Insurance authorities expect the evaluation results of the listed drugs that underwent quality reassessment on the reasonableness of their medical care benefit (re-evaluation of medical benefits of listed drugs) will be applied as early as October this year. This means that the results will pass the Health Insurance Policy Deliberative Committee’s review and be notified in October.

Also, regarding the issue of Keytruda’s reimbursement expansion that has been making little progress, the government has pressed for a clear financial sharing scheme with measures such as initial refunds.

On lowering the drug price in the detailed evaluation criteria of drugs up for drug pricing negotiations to 80% of the lowest A7 adjusted price, the government plans to continue to hold an ear out to the industry and accept acceptable opinions.

This was what Yoon-Seok Yang, Director of Ministry of Health and Welfare’s Division of Pharmaceutical Benefits said in response to the Korea Special Press Association’s questions on pending issues. Director Yang candidly shared the authorities’ positions and concerns over various pharmaceutical policies in his division ranging from reimbursement entry, expansion, improving reimbursement accessibility of ultra-expensive drugs, to ICER thresholds and other various reevaluation issues related to new drug listings.

The following is a QA of an interview with Director Yang

New drug listings – regarding ICER and PE exemption, RSA, and detailed criteria for drug pricing negations

▶The industry has been requesting rationalization of the ICER threshold in line with the $30,000 GDP per capita era. The ICER threshold is already being flexibly applied on severe and rare diseases, but the industry seems to believe that the threshold should be set at least 3 GDP.

“The issue has come up in the NA audit and has also been requested by the industry. As far as I know, HIRA is currently reviewing the issue. Accessibility to new drugs is directly related to drug price, and from the government’s perspective, directly related to NHI finances, so this issue needs to be approached with caution. The fact that you use the term ‘rationalize’ seems to imply that the current ICER threshold is unrealistic. However, there are others who believe that the current threshold is reasonable. We need to gather opinions from various sides before implementing any measures because the drug price also affects reimbursement expenditures. Many drugs have been receiving reimbursement benefits through the PE exemption system without ICER evaluations, so when the government collectively considers its finances, these drugs also need to be taken into account in this discussion. As I said, we need to first gather various opinions. We also need to bear in mind that not many countries use ICER thresholds directly connected to GDP.”

▶There was also talks in the industry that HIRA would lower the PE exemption criteria to 80% of the lowest A7 adjusted price while revising some phrases in HIRA’s evaluation criteria for negotiated drugs. In detail, the criteria would, in principle, set the rate at 80%, and some at 100% according to each drug’s characteristic. Multinational pharmaceutical companies have been greatly opposed to this change, and the question of whether the system and mechanism would become a ‘dead letter’ is also being raised. Is there any room for adjustment on this matter?

“We will listen, review, and accept reasonable arguments to the extent possible. The government and HIRA are both aware that the ‘visible’ price listed for most RSA drugs is not the ‘actual price.’ Our focus is on whether the price should be accepted as is, or be adjusted to reflect the real price. The industry will not be able to deny that this is a serious issue. But we will keep an ear out for suggestions from the industry.”

▶Considering that over half of the high-price drugs receive reimbursement through the PE exemption scheme, did the ministry lower the PE exemption criteria to 80% of the lowest adjusted price because the PE exemption scheme is being used more actively than expected?.

“Drugs need to be evaluated and given a price according to their value. We know that it is very difficult for rare disease drugs to prepare data for such evaluations, and that’s why we have the existing tools that strengthen post-management measures. HIRA wishes to find measures to strengthen the criteria through discusstions with the industry, but the industry is pushing their opinion. They need to discuss this together. The PE exemption scheme increases payment on HIRA’s part, so HIRA believes in the need to strengthen its management.”





Tecentriq and Keytruda

▶Tecentriq applied for reimbursement separately and is up for deliberation by the Cancer Drug Review Committee. I heard that the two drugs will be now discussed together, and the key to Keytruda’s issue is that it lacks a cost-sharing scheme. As the government’s signal would play an important role in the decision, the question that remains is - is the initial refund is crucial?.

"Under the premise that the clinical efficacy has been demonstrated, in general, the payer and the pharmaceutical company’s actions are what makes or breaks reimbursement expansions. In other words, the discussion and negotiations on how to share the financial burden are what take up the longest time. A slow progress like Keytruda's is a first for us in our history as well. I cannot disclose specific numbers, but even after CDRC's recommendation to take up the financial sharing request, pre-negotiations fell through. The government's request for a financial sharing scheme similar to those made for other drugs also broke down. The company just increased the scope of its indications and reapplied for reimbursement. This financial-sharing issue is still being discussed, and I hope the company would take a more forward-looking stance regarding this matter. The reason why the authorities emphasize the initial sharing plan is because it allows for a clearer sharing of cost during the initial period where the increase in reimbursement expenses from the expansion is unclear. Initial sharing of cost eliminates financial uncertainty on the government’s part. I know that the company is also seriously considering this matter, and hope that an agreement can be reached in the near future.


▶When will the agenda be introduced?.

“The agenda will be introduced sequentially according to HIRA’s order of placement. I believe it will be introduced around July or August.”

Premium pricing reevaluation

▶The issue at hand is the premium pricing of single-brand drugs. As brought up during the last pharmaceutical-HIRA roundtable, even when after applying for adjustments, the possibility of accepting the adjusted price is low and it is realistically difficult to reach an agreement, which eventually leads to discussions of taking legal actions. Wouldn't it be resolved by adjusting the timing, by allowing for adjustment applications to be submitted during the 60-day negotiation period set for the stable supply obligation so that they can reach an agreement earlier?

“We are reviewing various options. We are trying to adjust the price according to our system, but if the companies say the price is unsuitable for supplying the drug, I think it is right to adjust it to a reasonable price. Some parts of the current standard seem to be strict, and there are other parts where HIRA is not properly carrying out its assessment, and we are determined to address and improve these parts. However, as addressing these issues will increase the drug price, it is natural for the government to be precautious of implementing such price-increasing mechanisms because it will increase the burden on NHI finances, so we are seriously reviewing options with HIRA. Receiving applications during the negotiation period is not being reviewed under current circumstances. However the re-evaluation of premium pricing is being implemented due to a change in the law and system, and I hope the industry would accept this. After the grounds are fully justified, we will seek measures to adjust the price of the drugs.”