THE IMPACT OF NEW DRUG PRICING POLICY ON MARKET COMPETITION AMONG OFF-PATENT DRUGS IN SOUTH KOREA
Author(s)
Kwon H1, Kim H2, R. Reich M1
1Harvard T.H. Chan School of Public Health, Boston, MA, USA, 2National Health Insurance Service, Seoul, South Korea
Presentation Documents
OBJECTIVES: This study aims to evaluate the impact of the new pricing policy implemented as of April, 2012 in South Korea on market competition among off-patent drugs since the reform has taken an objective to introduce market competition mechanisms among off-patent drugs. According to the new pricing scheme, prices of brand-name and generic drugs are to be set to the same level after the patent expires. METHODS: The data used for this study were extracted from the National Health Insurance Claims database. We established a monthly panel dataset pertaining to pharmaceutical consumption between January 2011 and June 2013 (30 months). Proxies of market competition were considered as dependent variables such as price dispersion, market share of originators and relative ratio of utilization (originator/generics). Independent variables including policy effect, number of generic drugs, vintages of the first generic drugs, month for new generic entry and market value. RESULTS: The new pricing policy has resulted in no competition mechanism. Rather the policy shows more favorable to originators than generic drugs. Price dispersion has significantly decreased to 0.92 after the new pricing regulations. Market share of the originators has not significantly changed. However, originator-to-generic utilization ratio significantly increased to 6.12 (p<0.001) after the new policy. This study offers different results to the government’s intention. CONCLUSIONS: Price competition cannot be successfully achievable unless demand-side measures are combined. To lower prices, the bigger market share should be delivered through demand-side measures such as the reference pricing or compulsory substitution to lowest drugs applied in some European countries.
Conference/Value in Health Info
2015-05, ISPOR 2015, Philadelphia, PA, USA
Value in Health, Vol. 18, No. 3 (May 2015)
Code
PHP17
Topic
Health Policy & Regulatory
Topic Subcategory
Pricing Policy & Schemes
Disease
Multiple Diseases