The impact of South Korea’s new drug-pricing policy on market competition among off-patent drugs

Kwon, Hye-Young and Kim, Hyungmin and Godman, Brian and Reich, Michael R. (2015) The impact of South Korea’s new drug-pricing policy on market competition among off-patent drugs. Expert Review of Pharmacoeconomics and Outcomes Research, 15 (6). pp. 1007-1014. ISSN 1473-7167 (https://doi.org/10.1586/14737167.2015.1083425)

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Abstract

A new pricing policy was introduced in Korea in April 2012 with the aim of strengthening competition among off-patent drugs by eliminating price gaps between originators and generics. Examine the effect of newly implemented pricing policy. Retrospectively examining the effects through extracting from the National Health Insurance claims data a 30-month panel dataset (January 2011 - June 2013) containing consumption data in four major therapeutic classes (antihypertensives, lipid-lowering drugs, antiulcerants and antidepressants). Proxies for market competition were examined before and after the policy. The new pricing policy didn’t enhance competition among off-patent drugs. In fact, price dispersion significantly decreased as opposed to the expected change. Originator-to-generic utilization increased to 6.12 times (p=0.000) after the new policy. The new pricing policy made no impact on competition among off-patent drugs. Competition in the off-patent market cannot be enhanced unless both supply and demand-side measures are coordinated.

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