Drug Pricing in South Korea

List prices and clinical value of anticancer drugs in China, Japan, and South Korea: a retrospective comparative study

Background

High prices of anticancer drugs have raised concerns due to their financial impact on patients and healthcare systems. This study aimed to assess the initial and latest list prices and clinical value of reimbursed anticancer drugs in China, Japan, and South Korea.

Methods

We identified anticancer drugs newly approved by the National Medical Products Administration of China from January 2012 to June 2022, and by the Pharmaceuticals and Medical Devices Agency of Japan and the Ministry of Food and Drug Safety of South Korea up until June 2022. We compared initial and latest treatment prices between countries and assessed clinical value using patients' survival, quality of life (QoL), and European Society for Medical Oncology Magnitude of Clinical Benefit Scale (ESMO-MCBS). We calculated Spearman rank correlation coefficients of treatment prices with clinical value for individual countries and employed regression analyses to investigate whether the relationship between prices and clinical value was modified by the country setting.

Findings

Our cohort included 91 anticancer drug indications, with 60 listed for reimbursement in China, 91 in Japan, and 87 in South Korea. Median treatment prices were highest in Japan, followed by South Korea, and lowest in China, both for initial prices (US$64082 vs. US$45529 vs. US$19144, p < 0.0001) and latest prices (US$50859 vs. US$31611 vs. US$18666, p < 0.0001). Over time, China (β = -0.047, p < 0.0001) and South Korea (β = -0.049, p < 0.0001) witnessed more significant price reductions compared to Japan (β = -0.013, p = 0.011). The correlations between both initial and latest treatment prices and clinical value (QoL and ESMO-MCBS) were more significant and stronger in China and South Korea than in Japan, although Japan exhibited slightly stronger correlations in terms of survival compared to China and South Korea. The relationship between clinical value and treatment prices may not be modified by the country setting.

Interpretation

In comparison, South Korea's list prices and their correlations with clinical value appear reasonable. Policymakers in Japan could enhance efficiency by controlling prices and aligning them with clinical value, while China would need to take substantial steps to expand anticancer drug coverage.

Funding

National Natural Science Foundation of China (72374149 and 72074163), and China Center for South Asian Studies, Sichuan University.

Patient Welfare Implications of Indication-Specific Value-Based Pricing of Multi-Indication Drugs

OBJECTIVES

Indication-specific value-based pricing (ISVBP) is a mechanism that allows the prices of multi-indication drugs to vary across indications by aligning the drug prices with value. However, the overall impact of ISVBP on patients across indications is uncertain. This study examines the theoretical welfare effects of ISVBP for multi-indication drugs and compares consumer surplus under ISVBP and single pricing, the latter of which is based on the weighted average value.

METHODS

We considered a healthcare system with government-negotiated drug prices based on the value of drugs. We assumed a drug with 2 indications and 1 relevant comparator for each indication. The value of the drug was uniformly distributed among the patients of each indication in the base case. We also considered alternative scenarios with exponentially and Pareto distributed drug values. Numerical simulations were conducted to explore potential settings where ISVBP was welfare-improving for patients compared with single pricing.

RESULTS

The theoretical analysis showed that the consumer surplus change was strictly non-positive from single pricing to ISVBP. Therefore, it was not welfare-improving for patients in the settings of interest. Numerical simulations confirmed this result across various scenarios of value distributions.

CONCLUSIONS

This study provides insights into the patient welfare implications of ISVBP for multi-indication drugs. We did not identify conditions under which ISVBP can enhance overall patient well-being, suggesting that it should be implemented cautiously. Future research should examine dynamic welfare implications related to innovation incentives because they may significantly affect population health in the future.

