate-containing drugs.

Among the 17 cases, the Ministry of Health and Welfare won all eight cases where first trials or higher were concluded. This is why pharmaceutical companies’ lawsuits are criticized as time-delaying tactics. Representative In said, "Some pharmaceutical companies are delaying legitimate government drug price reductions through administrative lawsuits and suspensions of execution to secure corporate profits, causing huge losses to the national health insurance finances. Since the damage from health insurance financial losses ultimately affects the public, we will prepare measures to claim compensation or impose additional penalties for these 'time-delaying and profit-seeking' lawsuits going forward."

This content was produced with the assistance of AI translation services.