South Korea is taking significant steps to address the substantial lag between drug approval and reimbursement, which has historically prevented many innovative medications from reaching patients in a timely manner. The Korean government has launched a new pilot program aimed at dramatically reducing reimbursement times, which currently average about four years—significantly longer than in the United States, Japan, and European countries like Germany.
New Pilot Program Targets Reimbursement Delays
The Korean Ministry of Health and Welfare (MOHW) has introduced an "Approval-evaluation-negotiation linkage system" designed to expedite the reimbursement process for innovative drugs. While the complete regulatory framework is still being developed, two medications have already been selected for this pilot initiative: Qarziba from Italian pharmaceutical company Recordati and Bylvay from French drugmaker Ipsen.
Under this new approach, the Health Insurance Review and Assessment (HIRA) and the National Health Insurance Service (NHIS) will conduct reimbursement evaluations simultaneously rather than sequentially. Drugs that receive fast-track designation will be eligible for this accelerated pathway.
"The traditional reimbursement process in Korea could extend up to 1,000 days, which is substantially longer than timelines in other advanced healthcare markets," notes a recent report from the Seoul National University R&DB Research Foundation. "These reforms aim to cut that time in half."
Comprehensive Reforms to Streamline Access
Beyond the pilot program, Korea has implemented several additional measures to improve the reimbursement landscape:
Risk-Sharing Agreements
The introduction of risk-sharing agreements (RSAs) has created a financial safety net for the National Health Insurance Service. Under these arrangements, manufacturers may be required to refund payments if medications fail to achieve expected outcomes. This approach balances innovation with fiscal responsibility while accelerating the approval process.
Approximately 70 innovative drugs have been assessed under the new RSA framework, with a higher percentage receiving reimbursement approval on their first or second review compared to previous years.
Waivers for Economic Evaluation
HIRA has exempted certain categories of medications from pharmacoeconomic evaluation requirements, specifically:
- Medications for children with no therapeutic alternatives
- Treatments for rare diseases
- Cancer therapies
This policy change removes significant barriers that previously delayed critical medications from reaching Korean patients.
Shortened Negotiation Periods
The Korean authorities have reduced the duration for price negotiations from 60 days to 30 days, further streamlining the process. Additionally, the pilot linkage system processes drug applications, reimbursement decisions, and price determinations concurrently rather than sequentially.
Defining Innovation: A Point of Contention
One challenge in implementing these reforms has been establishing a clear definition of what constitutes an "innovative new drug." This has created tension between foreign and domestic pharmaceutical manufacturers.
Foreign companies advocate for a broader definition that encompasses drugs with novel mechanisms of action and those treating serious conditions, particularly those recognized under Korea's "GIFT" program (similar to breakthrough therapy designation in the US).
In contrast, domestic manufacturers prefer a narrower definition limited to drugs in the GIFT program and those tested in local clinical trials.
The MOHW has established a private-public working group to address these differences and develop standards that promote both innovation and accessibility.
Impact on Patient Access and Industry Growth
These policy changes represent a significant shift in Korea's approach to pharmaceutical access and are expected to have far-reaching implications for both patients and the healthcare industry.
For patients with cancer and rare diseases, the reforms promise faster access to cutting-edge treatments. For the pharmaceutical industry, the streamlined processes create a more predictable regulatory environment that could encourage greater investment in the Korean market.
As these policies continue to evolve through 2023 and beyond, Korea is positioning itself as a more competitive player in the global pharmaceutical landscape while prioritizing patient access to innovative therapies.
