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[Special] Pharmaceuticals at odds with government over selective benefit system
  • By Nam Doo-hyun
  • Published 2018.08.21 15:57
  • Updated 2018.08.21 15:57
  • comments 0

The pharmaceutical industry is raising concerns over the government’s plan to implement a “selective pharmaceutical benefits system,” claiming that the scheme might be another way to force drug price cuts.

As part of the measures to enhance health insurance coverage, the Ministry of Health and Welfare is to implement the selective pharmaceutical benefits system in multiple phases by 2022 to allow partial reimbursement of medicines that were in high demand but not reimbursable due to their uncertain cost-effectiveness.

Pharmaceutical industry executives and government officials talk about over the government’s plan to implement the selective pharmaceutical benefits system by 2022, at a forum in Seoul.

Accordingly, patients’ contribution to the drug costs will vary between 30 percent and 80 percent, depending on the drug reimbursement rate.

The association of reporters covering multinational pharmaceutical firms recently organized a debate between industry officials and the government in central Seoul Tuesday over the selective benefit system. Pharmaceutical officials worried that the government’s plan would lead to the implementation of “pre-drug price cut system.”

The pre-drug price cut system refers to a drug price reduction up to 5 percent before the listing of the drug when the medicine is expected to sell more than 300 million won ($268,000) a year due to an expansion of the drug reimbursement.

The government claimed that if a non-reimbursable medicine becomes reimbursable, more patients will use the drug, which will raise the need for a drug price reduction in advance.

However, pharmaceuticals said a price cut should not come first before the industry and the government reach consensus on the cost-effectiveness of the drug and changes in the drug use.

“We agree that the selective benefit system was made with good intention. However, it is questionable how much reimbursement rate between 30 percent and 80 percent we would agree on,” said Lim Kyung-hwa, director at Janssen Korea.

She went on to say, “It is necessary to enhance patients’ access to drugs, but it is difficult to predict how much drug access patients will get under the selective benefit system. It is also challenging to make predictions about pre-drug price cuts. Even under the current system that manages drug prices after the drug listing, we could face price reduction, which is why we’re worried.”

Lim also noted that a change in patients’ capability to pay for the differences in individual patient contribution rates was unpredictable.

“There is a considerable difference in the ability to pay for 5 percent of patient contribution for a 5 million-won drug and 30 percent of the patient contribution. We should consider how to predict such difference,” Lim said.

Kwak Myung-sub, director of Pharmaceutical Benefits Division at the Ministry of Health and Welfare, said he could not agree with the pharmaceutical industry’s claim that applying selective benefits to the pre-drug price cut system was unreasonable.

“From the government’s perspective, if patient contribution rate goes up from 5 percent to 30 percent, the National Health Insurance Service’s contribution will go down from 95 percent to 70 percent. The drugmaker’s share will remain unchanged,” he said.

The government was internally reviewing how to predict increases of new patients using a drug that turns from non-reimbursable to reimbursable, Kwak said. The government would review past cases and study how the upcoming system would affect the government’s spending, he added.

“If we collect several cases, we will be able to estimate how the difference between 5 percent patient contribution and 30 percent patient contribution would bring changes in the number of patients and its financial impact,” Kwak said.

However, pharmaceutical officials kept raising concerns that the selective benefit system will generate additional cuts in drug prices.

“Cases of non-reimbursed drugs are all different, and the market situations in the past and those in the present are not the same. It is true that pharmaceuticals’ incomes will remain the same despite the introduction of the new system. However, if the size of the government’s spending comes out different than pharmaceuticals’ prediction, drugmakers should face more drug price cuts,” said Yeo Dong-ho, market access manager at Celgene.

“If there is a discrepancy between actual finances and the estimates, we should think about which side’s opinion we should trust. If a company’s estimate is 1 billion won but the government concludes it as 3 billion won, the company will face different price reductions later,” he said.

Yeo said he was not opposed to the government’s pre-drug price cuts. Instead, he was raising the need for a consensus between a pharmaceutical’s estimate and that of the government. “Pharmaceutical companies have low trust in the government’s estimates. We need discussions at the working level on this,” Yeo said.

At the debate, participants also discussed future directions of the risk-sharing agreement (RSA) system.

“There are many requests for an expansion of the RSA-applicable drug list. However, most of the drugs under the RSA program are anticancer drugs and orphan drugs in many other countries, too,” Kwak of the health and welfare ministry said.

The problem of the current RSA system is that the criteria for an RSA are whether the drug has an alternative or not, Kwak noted.

Even in the same treatment class, a late-comer drug cannot benefit from the RSA reimbursement, which helps the first-comer drug monopolize the market, he said. “We are seriously concerned about the monopoly issue and reviewing to revise the system,” Kwak said.

As for the drug registration period and the nation’s status in drug pricing, the government and pharmaceuticals should avoid exhausting debates but take a more constructive approach, he added.


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