The Korean Ministry of Health and Welfare has announced that it will implement price cuts on drugs produced by foreign pharmaceutical companies. In addition to cutting drug prices, the government also cut the number of drugs that are covered by insurance, only covering those drugs that are cost-effective. The new drug price cut plan will be implemented in September 2006, although it is possible that implementation may be delayed.
Newly invented drugs are currently priced at the average of seven advanced countries under the public health insurance system, and there is no negotiation. Prices of newly invented drugs, which are mostly produced by foreign pharmaceutical companies, will now be negotiated in order to approve them as insurance-paid medicine. Negotiations will occur between the pharmaceutical company and the National Health Insurance Corporation.
The Korean government also plans to lower the prices of original drugs once domestic generic products are registered. In addition, it plans to exclude many drugs from the insurance-covered list that are of questionable therapeutic value. The public health insurance system currently pays for almost all medications, including those that may be unnecessary or ineffective. Foreign drug companies have criticized the new drug pricing plan, stating that many of their drugs are already underpriced in Korea.