Introduction of managed entry agreements in Korea: Problem, policy, and politics

Objectives: This study aimed to understand Managed Entry Agreements (MEAs) in Korea through the framework of three streams of the policy window model and its practical management and impact on pricing and reimbursement scheme. Methods: An extensive literature review based on Kingdon's model was conducted. We also performed descriptive analyses of MEA implementation using data on medicines listed in Korea and compared its MEA scheme with four different countries. Results: As per problem streams, patients with rare disease or cancers have considerable difficulties in affording their medicines and this has challenged the drug benefit system and raised an issue of patient's access. Policy streams highlighted that MEAs were introduced as a benefit enhancement plan for four major diseases since January 2014. MEAs have also been strengthened as a bypass mechanism to expand the insurance coverage especially for new premium-priced medicines under Moon Care (Listing all non-listed services). In descriptive analysis of MEAs, a total of 48 medicines were contracted as MEAs from January 2014 to December 2020, accounting for 73.4% of listed medicines for cancer or rare diseases and 97.9% of the cases were finance-based contracts. Meanwhile, outcome-based contracts such as CED accounted for only 2.1%. The application of MEAs differs across countries, resulting in a kappa coefficient of 0.00-0.14 (United Kingdom 0.03, Italy 0.00, Australia 0.14), indicating a lack of consistency compared to South Korea. Conclusion: MEAs, which were introduced as a bypass mechanism, have now superseded the standard process for anticancer agents or orphan drugs. Further studies are needed to evaluate the impact of the confidential agreements and effectiveness of new high-priced medicines with limited clinical data at launch.

Who initiates price competition when generic entrants are introduced into the South Korean pharmaceutical market?

Background

Price competition has the potential to reduce health expenditures without hindering pharmaceutical innovation. However, empirical evidence on price competition after generic drugs are introduced is scarce. This study investigates product- and substance-level determinants of price competition following the entry of generics into the South Korean market.

Methods

We selected substances that were approved by the Ministry of Food and Drug Safety from 2000 to 2019, linked their corresponding pharmaceutical products, measured the degree of price competition under various scenarios, and utilized multilevel analysis to investigate the determinants of price competition.

Results

A total of 986 substances and 12,109 corresponding pharmaceutical products were identified. Only 11% of products were affected by price competition in the 10% scenario. However, the number increased to 43% when we measured price competition at the substance level. Major domestic manufacturers mainly initiated price competition at the product level, while foreign manufacturers were reluctant to initiate price competition. At the substance level, the maximum reimbursement price was a significant determinant of price competition.

Conclusion

Price competition at the product level is rare in South Korea. In contrast, the market is quite price competitive at the substance level. Policy options could be introduced to encourage "discounted generic" substitution in an effort to maximize the effects of price competition at the substance level. Major domestic manufacturers are essential in the introduction of discounted generics into the South Korean health system.

Impacts of National Drug Price Negotiation on Expenditure, Volume, and Availability of Targeted Anti-Cancer Drugs in China: An Interrupted Time Series Analysis

The Chinese government has launched six rounds of national drug price negotiation since 2016 to lower the price and expand access to innovative drugs, many of which are anticancer drugs. This study aims to examine the effect of the second round of negotiation at the provincial level on the expenditure, volume, and availability of anti-cancer drugs. Procurement data at the provincial level from January 2017 to September 2018 were extracted from the China Drug Supply Information Platform (CDSIP). The volume, expenditure, and availability of three targeted anti-cancer drugs, rituximab, trastuzumab, and recombinant human endostatin (RHE), in 11 provinces that implemented the policy in September 2017 were analyzed through a controlled interrupted time series (ITS) analysis. A significant 6.0% increase (p < 0.1) in monthly average expenditure, an increase in the volume of 99.51 DDDs (defined daily doses) (p < 0.1), and a 0.24% (p < 0.1) increase in availability were observed for rituximab following the implementation of the policy. The volume and availability of rituximab increased by 949.6 DDDs (p < 0.05) and 1.56%, respectively, immediately after implementation. The availability of trastuzumab increased by 5.14% (p < 0.01) immediately after the implementation while no instant changes in expenditure and volume were observed. A 15% (p < 0.01) increase in monthly expenditure, 3673.17 DDDs increase in volume, and 0.66% increase in availability were observed after the inclusion of Trastuzumab. However, for RHE, only a 0.32% (p < 0.01) increase was observed after its inclusion. Eastern and middle provinces benefited more than western provinces. National negotiation related to the drug price significantly increased the volume and expenditure of anti-cancer drugs and improved their availability. The effect of the policy might be different across different regions and across different anticancer drugs.

