South Korea’s 2026 Drug Pricing Reform Begins
Faster access for rare disease drugs, sweeping generic price cuts, and ICER reforms to reshape pharmaceutical policy through 2028
The Ministry of Health and Welfare (MOHW) announced on March 26 that it will implement a comprehensive overhaul of pharmaceutical policies beginning in the second half of 2026, following approval by the Health Insurance Policy Deliberation Committee.
The reform targets a full restructuring of drug pricing, reimbursement, and management systems. Key measures include the introduction of a flexible contracting system (dual pricing), broader generic drug reforms, and revisions to ICER.
The plan will be rolled out in phases through 2028, built on three pillars: fostering an innovation-friendly listing and evaluation system, ensuring stable supply of essential medicines, and rationalizing drug pricing management.
H1 2026: Faster Rare Drug Access, Flexible Pricing Introduced
In the first half of 2026, reforms will prioritize improving access to innovative and rare disease treatments.
A central measure is shortening the reimbursement timeline—from application to final approval—from up to 240 days to within 100 days. The system will be piloted under national health insurance before formal adoption.
At the same time, a flexible pricing contract system will be introduced. This dual pricing model allows actual transaction prices to differ from listed insurance prices, aiming to prevent global pharmaceutical companies from exiting the Korean market.
For essential medicines, the government will revise designation and cost-compensation criteria for products at risk of supply disruption and establish a public–private monitoring system for real-time supply management.
H2 2026: Major Generic Pricing Reform Begins
The second half of 2026 marks a major turning point, with the launch of generic drug pricing reforms.
The baseline pricing rate for generics will be reduced to 45% of the originator drug price, down from the current 53.55%. In parallel, prices of already-listed drugs will be adjusted, with top-priced products set as the 100% reference and gradually reduced to around 40% by 2036.
Incentives will be introduced for innovative companies. Preferential pricing (49%) and a four-year grace period will apply to existing products, while newly listed generics will receive higher rates—60% for innovative firms and 50% for “semi-innovative” companies.
Semi-innovative status will depend on R&D investment ratios, with benefits applied over a defined period.
Post-2027: ICER Reform and Transition to Dynamic Pricing
From 2027, the reform will enter a full post-management phase. ICER improvements will be finalized, and adjustments to listed drugs will be fully implemented. A new reimbursement re-evaluation system, market-linked transaction pricing, and special post-management provisions will also be introduced.
A key feature is the adoption of a regular review cycle, with drug pricing reassessed every three to five years based on market conditions, product volume, and international comparisons.
Beyond 2028, the system will transition to a dynamic pricing model, combining rapid listing of innovative drugs with post-evaluation adjustments. A public–private consultative body will oversee ongoing policy refinement, including distribution structures and incentive schemes.
The reform has drawn mixed reactions from stakeholders.
South Korean pharmaceutical groups have raised concerns that the 16% price cut could undermine industry stability, given average operating margins of around 5%.
In contrast, research-based pharmaceutical companies have welcomed faster reimbursement processes and flexible pricing mechanisms, viewing them as steps toward improving patient access—particularly for rare and severe diseases.