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South Korea Expands Insurance Coverage for Cancer and Rare Disease Treatments

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A recent report by the Seoul National University R&DB Research Foundation reveals that South Korea has witnessed an increase in insurance coverage for cancer drugs and treatments of rare diseases.

South Korea has been actively pursuing a series of reforms aimed at expediting the incorporation of innovative drugs into its national insurance system. The country has been notorious for its stringent reimbursement criteria, often requiring manufacturers to go through numerous attempts to secure approval for their products. GlobalData has compared the average time it takes for branded drugs to receive reimbursement in South Korea to other advanced countries like Japan, Australia, the UK, and Spain. In 2022, South Korea’s average time for reimbursing branded drugs was 620 days, significantly longer than the average in the mentioned countries.

Nonetheless, South Korea has made notable strides in improving access to drugs, particularly high-cost treatments for rare diseases and cancer, by relaxing reimbursement requirements. A decade ago, the average time for reimbursement of branded drugs exceeded 1,000 days but had been halved by 2022, reaching 620 days. Surprisingly, South Korea even improved its reimbursement time during the COVID-19 pandemic, while most other countries faced delays. For instance, Japan’s reimbursement time increased from an average of 90 days to 301 days during the pandemic.

South Korea’s RSA and CEA Waiver Systems: Driving Efficiency in Drug Reimbursement

GlobalData has identified that the implementation of the Risk-Sharing Agreement (RSA) and the Cost-Effectiveness Analysis (CEA) waiver systems in South Korea contributed significantly to shortening the reimbursement process for innovative drugs with limited evidence of their benefits.

The RSA system, initiated in 2013, focuses on treatments for cancer, rare diseases, and other life-threatening conditions without available alternatives in South Korea. It offers various types of agreements, with expenditure caps and rebates being the most common. As of August 2023, South Korea has introduced 68 innovative treatments into its national health insurance under RSAs. An RSA report by the Seoul National University R&DB Research Foundation indicates an increase in insurance coverage for cancer drugs and orphan drugs between 2014 and 2019.

Despite longer reimbursement times for drugs with RSAs, more expensive drugs have been receiving approval on their first or second application. The average review time by the Drug Reimbursement Evaluation Committee (DREC) decreased from 2.8 times before 2013 to 1.4 times from 2014 to mid-2022.

Insurance Coverage

Innovations in Drug Reimbursement and Insurance Coverage

The CEA waiver system, initiated in 2015, aims to expedite reimbursement for innovative drugs lacking cost-effectiveness evidence. Drugs meeting specific criteria for clinical usefulness and patient needs can be exempted from CEA submission. Manufacturers must also reach expenditure cap RSAs with the Health Insurance Review and Assessment (HIRA) for positive reimbursement recommendations.

Yoo Mi-young, a senior official at HIRA, confirmed that approximately 87.5% of cancer and rare disease treatments approved for reimbursement in 2022 were reviewed without CEAs. However, the expansion of CEA waiver eligibility has faced opposition due to concerns about clinical benefits and financial impacts. Drugs reimbursed without CEA are subject to international reference pricing (IRP) rules.

In addition to easing reimbursement eligibility, HIRA is collaborating with the National Health Insurance Service (NHIS) and the Ministry of Food and Drug Safety (MFDS) to streamline the reimbursement process. In H1 2023, South Korea introduced an accelerated price negotiation scheme, reducing negotiation time from 60 to 30 days.

The South Korean government is ambitious about expanding the prior negotiation process. A pilot program for the approval-evaluation-negotiation linkage system is expected in late 2023. Under this system, manufacturers can submit reimbursement applications for drugs undergoing marketing authorization review, enabling simultaneous evaluation of marketing and reimbursement applications and price agreements. However, differing opinions between HIRA and NHIS may affect the implementation of the linkage system, with NHIS seeking greater involvement at an earlier stage, potentially advancing the barriers to drug reimbursement.

 

Resource: Pharmaceutical Technology, November 14, 2023

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