Jeong Eun-kyung, the Minister of Health and Welfare nominee, stated that the prices of domestically produced generic drugs are higher than those in major foreign countries and noted that she would reform the domestic drug price system.
According to the written answers received from the nominee by the Health and Welfare Committee of the National Assembly on the 17th, Jeong stated, "It is difficult to make practical drug price comparisons as the economic scale, drug pricing systems, and health insurance systems vary by country, but I understand that domestic generic drug prices are at a higher level compared to major foreign countries."
The nominee said, "I believe that appropriate drug price management is important to provide optimal coverage of medications with limited health insurance finances," and added, "I will reform the drug price compensation system so that the revenue from generic sales circulates into investment for new drug development, preventing excessive competition."
The price of generics starts at 72 to 85% of the original drug's price; however, as many companies launch their products and implement price reduction policies, the actual transaction price may drop to 40 to 50% of the original.
According to guidelines from the Ministry of Health and Welfare's notices and the Health Insurance Review & Assessment Service (HIRA), the price of generics registered in Korea for the first time is set at 85% of the original drug price, while the price of generics registered thereafter is priced at 85% of the first generic (approximately 72.25%).
According to HIRA's report on actual transaction prices, a significant number of generics have actual transaction prices that are less than 60% of the insurance upper limit. The Korea Institute for Health and Social Affairs (KIHASA) analyzed that in ingredient groups with many generic products and fierce market competition, the actual distribution price tends to fall to 40 to 50% compared to the original.
In the United States and Japan, the competition among generics encourages prices to drop sharply.
In the United States, the first generic is launched at about 80 to 90% of the price of the original drug, but once more than 35 companies enter the generic market, the prices of generics drop to about 10 to 20% of the original drug. In Japan, the government sets the drug prices and readjusts them every two years. Generics are registered at about 50% of the price of the original drug, and the prices decrease as competition intensifies.
The pharmaceutical industry expresses concern that lowering generic drug prices may hinder R&D investment. An industry official noted, "Most domestic pharmaceutical companies rely on generics in their management structure," and argued, "This could lead to a decline in corporations' profitability and a decrease in R&D investment."