With the presence of new anticancer drugs increasing in the clinical field, the pharmaceutical industry has been demanding the authorities apply a new reimbursement model in Korea.

In addition to the existing immuno-oncology drugs, the emergence of antibody-drug conjugates (ADCs), which have proven effective in various cancers, has led to calls for different drug prices for each 'indication.’

# These calls have been mainly coming from multinational pharmaceutical companies that own new anticancer drugs, but they have been met with a lukewarm response in the field. The reason is that the system they requested considers the profitability of companies rather than the patients.

According to industry sources on the 9th, as immuno-oncology drugs or ADCs with indications for various cancer types have recently been introduced to the field, the opinion has been raised on how different drug prices should be applied to the same drug by indication.

The system, indication-based pricing (IBP), is a further subdivision of value-based pricing (VBP), which states that drug prices should reflect the actual value of drugs. 

Currently, the single-price policy used by Korea’s health insurance system bases a drug’s price on the initial indication. For each additional indication that is covered, the existing drug’s price must be reduced to reflect the expanded scope of coverage.

For example, if an immuno-oncology drug called A is initially approved for lung cancer, and then expands its indication to gastric and breast cancer, the existing price must be reduced through negotiation to reflect the increased use in practice.

The problem is that an increasing number of drugs have indications for multiple cancers, including major immuno-oncology drugs and ADCs, and as demand for their reimbursement is rising, the current single-price system cannot accommodate all the indications.

One such treatment is MSD Korea's immuno-oncology drug Keytruda (pembrolizumab). As of August, Keytruda was approved in Korea for 33 indications in 17 different cancers. 

Since last year company has been pushing to expand reimbursement for Keytruda. It has applied for reimbursement of a total of 17 indications in Korea but has not been able to cross the Cancer Disease Deliberation Committee’s threshold. After applying for reimbursement for 13 of its indications last year, the company has added 4 more indications this year: ▲MSI-H gastric cancer, ▲MSI-H biliary tract cancer, ▲HER2-positive gastric cancer, and ▲HER2-negative gastric cancer.

MSD Korea recently submitted an additional financial-sharing proposal that included a gastric cancer indication and is reportedly making every effort to cross the CDDC threshold. 

The multinational pharmaceutical industry is of the opinion that the government should consider treatments with multiple indications, including immuno-oncology drugs such as Ono Pharmaceutical’s Opdivo (nivolumab), Roche’s Tecentriq (atezolizumab), AstraZeneca’s Imfinzi (durvalumab), and ADCs represented by Enhertu (trastuzumab deruxtecan), and the autoimmune disease treatment, Sanofi’s Dupixent (dupilumab).

“In the current system, we have to apply for the reimbursement of each indication separately, which means that we have to continuously conduct negotiations with the government,” said one multinational pharmaceutical industry official. ”I think the need for indication-specific pricing, which is being adopted in some countries overseas, is a reference to the need that we need to find a more efficient way to work the system.” 

In fact, major countries such as the United Kingdom, France, Germany, Italy, Japan, Switzerland, and the United States have adopted indication-specific pricing, said the official.

“The use of a single drug for multiple indications will be increasing not only in cancer but also in other diseases,” said the official. “We need a more comprehensive approach.”

Then how do clinicians who actually use the drugs on-site feel about the need?

First of all, the pharmaceutical industry’s dominant opinion is that IBP is necessary for 'multinational pharmaceutical companies,' but believes in the need for a cautious approach in implementing the system.

This means that while the need is acknowledged, patient consent should be prioritized. For now, the demand is more focused on the profit logic of pharmaceutical companies than an improvement on the patient’s part.

“With the rising number of anticancer drugs that hold multiple indications, I do agree on the need to calculate drug prices by indication,” said Dr. Shin-kyo Yoon, Professor of Oncology at Asan Medical Center, ”but the opinions of patients are more important than ours. It is not easy because the entire system would need to be reorganized.”

Another professor of oncology at a university hospital said, “It's not an easy problem, as the price cuts in the current system are entirely borne by the drug companies. The IBP seems to have come about because they have to apply for reimbursement while avoiding drug price reductions and receive approval for the additional indications. In the end, it's a problem that the government should need to address.”

As such, introducing IBP has been mentioned during the National Assembly's audit, which ended last month.

However, the Ministry of Health and Welfare and the Health Insurance Review and Assessment Service did not specifically mention the need for such a system, saying that the necessity of the system should be reviewed first. At the same time, the authorities stated that it is time to think about how too much of Korea’s health insurance finances are being spent on reimbursing anticancer drugs.

The MOHW said, “We will review the necessity of introducing a Korean-style IBP system that reflects the value of each indication by comprehensively considering various factors such as expanding access to new drugs and the impact on health insurance finances. However, we would need to conduct literature reviews, explore domestic and foreign cases, evaluate its operability within the current drug pricing system and the national health insurance system, and calculate the benefits of introducing the system comprehensively.” 

It added, “The post-settlement method, in which the actual price is set differently for each indication and then settled between the payer and pharmaceutical companies, requires sufficient review and public discussion on the method of calculating drug prices by indication and the reimbursement method between the payer and pharmaceutical companies.”

“In the case of anticancer drugs, many good drugs are being released, but at a higher than we expected,” said Kook-hee Kim, Director of the Pharmaceutical Management Division at HIRA. ”Recently, we have been managing finances by adjusting the reimbursement standards for artificial tears and choline alfoscerate drugs, but there is a concern on whether such saved finances should be solely invested in anticancer drugs.”