Next Month, Over 7,600 Generic Drugs' Price Ceilings to Be Reduced

From the 5th of next month, the maximum prices of about 7,600 generic drugs will be simultaneously lowered. The government expects that this will reduce health insurance expenditures by approximately 300 billion KRW and also decrease the amount consumers pay when purchasing medicines.

On the 31st, the Ministry of Health and Welfare held a meeting of the Health Insurance Policy Deliberation Committee (Geonjeongsim) and announced this decision based on the first re-evaluation results of the maximum prices of previously listed drugs. Among the 16,723 generic drug items subject to re-evaluation, the maximum prices of 7,675 items will be lowered, while the remaining 9,048 items will maintain their current maximum prices.

This is the result of re-evaluating the maximum prices of drugs registered before the revision of the generic drug pricing system in July 2020 according to the new standards. Following the 2018 incident of impurity detection in valsartan-containing drugs in Korea, concerns about the quality of generic drugs increased, leading to differentiated price compensation based on pharmaceutical companies' drug quality management levels. The generic differential pricing system re-evaluated these generics registered before the system revision after a three-year grace period.

The generic differential pricing system has two criteria. Generic drugs must prove ‘conducting their own bioequivalence tests’ to demonstrate safety and efficacy equivalent to the original drug, and use ‘registered active pharmaceutical ingredients.’ Generics meeting both criteria are priced at up to 53.55% of the original drug’s price. If one criterion is unmet, the price is reduced by 15%, and if both are unmet, the price is cut by 27.75%.

The Ministry of Health and Welfare revised the Drug Reimbursement List notice on September 1 and postponed the enforcement date to September 5, allowing pharmacies and others about two weeks to prepare. To prevent confusion at pharmacies, the ministry shared the list of drugs subject to price reductions with related associations such as the Korean Pharmaceutical Association on the 23rd.

Additionally, at this Geonjeongsim meeting, it was decided to apply health insurance coverage from next month for Opdivo Injection (active ingredient nivolumab) by Korea Ono Pharmaceutical as a treatment for advanced and metastatic gastric cancer. Until now, patients with advanced or metastatic gastric cancer have borne an annual out-of-pocket cost of about 43 million KRW per person without coverage. With this health insurance application, the annual cost will be drastically reduced to 2.15 million KRW with a 5% co-payment.

Meanwhile, the agenda for next year’s health insurance premium rate (health insurance rate) was omitted from this Geonjeongsim meeting. Usually, the next year’s health insurance rate is decided at the end of August Geonjeongsim meeting. The government stated on the 4th of last month that it would minimize the increase rate for next year’s health insurance premium. Therefore, the increase is widely expected to be lower than this year’s rate (1.49%). However, due to significant disagreements among Geonjeongsim members regarding the specific increase rate, the Ministry of Health and Welfare plans to continue discussions further.