The Impact of Reimbursement Practices on the Pharmaceutical Market for Off-Patent Medicines in Slovakia

Background: The aim of this study was to investigate the impact of selected legislative initiatives and their implementation for off-patent medicinal products in Slovakia compared with the rest of the Visegrád Group (V4 countries).

Methods: We analyzed the development of applications for the reimbursement of generic and biosimilar drugs. Particular emphasis was placed on a) the availability and penetration of biosimilars from 2006 to 2020 in Slovakia, b) a comparative analysis of biosimilars in V4 countries based on the national reimbursement lists of medicinal products for August 2021. Data relating to the sales of generic and biosimilar medicines in Czechia, Hungary, Poland, and Slovakia were based on the IQVIA MIDAS MAT July 2021.

Results: The number of applications for the reimbursement of generic drugs decreased from 296 in 2016 to 165 in 2020. In financial terms, the sales of generic medicines in Slovakia increased from 21.7% in 2015 to 22.3% in 2020. Over the same period, the sales of generic drugs in Poland fell from 40.4% in 2015 to 35.0% in 2020, from 26.2 to 22.1% in Hungary, and from 29.6 to 20.4% in Czechia. When considering the 66 biosimilars registered by the European Medicines Agency 38 drugs (58%) were available on the Slovak market as of August 1, 2021; this compared to 32 drugs (48%) in Poland, 38 drugs (58%) in Hungary, and 40 drugs (61%) in Czechia. In financial terms, the sales of biosimilars in Slovakia increased from 0.94% in 2015 to 2.00% in 2020. Over the same period, the sales of biosimilars in Poland increased from 0.59% in 2015 to 1.29% in 2020, from 0.72 to 2.23% in Hungary, and from 0.76 to 2.15% in Czechia.

Conclusion: To intensify the use of generic and biosimilar medicines, we suggest the comprehensive re-evaluation of combinations of the three-threshold entry, the amount of mandatory price reductions, and external reference pricing requirements (as the average of the three lowest prices among the official prices of a medicinal product in other Member States) for generic and biosimilar drugs. We also suggest cancellation of the exception from the fixed co-payment of the insured.

Current utilization patterns for long-acting insulin analogues including biosimilars among selected Asian countries and the implications for the future

INTRODUCTION

Prevalence rates for diabetes mellitus continue to rise, which, coupled with increasing costs of complications, has appreciably increased expenditure in recent years. Poor glycaemic control including hypoglycaemia enhances complication rates and associated morbidity, mortality and costs. Consequently, this needs to be addressed. Whilst the majority of patients with diabetes have type-2 diabetes, a considerable number of patients with diabetes require insulin to help control their diabetes. Long-acting insulin analogues were developed to reduce hypoglycaemia associated with insulin and help improve adherence, which can be a concern. However, their considerably higher costs have impacted on their funding and use, especially in countries with affordability issues. Biosimilars can help reduce the costs of long-acting insulin analogues thereby increasing available choices. However, the availability and use of long-acting insulin analogues can be affected by limited price reductions versus originators and limited demand-side initiatives to encourage their use. Consequently, we wanted to assess current utilisation rates for long-acting insulin analogues, especially biosimilars, and the rationale for patterns seen, across multiple Asian countries ranging from Japan (high-income) to Pakistan (lower-income) to inform future strategies.

METHODOLOGY

Multiple approaches including assessing utilization and prices of insulins including biosimilars among six Asian countries and comparing the findings especially with other middle-income countries.

RESULTS

Typically, there was increasing use of long-acting insulin analogues among the selected Asian countries. This was especially the case enhanced by biosimilars in Bangladesh, India, and Malaysia reflecting their perceived benefits. However, there was limited use in Pakistan due to issues of affordability similar to a number of African countries. The high use of biosimilars in Bangladesh, India and Malaysia was helped by issues of affordability and local production. The limited use of biosimilars in Japan and Korea reflects limited price reductions and demand-side initiatives similar to a number of European countries.

