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[Column]Nothing is cheap -- and goodDr. Song's medbiz column
  • By Song Hyoung-gon
  • Published 2018.06.05 11:47
  • Updated 2018.06.05 11:47
  • comments 0

On May 31, Korean Medical Association declared the breakdown of negotiations to decide medical treatment fees for next year. The rupture was due to the vast difference between the 7.5-percent rise requested by KMA and the 2.8-percent hike proposed by National Health Insurance Service (NHIS).

KMA pointed out that the government had promised to guarantee “appropriate medical fees” in return for turning most uninsured treatments into insured ones, along with the introduction of the Moon Jae-in care, or Mooncare. “We doubt whether the government has any will to materialize its pledge,” the association said.

Physicians are no longer the only ones who maintain medical fees hover below the cost. Also, the allegation that low medical charges are aggravating the distortion of the healthcare system and threatening the public health is earning recognition to a considerable extent.

The government made the Medical Insurance Act in 1963 and integrated national medical insurance and employer-provided medical insurance into the national health insurance as the single public insurance in 2000. Since then, the controversy over the low medical fees has persisted. Various foreign data also indicate Korea’s health insurance system has maintained a low level of fees compared with other countries.

There are reasons for cheap things. People tend to seek and buy cheap products, but they have reasons for being cheap. In other words, you have to take the consequences of buying cheap products and services in the end.

When people say the cost for medical care is low, they refer to the part covered by insurance, that is, insured treatments. On the other hand, when patients receive medical services and take drugs not covered by the insurance, that is uninsured treatment, the prices are never low. For treatments covered by the insurance, patients have only to pay the cost set by the NHIS. If hospitals provide treatments without such restrictions, however, they set high prices to make up for losses incurred by insured treatments. In the end, overall health bills are low, but if you get fatal diseases, the cost becomes prohibitive. This is why I say nothing can be cheap and good.

At about the same time when the medical fee negotiations broke down, Guerbet, a French pharmaceutical company that exclusively supplies Lipiodol used in transarterial chemoembolization for treating liver cancer, called for a 500-percent price increase while threatening to withdraw from the Korean market if its demand is not accepted.

The controversies over the withdrawal of foreign drugmakers, medical equipment manufacturers and medical material suppliers have long ceased to become news. We have experienced several such disturbances, including one over the endoscopic knife for gastric cancer submucosal resection supplied by Olympus in 2011, and another one involving artificial blood vessels for cardiac surgery by Gore Medical last year.

Lipiodol sells at about $50 in Korea. Aside from the U.S. where medical expenses are known to be expensive, this is cheaper than Vietnam, Thailand and Brazil.

Should we regard these supply cuts or threats of withdrawal from the nation as just the abuse of power on the part of providers?

As a physician-turned-drug developer like me see it, things should not be necessarily so. To put a new drug on the market, developers need to pour massive money throughout the long process spanning pre-clinical stage, and phase 1, 2, and 3 clinical tests. They have to retrieve the invested capital in 20 years before its substance patent or use patent is expired. Also, they should use the capital accumulated during the period for developing other new drugs. Therefore, we cannot merely regard their demands as the abuse of power.

Some may ask why these companies set their drug prices at low levels in the first place. There is a reason for that, too. When a foreign drug enters the Korean market, its price is decided by considering the equity with the nation’s overall medical fee levels. If the price of other medical services or drugs are around 100 won but the new drug sells at around 1,000 won, the drug cannot enter the market.

However, the situation can change depending on the circumstances the foreign drugmaker faces. For instance, if the patent expiration is nearing or the domestic demand surges to make sales here less profitable than in other countries, the company cannot help but demand higher prices.

The ultimate goal of a business enterprise is creating maximum profits as far as specific systems and regulations permit. Pharmaceutical companies are no exceptions. You cannot cite the Hippocratic Oath to businesses and force them to continue to sell drugs at a loss.

As long as the Korea medical system sticks to low fee levels, the ongoing incidents are sure to recur. Conversely, let’s assume that a domestic pharmaceutical company has developed a drug for intractable diseases that have no alternative treatments. The price for such a drug will also be set very low according to the overall level under the Korean system. If the Korean company wins sales approval in the U.S. and export its product to America, can it sell the drug at 10 times or 100 times higher price than here? The answer is, “It can never do so.”

After all, if the nation fails to break the abnormal, low-fee system, it will not only adversely affect patients’ right to live but hamper the creation of national wealth by turning the healthcare sector into an active export industry.

Now is the time to have a broader, longer-term perspective and rack our brains to come up with sustainable medical fees and health insurance system. That is the only way patients, physicians and businesses can live.


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An emergency medicine specialist, Song Hyoung-gon served as head of the emergency department at Samsung Medical Center and vice president and spokesman of the Korean Medical Association. He is now the CEO of GemVax & KAEL. Contact him at cprkings@gmail.com.- Ed.

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