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‘Moon Jae-in care’ keeps industry busy weighing bottom linesCritics say measure falls short of expectations
  • By Park Gi-taek
  • Published 2017.08.11 13:42
  • Updated 2017.08.11 13:42
  • comments 0

After President Moon Jae-in announced a policy to drastically expand health insurance coverage, related industries are busy calculating their gains and losses from it.

Healthcare industries, including pharmaceutical, medical equipment sectors, welcomed the move as it would give insurance benefits to many of their products. To grasp the policy’s real impacts, they are applying different measuring methods, however.

For a start, the domestic pharmaceutical industry thinks the government’s intention to expand insurance coverage itself would help enlarge market, given the absolute role insurance benefits play in the marketing of prescription-based medicine.

“As drugmakers want to include as many products as possible in covered items, they think the policy will be of help,” an industry executive said. “Showing sensitive response to the new policy will be rare disease therapies or anticancer drugs, which have not received insurance benefits. However, few Korean drugmakers have developed or possess cancer drugs or rare disease treatment.

Another executive also remained cautious. “We have to start discussing what effects the policy will have. For now, we see many positive aspects but believe the benefits for some products could be smaller than expected.”

The domestic pharmaceuticals, which mainly have generic drugs and chronic disease treatments, the benefits for them would be less than those enjoyed by multinationals that possess expensive new medicines. Given the government has announced the “state responsibility system for dementia,” however, it would benefit related market.

"The dementia therapy market has high potential growth drawing the attention of drugmakers,” said an official at a domestic pharmaceutical company. “The market will grow even further as the government policy will reduce financial burdens of dementia patients to 10 percent, and give insurance benefits to checkups, too, which in turn will help companies that have dementia therapies grow.”

An executive at a multinational pharmaceutical company also showed mixed responses. “We are positive about the policy to turn uncovered drugs into covered ones,” he said. “However, the plan is lacking in ways to improve patient access to new medicines. At stake is how to expand access for patients who cannot use drugs for financial reasons, but the latest policy has omitted this aspect. As far as drug-related contents are concerned, the recent announcement fails to meet less than half of our expectations.”

The government plans to maintain the “selected coverage” principle, by which it applies health insurance to drugs with proven efficacy against prices, while actively pushing for the gradual conversion of uncovered drugs into covered ones.

‘Will getting coverage become easier – or harder?’

Korean and multinational pharmaceuticals make different calculations about the immediate effects of the Moon Jae-in care but have the same expectation about easier registration as insurance-covered drugs in the long run. Because, once the drugmakers manage to register their products as covered medicine, they will be able to put them into covered drugs without much problem even if they’ll have to undergo reassessment process after three or five years.

Others are less sanguine, saying the price negotiation of a drug may get trickier.

“There will be a series of releases of expensive medicinal products in the future. And, high-priced anticancer drugs will expand their indications, swelling the fiscal burdens on drug costs,” said the official at a multinational pharmaceutical. “The government is also aware of this problem and will try to set drug prices as low as possible in negotiations.

Has Pandora’s Box opened for medical equipment makers?

The medical equipment industry is more concerned than pleased with the policy, as the government has shown its willingness to expand the new Diagnosis Related Group (DRG).

The government plans to increase the target institutions of the new DRG system – which incorporate all costs from entering to exiting hospitals, such as hospitalization, treatment, checkup, and drugs fees – from the current 42 public hospitals to about5 200, including private hospitals, by 2022.

The government will set targets to secure appropriate benefit levels and reduce uninsured drugs to induce active involvement of medical organizations and introduce an incentive for medical institutions using the cost reduction to compensate them.

The medical equipment industry under the DRG system, thinking medical institutions would attempt to lower the prices of treatment materials through opening bidding under the new DRG system, is worried about overheated competition and dumping.

“A Pandora Box will open depending on the targeted institutions and application range,” said an industry official. “We will keep an eye on the government’s next move.”

On the other hand, dental implant industry is expected to emerge as beneficiaries.

The government has decided to reduce the elderly’s payment shares for dentures and implants to as low as 30 percent, which will result in the increase in patients at dentists.

“We are positive about the Moon administration’s policy to strengthen dental insurance coverage,” said Korean Dental Association (KDA)대한치과의사협회. “We will actively join the government’s policy to improve dental healthcare,”

An implant provider agreed. "We have a positive review of the policy. The expansion of covered treatments and reduced patients’ burdens will work to increase in patients, who could not get treatment due to medical costs. Eventually, these will provide benefits for all.”


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