Korea Nears Decision on Generic Drug Pricing Reform

The pharmaceutical industry is closely watching the Ministry of Health and Welfare (MOHW) as the Health Insurance Policy Deliberation Committee prepares to decide on a drug pricing reform plan that includes generic price reductions. Revisions to the Innovative Pharmaceutical Company certification system—expected to serve as a benchmark for pricing incentives—are also anticipated.

According to industry sources on March 15, the ministry unveiled a roadmap last November to lower the generic pricing rate from the current 53.55% to the 40% range. The plan also aims to foster a new drug innovation ecosystem, ensure a stable supply of essential medicines, and improve the management of drug pricing.

Following the announcement, pharmaceutical companies raised concerns about the scale and timing of the proposed price cuts, as well as the criteria for preferential treatment of Innovative Pharmaceutical Companies. The dispute heightened tensions between the government and industry stakeholders.

After gathering additional feedback and conducting internal reviews, the ministry resumed discussions this month. At a subcommittee meeting of the Health Insurance Policy Deliberation Committee on March 11, the pricing reform proposal was presented as a standalone agenda item. However, the specific generic pricing rate was not finalized, with a decision deferred to the committee’s plenary meeting scheduled for March 26.

Some details of the revised proposal have begun to emerge. The ministry is reportedly considering a pricing premium of 60% for newly listed generics produced by Innovative Pharmaceutical Companies and 50% for firms with comparable qualifications. It has also discussed extending the premium period for domestically manufactured drugs to as long as four years.

Meanwhile, the pricing adjustment for already listed generics remains undecided, though the revised rate is expected to fall in the low-to-mid 40% range. The threshold for the stepwise price reduction system may also shift from the 11th product to the 13th, suggesting that while the framework of the reform remains largely unchanged, key design elements are still under negotiation.

Alongside the pricing reform, the planned revision of the Innovative Pharmaceutical Company certification system is drawing significant attention from the industry.

Since last year, the ministry has been reviewing amendments to three related regulations—the enforcement decree, enforcement rule, and administrative notice. Although the government previously indicated that a legislative notice would be issued in February, the announcement has been delayed as final reviews continue on easing rebate-related penalties and revising criteria for maintaining or revoking certification.

The certification overhaul is particularly sensitive because it is directly tied to the pricing reform. The government plans to differentiate generic pricing incentives based on whether a company holds Innovative Pharmaceutical Company certification and on its level of R&D investment.

For pharmaceutical companies, while price cuts themselves present a challenge, the greater concern is that the pricing of newly listed generics could vary depending on certification status. As a result, the certification system has become a central issue for the industry.

With both the drug pricing reform and certification revisions under review, March is expected to mark a key turning point in defining the government’s policy direction for the pharmaceutical sector.