CONCLUSIONS

Increasing use of long-acting insulin analogues across countries is welcomed, adding to the range of insulins available, which increasingly includes biosimilars. A number of activities are needed to enhance the use of long-acting insulin analogue biosimilars in Japan, Korea and Pakistan.

Evidence-based public policy making for medicines across countries: findings and implications for the future

Aim: Global expenditure on medicines is rising up to 6% per year driven by increasing prevalence of non-communicable diseases (NCDs) and new premium priced medicines for cancer, orphan diseases and other complex areas. This is difficult to sustain without reforms. Methods: Extensive narrative review of published papers and contextualizing the findings to provide future guidance. Results: New models are being introduced to improve the managed entry of new medicines including managed entry agreements, fair pricing approaches and monitoring prescribing against agreed guidance. Multiple measures have also successfully been introduced to improve the prescribing of established medicines. This includes encouraging greater prescribing of generics and biosimilars versus originators and patented medicines in a class to conserve resources without compromising care. In addition, reducing inappropriate antibiotic utilization. Typically, multiple measures are the most effective. Conclusion: Multiple measures will be needed to attain and retain universal healthcare.

Physicians' Knowledge, Attitude and Practice of Generic Substitution in China: A Cross-Sectional Online Survey

The purpose of this study is to investigate physicians’ knowledge, attitudes and practice of generic medicine substitutions in China. We conducted a cross-sectional online questionnaire survey on physicians from secondary or tertiary hospitals in China from 2020 December to 2021 April. Descriptive statistical and ordered logistic regression were used for analysis. A total of 1225 physicians were included in the final analysis, and only 330 (26.94%) of them scored 4 or above in the knowledge part, which means that the physicians have a good knowledge of generic substitutions. Of the total, 586 (47.83%) agreed or strongly agreed that generic drugs could be substituted for originator drugs and 585 (47.75%) always or often prescribed generic medicines. The percentage of physicians with a positive attitude toward or that practice prescribing generic medicine is below 50%, which needs to be improved in China. Physicians’ knowledge, their attitude toward generic substitution, if familiar with the policy of generic substitution, and incentives for prescribing generic medicines are influencing factors for the practice of generic substitution. Our studies show that the practice of generic substitution by physicians could be improved by several measures in China. We suggested that the physicians should be taught more about the bulk-buy policy and the generic-originator equivalence evaluation policy. Moreover, government incentives to promote generic substitution should be established. Our study also suggested that physicians with less working experience and female physicians should learn more about generic substitution.

The Current Situation Regarding Long-Acting Insulin Analogues Including Biosimilars Among African, Asian, European, and South American Countries; Findings and Implications for the Future

Background: Diabetes mellitus rates continue to rise, which coupled with increasing costs of associated complications has appreciably increased global expenditure in recent years. The risk of complications are enhanced by poor glycaemic control including hypoglycaemia. Long-acting insulin analogues were developed to reduce hypoglycaemia and improve adherence. Their considerably higher costs though have impacted their funding and use. Biosimilars can help reduce medicine costs. However, their introduction has been affected by a number of factors. These include the originator company dropping its price as well as promoting patented higher strength 300 IU/ml insulin glargine. There can also be concerns with different devices between the manufacturers. Objective: To assess current utilisation rates for insulins, especially long-acting insulin analogues, and the rationale for patterns seen, across multiple countries to inform strategies to enhance future utilisation of long-acting insulin analogue biosimilars to benefit all key stakeholders. Our approach: Multiple approaches including assessing the utilisation, expenditure and prices of insulins, including biosimilar insulin glargine, across multiple continents and countries. Results: There was considerable variation in the use of long-acting insulin analogues as a percentage of all insulins prescribed and dispensed across countries and continents. This ranged from limited use of long-acting insulin analogues among African countries compared to routine funding and use across Europe in view of their perceived benefits. Increasing use was also seen among Asian countries including Bangladesh and India for similar reasons. However, concerns with costs and value limited their use across Africa, Brazil and Pakistan. There was though limited use of biosimilar insulin glargine 100 IU/ml compared with other recent biosimilars especially among European countries and Korea. This was principally driven by small price differences in reality between the originator and biosimilars coupled with increasing use of the patented 300 IU/ml formulation. A number of activities were identified to enhance future biosimilar use. These included only reimbursing biosimilar long-acting insulin analogues, introducing prescribing targets and increasing competition among manufacturers including stimulating local production. Conclusions: There are concerns with the availability and use of insulin glargine biosimilars despite lower costs. This can be addressed by multiple activities.

