New KRPIA chair highlights vision and challenges ahead for multinational pharma in Korea

In February, Bae Kyung-eun, the general manager of Sanofi-Aventis Korea, Australia, and New Zealand, became the Korea Research-based Pharmaceutical Industry Association (KRPIA) chair.

KRPIA has 48 multinational pharmaceutical companies in Korea as members and represents their interests. It was established to foster the growth and development of the pharmaceutical industry by promoting innovation, research, and development (R&D) in pharmaceuticals.

With a rich background in the pharmaceutical industry, including roles as a KRPIA member, Board of Directors (BOD) member, and vice chair, Bae brought a wealth of experience and insight to her new position.

Korea Biomedical Review met with Bae on May 9 to listen to her vision and goal as the new chair of KRPIA.

Bae especially emphasized the alignment between KRPIA's objectives and recent government policies, particularly the inclusion of "recognizing the value of new drugs" in the government's Second Comprehensive National Health Insurance Plan.

"It is a significant step forward that the plan mentions the recognition of new drug innovation and value for the first time," Bae said. "There are many commonalities between what KRPIA aims for and the content announced by the government."

However, Bae pointed out that practical and effective measures must be developed so that new drugs can be supplied quickly to patients, leading to a virtuous cycle of R&D.

She stressed the need for continuous dialogue with the government to make constructive proposals based on this extensive knowledge.

One of the critical issues Bae identified is the delay in introducing new drugs in Korea.

"In Japan, a new drug approved at the same time as in Korea is covered by insurance within two to three months. In Korea, it takes 18 months to two years, and even longer if supplementary issues arise," she said. "Also, only 5 percent of new drugs are introduced to Korea within a year of their global approval."

According to the KRPIA head, Korea needs to benchmark systems from other countries, including France, where new drugs are quickly listed and evaluated post-market entry.

Bae also stressed the importance of recognizing the value of new drugs to motivate pharmaceutical companies to invest in R&D.

"Pharmaceutical companies face significant risks in developing new drugs. The acknowledgment of new drug value leads to revenue generation, which in turn supports the R&D cycle. This requires substantial changes in drug pricing policies," she said.

Balancing budget constraints and innovation

Addressing concerns about the government's limited budgets and sustainability, Bae acknowledged the need for post-market surveillance but criticized the fragmented and overlapping systems.

"Post-market management is necessary to manage the overall health insurance finances to some extent," she said. "However, the current domestic post-market management system is not integrated and is overly segmented, with various forms like price volume agreement (PVA) and price management for patent-expired drugs, leading to frequent redundant price reductions."

She explained that post-market management is necessary, but redundant parts must be avoided, as companies need a streamlined system to predict outcomes.

Bae stressed that the government currently focuses on post-market management systems like PVA, which increases administrative burdens.

"It would be better to operate the system considering structural aspects, such as strengthening health insurance coverage for severe diseases compared to mild ones," she said. "There is concern that the focus is too much on price reductions."

She added that strengthening post-market management without improving the system for the rapid listing of new drugs will ultimately hinder access to them.

Impact of medical school admission quota increase in R&D

Multinational pharmaceutical companies face significant challenges as they navigate the ongoing healthcare crisis in Korea regarding the dispute between the government and physicians regarding the medical school enrollment quota increase.

The dispute has led to university hospitals halting operations, impacting clinical trial activities.

"KRPIA member companies invested over 800 billion won ($589 million) in domestic clinical research in 2022, with investments increasing by about 15 percent annually," she said. "However, the medical turmoil, marked by the halt of operations in university hospitals, threatens this upward trajectory."

Bae added that Seoul remains a key player in global clinical trials, particularly phase 1 trials and first-in-human studies.

She explained that about 90 percent of clinical development efforts focus on oncology and rare intractable diseases, providing crucial opportunities for patients to access new drugs through clinical trial participation.

"Yet, the crisis has led to delays in new patient enrollments. If it continues, it could significantly impact the research environment," she said.

In addition to the operational challenges posed by the medical crisis, drug pricing policies in Korea are also affecting the operation of multinational pharmaceutical companies in Korea, Bae noted.

She pointed out that countries like China are referencing Korean drug prices, leading companies to delay launching new drugs in Korea due to the low prices.

She said this phenomenon, termed "Korea passing," poses a serious threat to the industry's sustainability.

"If issues with new drugs are not resolved and the prices of existing drugs are further reduced, it will lead to a downward standardization of drug prices, creating a vicious cycle," Bae explained. "This impacts not only the availability of new treatments but also the overall investment climate."

Commitment to open innovation

Bae emphasized KRPIA's support for open innovation, which is crucial for the pharmaceutical industry's future.

"There are over 500 pharmaceutical companies and 350 biotech firms in Korea with significant potential for collaboration with global R&D leaders," she noted. "KRPIA facilitates partnerships between global and domestic companies, fostering joint development, commercialization, and production processes."

Bae mentioned ongoing initiatives involving various KRPIA members in open innovation projects, emphasizing the importance of these efforts for sustaining innovation pipelines.

She reiterated KRPIA's commitment to working with domestic and global partners to advance the pharmaceutical industry in Korea.

"KRPIA and the government need to be win-win partners," Bae said. "Our role is to ensure that the government considers issues they might not have previously, helping them make informed and rational decisions."