The government will overhaul the drug pricing system. The main thrust is to strengthen rewards for developing essential medicines and innovative new drugs while lowering the pricing rate applied to generics and drugs with expired patents.
It will lower the pricing rate for generics from the current 53.55% to the 40% range, meaning a price currently sold at 1,000 won is expected to be reduced to around 747 won.
The Ministry of Health and Welfare said on the afternoon of the 28th that it convened the 22nd Health Insurance Policy Deliberation Committee (HIPDC) of 2025 and discussed plans to improve the drug pricing system that include these measures. The ministry said the goal is to improve the system so patients have better access to innovative treatments and Korea's pharmaceutical industry can become more innovation-oriented.
The government will finalize the reform plan after collecting additional feedback. A ministry official said related regulations will be revised quickly and implemented sequentially from the first quarter of next year, adding that the comprehensively revamped drug pricing framework will take effect in the second half of next year.
◇ Generic prices will drop… 1,000 won→around 747 won
Generic drug prices are expected to be cut starting next year. The ministry said it plans to adjust the pricing rate for generics and drugs with expired patents from the current 53.55% to the 40% range based on an analysis of Korea's pharmaceutical cost structure and major countries' cases.
For medicines already listed under health insurance, prices will also be adjusted in sequence, taking into account the time of listing and current price levels.
To prevent a reckless increase in low-quality generics, it will apply a "stepwise reduction" that sets lower prices for generics launched later and tighten management of multi-item listings.
In addition, the re-evaluation of reimbursement appropriateness will be expanded to include drugs listed through selective listing, focusing on those for which it is necessary to reexamine clinical utility.
Earlier, Minister Jung Eun-kyeong of the Ministry of Health and Welfare said at the Health and Welfare Committee's confirmation hearing in Jul. that appropriate price management is important to provide optimal drug benefits within limited health insurance finances, adding that the pricing compensation system will be revamped so revenue from generic sales circulates into investment in new drug development and excessive competition does not occur.
◇ Overhaul of the add-on system for essential medicines
The add-on system will also be revamped to stabilize the supply of essential medicines such as "withdrawal-prevention medicines" and "national essential medicines." Withdrawal-prevention medicines are drugs that are indispensable for patient care but lack economic viability and require compensation for production or import costs. National essential medicines are drugs that are essential for public health care but difficult to supply stably through market mechanisms alone.
The government said it will implement multifaceted measures from the second half of next year to ensure stable supply of "withdrawal-prevention medicines," including ▲ raising the designation criteria by 10% and ▲ aligning the cost compensation criteria with reality.
It also said it will expand the scope of preferential pricing policies for "national essential medicines" and pursue pricing policies that reliably guarantee the preferential period starting in the first quarter of next year.
The ministry said it plans to overhaul the add-on system with a focus on contributions to innovation and supply stability, ensuring that policy preferences are clearly felt.
◇ "Faster introduction of rare disease treatments and innovative new drugs"
Starting next year, the time to list rare disease treatments for health insurance reimbursement will also be shortened. The maximum listing period, currently up to 240 days, will be reduced to within 100 days.
The "cost-effectiveness evaluation system" that assesses and adjusts the value of innovative new drugs such as treatments for severe and intractable diseases will be changed in stages. A ministry official said that in the short term it will introduce a weighting model to raise the threshold to an appropriate level, and in the mid to long term it will establish a new model that incorporates Digital Healthcare technologies such as AI to evaluate and reflect clinical outcomes.
To ensure that innovative medicines are introduced quickly in Korea and gain competitiveness in overseas markets, the scope of the tentative "flexible drug contract system" will be greatly expanded from the first quarter of next year. This system supports swift and stable health insurance listing by having the National Health Insurance Service and pharmaceutical companies sign separate contracts to strengthen patient access.
Newly listed new drugs, originals with expired patents, drugs whose rebates under risk-sharing schemes have ended, and biosimilars will be included. The compensation system for innovative pharmaceutical companies that actively invest in research and development (R&D) will be refined to reward in proportion to their innovation creation efforts and will be fully applied from the second half of next year.
The government will establish a comprehensive mechanism for drug price evaluation and adjustment within next year and apply it on a 3- to 5-year cycle starting in 2027.
Separately, through the HIPDC on the day, the ministry decided to extend for three years, until Dec. 2028, three pilot programs set to end in Dec.: the primary care home-visit fee pilot, the peritoneal dialysis patient home-care pilot, and the post-compensation pilot for children's public specialized medical centers, and to prepare and implement improvement measures for the pilots.