The impact of expanding health insurance coverage for anti-cancer drugs on cancer survival in Korea

Background

To reduce out‐of‐pocket costs, the Korean government expanded health insurance reimbursement in anti‐cancer drugs for cancer patients in 2013. Our objective was to examine the impact of the benefit coverage expansion policy on healthcare utilization and overall survival (OS) among patients with six types of solid cancer after the policy of expanding health insurance coverage.

Methods

This study analyzed a before‐and‐after retrospective cohort of patients newly diagnosed with six types of solid cancer (stomach cancer, colorectal cancer, lung cancer, liver cancer, breast cancer, and prostate cancer) from January 1, 2009 to December 31, 2015 in Korea. The intervention was the expansion of reimbursement in 2013. Multivariate Cox proportional hazards regression was used to estimate the policy effect.

Results

In total, 142,579 before and 147,760 patients after the benefit expansion, and after matched by age, gender, and stage, 132,440 before and 132,440 patients after policy were included in the analysis. Almost total medical expenditure increased for five types of cancer increased. The expansion of health insurance reimbursement was associated with significantly lower overall mortality compared with pre‐policy mortality for all six cancer sites.

Conclusion

The policy of expanding health insurance reimbursement might have been associated with a significant increase in survival among cancer patients by ensuring access to health care and medicine. Although the reimbursement expansion timing differs for each cancer, it is believed that eliminating delayed treatment might rather lead to reduce medical expenses and improve health outcomes.

Determinants of Growth in Prescription Drug Spending Using 2010-2019 Health Insurance Claims Data

Background: Despite policies to manage prescription drug spending and ensure accessibility, prescription drug spending has continued to increase in South Korea. Using nationwide claims data, this study analyzed trends in total pharmaceutical expenditures and pharmaceutical expenditures by drug classification.

Methods: We conducted a retrospective population-based study using the Korean National Health Insurance claims database from January 2010 through December 2019. Pharmaceuticals were categorized as new drugs, continued drugs, and abandoned drugs. Prescription drug spending was calculated using the components of price and quantity for individual products in successive two-year periods, to obviate the need to consider changes over time.

Results: Total pharmaceutical expenditures increased by 54.2% from 2010 to 2019 (from USD 11.3 billion to USD 17.4 billion). The average annual growth rate was 4.9% overall (the 4% rate for continued drugs was decomposed into −3.5% for the price of drugs, 8.0% for the quantity of drugs, and −0.5% for mixed effects, a measure of changes in drug treatment patterns). The trends were generally consistent. Particularly sharp increases in expenditures were found for groups L (antineoplastic and immunomodulating agents), C (cardiovascular system drugs), and A (alimentary tract and metabolism drugs).

Conclusions: Since increased prescription drug spending was primarily driven by an increase in the quantity of drugs used, consumer-focused policies to reduce drug use are necessary.

How Well Does a Sequential Minimal Optimization Model Perform in Predicting Medicine Prices for Procurement System?

The lack of an efficient approach in managing pharmaceutical prices in the procurement system led to a substantial burden on government budgets. In Thailand, although the reference price policy was implemented to contain the drug expenditure, there have been some challenges with the price dispersion of medicines and pricing information transparency. This phenomenon calls for the development of a potential algorithm to estimate appropriate prices for medical products. To serve this purpose, in this paper, we first developed the model by the sequential minimal optimization (SMO) algorithm for predicting the range of the prices for each medicine, using the Waikato environment for knowledge analysis software, and applying feature selection techniques also to examine improving predictive accuracy. We used the dataset comprised of 2424 records listed on the procurement system in Thailand from January to March 2019 in the application and used a 10-fold cross-validation test to validate the model. The results demonstrated that the model derived by the SMO algorithm with the gain ratio selection method provided good performance at an accuracy of approximately 92.62%, with high sensitivity and precision. Additionally, we found that the model can distinguish the differences in the prices of medicines in the pharmaceutical market by using eight major features—the segmented buyers, the generic product groups, trade product names, procurement methods, dosage forms, pack sizes, manufacturers, and total purchase budgets—that provided the highest predictive accuracy. Our findings are useful to health policymakers who could employ our proposed model in monitoring the situation of medicine prices and providing feedback directly to suggest the best possible price for hospital purchasing managers based on the feature inputs in their procurement system.

