"Even though there is a drug right before our eyes that can ease my mother's pain and help her regain her precious daily life, we cannot readily begin treatment for financial reasons. Instead, my mother is receiving standard chemotherapy, a grueling process she must endure with her whole body. Because we saw hope, the current reality feels all the more heartbreaking."
This is part of a public petition calling for the swift inclusion of Eli Lilly and Company's lung cancer targeted therapy "Retevmo" in health insurance coverage. The petition ends today on the 28th.
The petitioner said that the mother was recently diagnosed with stage 4 lung cancer. The petitioner wrote, "It felt like everything was collapsing, but the fact that there is a new drug, Retevmo, that targets the 'RET mutation' became a ray of hope," adding, "However, when we saw the monthly price of 8 million won, that hope felt far away."
The industry cites Korea's low drug prices and slow insurance listing procedures as reasons this situation keeps happening. As a result, global pharmaceutical companies have opted for so-called "Korea passing," delaying reimbursement listing in Korea even after obtaining sales approval. This trend became more pronounced after China designated Korea as a reference pricing country in 2018. Because Korean drug prices were used as grounds for price cuts in China, the burden on pharmaceutical companies to defend profitability increased.
In Korea, it takes an average of 46 months from new drug approval to health insurance reimbursement. That is longer than Japan (17 months), the United Kingdom (27 months), France (34 months), and even the OECD average (45 months). As a result, patients' access to new drugs is delayed. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), among 460 new drugs approved in the United States, Europe, and Japan from 2012 to 2021, the share introduced in Korea within one year was 5%, one-third of the OECD average (18%).
◇Government to revise economic evaluation standards for new drugs… more flexible application of ICER
To address these issues, the government announced a plan to apply the incremental cost-effectiveness ratio (ICER) standard more flexibly. It reflected in policy direction the precedent of flexible ICER application used to decide reimbursement listing for breast cancer antibody-drug conjugates (Enhertu, Trodelvy) and the Imfinzi combination therapy for cholangiocarcinoma. The government will conduct a policy study in the first half of next year to review how to introduce cost-effectiveness thresholds and weighting, and, based on the results, apply new standards starting in 2027.
ICER is an indicator that assesses how much more effective a new drug is compared to existing treatment and how much additional expense is required to achieve that effect. In Korea, if the ICER is 50 million won or less, the likelihood of health insurance coverage increases. However, there is a structural limitation where the ICER can become unfavorable if the price of the existing treatment is excessively low or if the new drug significantly extends survival.
According to the Health Insurance Review & Assessment Service (HIRA), the ICERs for 20 new drug substances that were recognized for reimbursement after undergoing economic evaluation by the Drug Reimbursement Evaluation Committee from 2018 to 2022 ranged from 17.78 million won to 47.92 million won. The median was 25.67 million won for general drugs, 39.99 million won for anticancer drugs, and 39.97 million won for rare disease treatments.
◇Evaluation and listing methods will also change… "Indication-based pricing remains a task"
Starting in 2028, the government also plans to introduce a "fast-track listing–post-evaluation and adjustment" pathway to appropriately assess the value of innovative new drugs, such as genome-based anticancer therapies. The plan is to expand fast-track listing across innovative new drugs and use artificial intelligence (AI)-based Digital Healthcare technologies to analyze real-world clinical data, followed by post-listing price adjustments.
The industry said the direction of the new measures is "positive," but noted that challenges remain. A prime example is the introduction of an indication-based pricing system.
Under current rules, the reimbursement review period is eight months, but there is no time limit for drugs with added indications, so the process takes much longer. In fact, studies show that it takes an average of 30 months to apply reimbursement for multi-indication drugs, roughly four times slower than for single-indication drugs. The Imfinzi combination therapy used for lung cancer and cholangiocarcinoma is a representative case. Major countries such as the United States, the United Kingdom, Japan, Germany, and Australia applied reimbursement at the time of approval or within 10 months, but in Korea, reimbursement discussions have continued into the 21st month since approval in Nov. 2022.
A pharmaceutical industry official said, "As multi-indication new drugs such as immuno-oncology agents and ADCs are rapidly changing the treatment paradigm, we hope to see broad institutional improvements in Korea in line with global trends."