The government will overhaul the pricing system for generics covered by the national health insurance.
It will sharply lower the price cap for newly launched generics compared with the current level, while expanding price incentives for pharmaceutical companies that produce essential medicines such as pediatric drugs and antibiotics domestically or actively invest in research and development (R&D).
The aim is to reduce national health insurance budget leakage while strengthening the supply chain for essential medicines and the competitiveness of the domestic pharmaceutical industry.
The Ministry of Health and Welfare said on the 20th that it has issued an advance notice of legislation for a partial amendment to the Standards for Determining and Adjusting Drug Prices and will collect opinions through July 13. The amendment fleshes out the drug pricing reform plan approved by the Health Insurance Policy Deliberation Committee in March.
The core is lowering the criteria for calculating generic drug prices. The government will reduce the calculation rate for generics from 53.55% of the original drug's price to 45%. Accordingly, generics to be launched going forward will have national health insurance prices set lower than now. The savings will be used for essential medical services and to stabilize the health insurance finances.
Instead, the government will focus incentives on corporations that contribute to research and development and the supply of essential medicines.
First, it will establish criteria for semi-innovative pharmaceutical companies, a broader category than the existing innovative pharmaceutical companies, to provide price preferences even to corporations that invest a certain level or more in research and development.
Corporations that stably produce essential medicines with low profitability and at risk of supply suspension will be granted the status of supply stability leading company and receive additional benefits.
In particular, it will expand price add-ons for corporations that produce pediatric medicines and injectable antibiotics domestically. Cases that lower dependence on overseas ingredients and directly synthesize ingredients at domestic manufacturing sites will also be eligible for preference.
The government will also extend the period for applying price add-ons from the current three years to five years. The intent is to encourage pharmaceutical companies to invest more long term in producing essential medicines and in research and development.
A Ministry of Health and Welfare official said this is not a simple price cut but a system overhaul that considers both the stable supply of essential medicines and strengthening the competitiveness of the pharmaceutical industry.