Price Reduction of Anticancer Drugs from 2007 to 2019 in South Korea: The Impact of Pharmaceutical Cost-Containment Policies

OBJECTIVES

To assess price reductions of anticancer drugs in South Korea over 12 years and analyze the association between price reduction, drug characteristics, and repricing mechanisms.

METHODS

We constructed a dataset based on the Health Insurance Review and Assessment Service (HIRA) price log of anticancer drugs from January 2007 to June 2019. We investigated each mechanism that resulted in a price reduction, including actual transaction price (ATP), voluntary reduction by a manufacturer, price-volume agreement, expansion of indication or reimbursement scope, price cut at generic entry, lump price cut in April 2012, and re-evaluation. The price reduction rate per year was estimated by dividing the total number of price reduction events by the total period for which the products were on the market. A Poisson regression model was used to estimate the characteristics-adjusted incidence rate ratio of the price reduction. Price reduction per event was also determined across originator and generic products. Data analysis was performed using R (version 3.5.1).

RESULTS

Five hundred price reductions occurred in 439 new anticancer drugs, with a reduction rate per 100 product-years of 23. ATP was the most frequent cause (39.2%) but had minimal impact (average reduction per event of 3%), followed by lump price cut (19.2%) and voluntary reduction (10.2%). Generic entries and lump price cut had the greatest impact (16-29% reduction per event). ATP was the most frequently occurring mechanism, followed by generic entry, voluntary reduction, and the lump price-cut in April 2012.

CONCLUSIONS

The incidence of price reduction of anticancer drugs increased gradually due to various repricing mechanisms. Although these mechanisms are effective, improvements can be made. Well-designed mechanisms that actively regulate price adjustment are needed to establish repricing policies that adequately reflect changes in the value of drugs over their entire life cycle.

Use of budget savings from patent expiration of cancer drugs to improve affordability and accessibility

BACKGROUND

The introduction of generics after the loss of patent exclusivity plays a major role in budget savings by significantly decreasing drug prices. The aims of this study were to estimate the budget savings from off-patent cancer drugs in 2020-2024 and to inform decision makers on how these savings could be used to improve the affordability of innovative cancer treatments in South Korea.

METHODS

A model was developed to calculate budget savings from off-patent cancer drug use in Korea over 5 years (2020-2024). Cancer drugs with one or more valid patents that expire between 2020 and 2024 in Korea were selected. Key input parameters in the model included market share of generics, market growth, and prices of originators and generics. To reflect market dynamics after patent expiration, the trends of the off-patent market were estimated using historical sales volume data of IQVIA from 2012 to 2018. The study assumed that the prices of off-patent drugs decreased according to the price regulations set by the Korean government and that the off-patent market sales volume did not grow. Sensitivity analyses were performed to investigate the uncertainty in model input parameters.

RESULTS

A total of 24 cancer drugs which met selection criteria were identified. In the base case analysis, patent expiration of cancer drugs between 2020 and 2024 could lead to a spending reduction of ₩234,429 million ($203 million), which was 20% of the cancer drug expenditure in the 5-year period. The savings ranged from ₩157,633 million ($136 million) to ₩434,523 million ($376 million) depending on the scenarios in sensitivity analyses.

CONCLUSIONS

The findings indicate that patent loss of cancer drugs could lead to a 20% reduction in spending on cancer drugs over the next 5 years in South Korea. The savings could be used to improve the affordability of innovative, advanced cancer drugs for 94,000 cancer patients by reallocating the budget savings from patent expiration.

Consistency of new drug pricing in Korea: Bridging variations among personnel in price negotiations

OBJECTIVES

This study aims to explore the performance of price negotiations, over a period of 10 years, and identify individual variations in pricing that directly affect the consistency of pricing decisions.

