The Korea Pharmaceutical and Bio-Pharma Manufacturers Association held an emergency press conference on the 22nd at the association’s office in Seocho-gu, Seoul, calling for a full reconsideration of the drug pricing system reform plan. The association argued that the domestic pharmaceutical industry, which is highly dependent on generics, could be hit by the reform.

The core of the government’s drug pricing system reform, announced on the 28th of last month, is to lower the price benchmark for generics from 53.55% of the original drug price to the 40% range, while granting benefits to companies that invest in research and development (R&D). This means reallocating a limited budget from generics to innovative R&D.

The domestic pharmaceutical industry has taken the position that “if profits decline immediately, even the R&D currently underway will instead be reduced.” According to the association, if the government’s policy is implemented as planned, annual sales of domestic pharmaceutical companies will decrease by up to KRW 3.6 trillion.

The association stated that “this also includes certain antibiotics and anticancer drugs and could lead to the suspension of supply of low-priced essential medicines.” In the case of antibiotics, when compared using a price index adjusted for price levels in each country, as of 2022, antibiotic prices in the United States, the United Kingdom, and Germany were 3.34 times, 1.55 times, and 1.81 times higher, respectively, than in Korea, it explained. An association official said, “For cephalosporin antibiotics, which are now subject to price cuts, profitability is not sufficient, so dependence is on China and India. The domestic self-sufficiency rate for active pharmaceutical ingredients is only 30%.”

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