[2021 National Audit] Nam In-soon "Need for Preferential Drug Pricing Policy for Innovative Pharmaceutical Companies' New Drugs"

Nam In-soon, Democratic Party of Korea lawmaker. / Photo by Dongju Yoon doso7@

[Asia Economy Reporter Chunhee Lee] There has been a call for a drug price preferential policy that reflects the R&D value for new drugs developed by innovative pharmaceutical companies to foster the domestic bio-industry.

Nam In-soon, a member of the National Assembly's Health and Welfare Committee from the Democratic Party of Korea, stated during the policy inquiry at the national audit on the 7th, "The 'Special Act on the Promotion and Support of the Pharmaceutical Industry,' revised in December 2018, newly established 'preferential treatment such as additional upper limit prices for drugs,' mandating the Minister of Health and Welfare to provide preferential treatment as prescribed by presidential decree, including additional upper limit prices for medicines manufactured by innovative pharmaceutical companies under the National Health Insurance Act.” However, she pointed out, “It has been almost three years since the preferential regulations were introduced, but no concrete follow-up legislation such as presidential decrees has been pursued, rendering the policy practically ineffective.”

Nam emphasized, “It appears that the Ministry of Health and Welfare is delaying follow-up legislation citing issues such as Free Trade Agreement (FTA) disputes and trade frictions, but the legislative intent of the National Assembly, as the legislative body, must be respected.” She added, “Innovative pharmaceutical companies receive preferential drug pricing by adding a premium for the first year when generic drugs, not new drugs, are developed and covered by insurance, and biosimilar drugs also receive preferential insurance pricing. However, there is only a preferential pricing regulation for generics, and no preferential pricing regulation for new drugs, leading to a contradictory situation where generics are encouraged over new drugs.”

According to Nam, the current price of generic drugs from innovative pharmaceutical companies is set at 68% of the original drug price, while other generic drugs are priced at 59.5% compared to the original. The price of biosimilars (biopharmaceutical generics) from innovative pharmaceutical companies is set at 80% of the original, with preferential pricing such as an additional 10 percentage points for up to three years.

Nam stated, “Applying preferential drug pricing only to generics does not align with the purpose of supporting innovative pharmaceutical companies,” and pointed out, “A plan should be devised to provide preferential drug pricing reflecting the R&D investment value for new drugs developed by innovative pharmaceutical companies.” She also noted, “Among innovative pharmaceutical companies are global pharmaceutical firms including Korea Janssen, making it possible to prevent trade disputes, and even if drug prices are preferentially set at 100% of the alternative drug market price, the certification preferential effect for innovative pharmaceutical companies can be strengthened without additional health insurance financial burden.”

Finally, Nam urged, "A policy plan should be promptly prepared to provide preferential drug pricing for new drugs developed by innovative pharmaceutical companies that reflects R&D investment value while avoiding trade frictions.”

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