Drug prices to fall 17% on average in 2012
Pharmaceutical firms denounce government-led price reduction measures
By Kim Rahn
Retail drug prices are expected to fall about 17 percent on average beginning next year following a set of government-led reforms, the government said Friday.
Health and Welfare Minister Jin Soo-hee Friday announced a set of measures to cut medicine prices and improve the pharmaceutical industry.
“We will revise related laws and regulations to have the new system take effect in January next year. When it is implemented, expenses for drug purchase will drop by 2.1 trillion won per year,” Jin said during a meeting of the health insurance policy review committee.
Under the plan, the government will abolish a system fixing different prices for generic drugs with similar efficacy according to the order they are listed on health insurance.
After the patent of an original drug expires, the price cap of the first-listed generic drug used to be set at 80 percent of that of the original, and the prices of the second, third and next-listed drugs were lowered gradually to 68 percent.
“Instead of the gradual price system, we’ll set one cap for drugs having the same ingredients regardless of the listing order _ 53.5 percent. Pharmaceutical firms will be able to set their own prices under the price ceiling,” Jin said. “We believe drug manufacturers will then compete to improve the quality of their drugs instead of trying to list their products earlier than others, as they do now.”
The prices of already listed generic drugs will also be collectively cut to 53.5 percent of those of the original ones in March next year.
If the system is adopted as planned, the prices of 8,776 drugs out of the total 14,410 listed on the national health insurance will go down by an average of 17 percent and by as much as 33 percent, according to the ministry.
At the same time, the ministry will seek to revise related laws, so that it can reduce the amount of money that must be given by the national medical insurance system to hospitals and drugstores.
“All these measures will reduce the annual expenses for drug purchase by 2.1 trillion won _ 600 billion won paid by individuals and 1.5 trillion won from health insurance. The ratio of expenses for drug purchases among the total health insurers pay will also be lowered to 24 percent from the current 30 percent,” the minister said.
The government also announced measures for drug manufacturers, including supporting their research and development and raising funds.
The price-cutting steps, designed to relieve the financial burden of medical costs, have drawn fierce protests from drugmakers.
Pharmaceutical firms have strongly protested the scheme, with some 100 officials from the firms staging demonstrations at the Korea Pharmaceutical Manufacturers’ Association building in southern Seoul.
“The ministry is pushing ahead with the unreasonable policy, which will result in 2 trillion won in losses for the pharmaceutical industry. We’ll take every possible measure to prevent it,” the group said in a statement.