(Health Korea News / Chang-yong Lee) It has been pointed out that the government is pursuing policies that are inconsistent with the revitalization of generic drugs, such as drastically lowering the prices of generic drugs.
The recent drug supply shortage that has occurred in many countries around the world due to COVID-19 has proven that generic drug production capacity is important in securing pharmaceutical sovereignty.
Nevertheless, there is high concern that the Korean government has recently been pursuing policies in the opposite direction of revitalizing generic drugs, such as attempting to drastically reduce the prices of generic drugs through ‘re-evaluation of overseas drug price comparisons’.
Lee Jong-hyuk, a professor at the College of Pharmacy at Chung-Ang University, said in a report on the 24th (Opinions on the reevaluation of the overseas price comparison of generic drugs), “The basis for the reevaluation of the overseas price comparison of generic drugs is the premise that the prices of Korean generic drugs are higher than those of overseas generic drugs, but the price of generic drugs in each country is different. “If we estimate the price of generic drugs at the time of registration, taking into account the calculation method, the price of generic drugs in Korea is bound to be very low at the time of initial registration,” he pointed out.
The price of generic drugs in Korea is calculated at a maximum of 53.55% (59.5% for one year) of the original drug price. The price of generic drugs in overseas A8 countries (USA, UK, Germany, France, Italy, Switzerland, Japan, and Canada) is calculated to be 40-80% of the price of original drugs. Up to 80% of the maximum price is recognized.
Looking at the price calculation ratio of A8 countries, the price calculation ratio of all countries except France (40%) is much higher than that of Korea (53.55%). Since the prices of new drugs are significantly lower in Korea than in A8 countries, the price of generic drugs when first listed is bound to be lower in Korea.
However, while the price of generic drugs in Korea does not fluctuate significantly after marketing, prices in foreign countries continue to fall due to market principles.
Professor Lee said, “As a result of our research, we were able to confirm that the prices of generic drugs in major foreign countries are rapidly decreasing over time. As a result, when many generic drugs are registered long after the patent expires, the price of generic drugs in Korea “We were able to confirm that it was higher than that of major overseas countries,” he said.
The prices of generic drugs in Korea are listed lower than those in major overseas countries at the time of registration, but since price competition does not occur after registration, prices often reverse to those in major overseas countries after a certain period of time.
The price of generic drugs in Korea is calculated at 53.55% of the original drug (59.5% when added) regardless of overseas prices at the time of registration. In this way, if the drug price calculated regardless of the overseas generic drug price is lowered through ‘re-evaluation of overseas generic drug price comparison’, problems with the consistency of the system may be raised.
Professor Lee said, “If you want to reevaluate the comparison of overseas prices of generic drugs, first, revise the drug price determination standard (53.55% compared to the original) for the first registration of domestic generic drugs to calculate it by referring to overseas prices, and adjust the price of overseas generic drugs after registration to determine the price. He suggested that the consistency of the registration and follow-up management system can be maintained only by lowering the price in conjunction with .
The report pointed out, “The implementation of systems that can drastically reduce the prices of most generic drugs and raise controversy over their validity, such as the comparative reevaluation of overseas drug prices, needs to be implemented after more careful review.”
Meanwhile, generic drugs not only play a pivotal role in securing patients’ access to medical care by providing cost-effective alternatives at a relatively very low cost, but also play a role in reducing government medical expenses.
From 1999 to 2023, Korea has reduced prices for already listed drugs a total of 10 times. It is estimated that the fiscal savings effect for the current year alone was approximately 5 trillion won or more.
The effect of drug price cuts appears not only in the current year but also every year. Taking this into account, the analysis suggests that if the cumulative financial savings were simply estimated, there would have been a financial savings of about 63 trillion won from 1999 to 2023.
In addition, drug costs, which accounted for 30% of Korea’s health insurance medical expenses when the selective registration system was implemented in 2007, were lowered by 7 percentage points to about 23% as of 2022, significantly improving financial soundness.
The report said, “These achievements not only contributed greatly to financial savings by domestic pharmaceutical companies’ rapid development of generic drugs, but were also largely due to generic drug price reduction policies such as blanket drug price reductions, various reassessments, and actual drug price reductions. “It is a result that involves sacrifice,” he said.
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