South Korea to Reform Generic Drug System Amid Concerns of Overproduction and Financial Strain
The South Korean government is initiating reforms to its generic drug system, aiming to address concerns about overproduction, marketing excesses, and potential financial burdens on the national health insurance system. The move comes as the number of generic drug items with the same major pharmaceutical ingredients in health insurance claims has surpassed 150 per ingredient in recent years.
Rise in Generic Drug Competition
According to the Ministry of Health and Welfare and the National Health Insurance Corporation, over 150 generic drug items per ingredient have been claimed in health insurance data between 2022 and 2024. This surge has led to a situation where multiple products compete in a saturated market, driving up marketing costs and potentially leading to unnecessary production.
As of 2024, 149 generic drugs compete for market share for atorvastatin (10mg), a common hyperlipidemia treatment, resulting in an annual bill of 288.3 billion won (approximately $220 million USD). A similar trend is observed with rosuvastatin (10mg), with 151 competing products. Other medications, such as esomeprazole (20mg) for gastroesophageal reflux disease (137 generic drugs) and donepezil (10mg) for Alzheimer’s disease (131 generic drugs), similarly exhibit high levels of generic competition.
Officials from the Ministry of Health and Welfare have noted 1,343 instances over the past five years where more than 20 drugs with the same ingredient were simultaneously listed.
Price Structure and Proposed Changes
The current price structure for generic drugs, which is set at 53.55% of the original drug price, is believed to incentivize multiple product listings. The government highlights that the ratio of health insurance benefits to domestic generic drug usage is 0.85, significantly higher than the OECD average of 0.46.
To address this, the government is considering lowering the price of generic drugs by 40% and reallocating the resulting savings to support companies focused on developing new drugs. This strategy aims to balance affordability with innovation in the pharmaceutical sector.
Industry Response
The Korea Pharmaceutical and Biotechnology Association has voiced opposition to the proposed price cuts, arguing that they could hinder investment in research and development (R&D). The association recently called for a complete postponement of the price reductions, citing the financial structure of domestic pharmaceutical companies, which rely heavily on self-funding for R&D initiatives. They fear that substantial price cuts could disrupt new drug development efforts.
Government Oversight and Quality Control
The Central Drugs Standard Control Organisation (CDSCO), under the Directorate General of Health Services, Ministry of Health & Family Welfare, Government of India, serves as the National Regulatory Authority (NRA) and plays a crucial role in ensuring the quality of generic medicines. The Ministry of Health & Family Welfare and CDSCO have implemented various regulatory measures to promote and guarantee the quality of generic drugs, with medicines dispatched to PMBJP Kendras only after passing rigorous quality tests.
Reporter Lim Jung-kwon lim9181@etnews.com