OBJECTIVES: In November 2013, the Drug Review Committee of Korean National Health Insurance (NHI) started to apply a new higher cost-effectiveness threshold to the reimbursement decisions of new drugs for the cancer and rare disease. This change was not applied to other new drugs. This study is to investigate the impact of this policy on the newly listed anticancer drugs’ prices.

METHODS: We conducted a comparative interrupted time-series analysis to estimate the effect of the threshold change. The newly listed drugs were extracted from the NHI drug formulary from January 2007 to December 2017. The anticancer drugs were grouped as a treatment and the other drugs as a control. The launch price was defined as first month drug cost per patient after launching in the insurance market and obtained from the NHI claim’s database. A log-linear model was used to model prices against group, policy-post-period dummies, continuous time centered at November 2013 were inputted along with all their two- and three-way interaction terms.

RESULTS: The data included 445 new drugs, including 64 anticancer drugs. The growth in prices between the treatment and control group followed the same trends in the pre-policy period (Coeff=-0.02 p=0.06). The policy of increased threshold was associated with an immediate differential increase in median price levels in the treatment group (Coeff= 1.81; p = 0.034). However, there was no significant difference in growth rates of prices between the treatment and control group in the post-policy period (p=0.854).

CONCLUSIONS: This study shows that an explicit threshold change increased the drug prices in Korea. This aligns with a theoretical microeconomic model that anticipates manufacturers to price their produce close to an explicit threshold. Allowing uncertainty, or a range of cost-effectiveness thresholds might be better to control gaming around price setting.