METHODS

Existing literature and relative regulations were reviewed, and data provided by the National Health Insurance Service (NHIS) was analysed to evaluate the performance of price negotiations. To examine individual variations in pricing, hypothetical scenarios of four types of drugs were developed. These were subsequently given to the reviewers who have been actually conducting price negotiations at the NHIS.

RESULTS

Over the last decade, negotiations succeeded at a rate of 85.5 %, with a higher agreement rate in the more recent years. The reduction rate, via price negotiations, from the price approved for reimbursement by the Health Insurance Review and Assessment Service (HIRA), was 12.2 %. The survey results confirmed a significant individual variation in pricing. Especially, in the case of Drug N1, the higher-grade personnel and non-pharmacists tended to give higher prices with a significant difference.

CONCLUSIONS

The individual variations that would greatly affect the financial results were confirmed when making decisions on price of new drugs.For the consistency of drug pricing, some measures to minimise the variation of reviewers' judgement are needed.

Barriers for Access to New Medicines: Searching for the Balance Between Rising Costs and Limited Budgets

Introduction: There is continued unmet medical need for new medicines across countries especially for cancer, immunological diseases, and orphan diseases. However, there are growing challenges with funding new medicines at ever increasing prices along with funding increased medicine volumes with the growth in both infectious diseases and non-communicable diseases across countries. This has resulted in the development of new models to better manage the entry of new medicines, new financial models being postulated to finance new medicines as well as strategies to improve prescribing efficiency. However, more needs to be done. Consequently, the primary aim of this paper is to consider potential ways to optimize the use of new medicines balancing rising costs with increasing budgetary pressures to stimulate debate especially from a payer perspective. Methods: A narrative review of pharmaceutical policies and implications, as well as possible developments, based on key publications and initiatives known to the co-authors principally from a health authority perspective. Results: A number of initiatives and approaches have been identified including new models to better manage the entry of new medicines based on three pillars (pre-, peri-, and post-launch activities). Within this, we see the growing role of horizon scanning activities starting up to 36 months before launch, managed entry agreements and post launch follow-up. It is also likely there will be greater scrutiny over the effectiveness and value of new cancer medicines given ever increasing prices. This could include establishing minimum effectiveness targets for premium pricing along with re-evaluating prices as more medicines for cancer lose their patent. There will also be a greater involvement of patients especially with orphan diseases. New initiatives could include a greater role of multicriteria decision analysis, as well as looking at the potential for de-linking research and development from commercial activities to enhance affordability. Conclusion: There are a number of ongoing activities across countries to try and fund new valued medicines whilst attaining or maintaining universal healthcare. Such activities will grow with increasing resource pressures and continued unmet need.

Easy cuts, easy rebound: Drug expenditures with massive price cuts in Korea

BACKGROUNDS

Since 2012, the Korean government has introduced 46.5% price cut for off-patent medicines in order to reign everescalating drug expenditure. This study sought to appraise the impact of the price cut measure (in the context of Korean National Health Insurance system).

METHODS

We employed Korean National Health Insurance database from January 2007 until December 2016 for 120 month period. An interrupted time series analysis with segmented regression analysis was conducted to estimate the impact of price cut on overall drug spending.

RESULTS

Drug spending significantly dropped with the price cut by 186.22 billlion Korean Won (KRW) (p < 0.0001) and the trend after the price cut has also significantly decreased by 1.33 billion KRW (p = 0.002). However, it was predicted that total expenditures showed an increasing trend and bounced back to the original level. Quantity prescribed had no significance with the price cut. Unit price had a substantial drop (β = -41.68, p < 0.0001) with the price-cut, but the trend after the intervention has increased (β = 0.16, p = 0.656) with no significance.

CONCLUSIONS

Although the price cut has successfully countered the everescalating pharmaceutical expenditures in Korea, the impact was temporary. A lack of demand-side measures resulted in an ineffectiveness and unsustainability of policy effect. Thus, more aggressive demand-side measures should be introduced in the Korean context,and both the demand and supply-sides should be balanced.