Pharmaceutical companies are stepping up manufacturing choline alfoscerate drugs after the government decided to reduce their indications subject to insurance coverage to treating dementia.

As choline alfoscerate makers that fail to submit reevaluation plans for follow-up clinical trials by Dec. 23 will likely have their licenses canceled, they are about to increase output to induce prescriptions before insurance payments end, industry sources said on Tuesday.

Domestic pharmaceuticals make the most of the grace period to turn out more choline alfoscerate drugs before their insurance benefit ends.
Domestic pharmaceuticals make the most of the grace period to turn out more choline alfoscerate drugs before their insurance benefit ends.

Some trustee makers are expanding the output of products of trustor firms whose licenses are to be nullified. The reason: If the Ministry of Food and Drug Safety cancels item permits, the production and sales of such products are prohibited. However, doctors can prescribe products already distributed in the market for six months after their licenses are revoked.

As the Health Insurance Review and Assessment Service (HIRA) guarantees maintaining the status quo for six months after its announcement to reduce insurance coverage, pharmaceuticals can mass-produce the drugs during the grace period.

Drugmakers are manufacturing more choline alfoscerate to prepare for the cancellation of the permit, a pharmaceutical company official said on condition of anonymity. Although HIRA plans to narrow indications of choline alfoscerate drugs, pharmaceuticals are turning out more, as the government would maintain the insurance benefits for six months when they submit a reevaluation plan.

The health authorities have instructed companies to submit reassessment plans for 255 products of 134 companies, and those who do not participate in the reevaluation process are likely to give up their products.

According to the industry official, many pharmaceutical companies will not submit proposals because of the cost required to conduct clinical trials for the reevaluation.

Ironically, the government has introduced the half-year grace period because of choline alfoscerate.

The food and drug safety ministry revoked the approval of Daewoong Pharmaceutical's choline alfoscerate drugs in May 2016 but decided to keep the insurance benefit until October. In protest to the temporary benefits, however, Daewoong filed a complaint and received the insurance benefit until April of the following year, selling the drugs for nearly a year after the regulator’s decision. The health authorities then revised the system to stipulate the grace period to six months after notifying the cancellation.

The government’s intention behind the grace period was to ease confusion in the medical field and help the firms remove idle inventories after revoking the permit, but some pharmaceuticals abused this system as a legal loophole.

HIRA decided to maintain the current benefits of choline alfoscerate for treating dementia and ensured minimal coverage to reduce patients’ payment to 80 percent of the drug price.

As choline alfoscerate-based medicines are sold as health functional foods in foreign countries, the National Assembly and civic groups have taken issues with possible drug abuses and the appropriateness of providing insurance benefits.

"The recent regulatory decision comes as a huge burden on pharmaceutical companies because they cannot predict the outcome of reevaluation," the anonymous industry official said. "Pharmaceuticals are stepping up production to maximize their prescription during the licensed period, given the uncertainty of reevaluation results.”

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