SOUTH KOREA Law and Practice Contributed by: Keum Nang Park, Eileen Jaiyoung Shin, Eunkyoung Lyu and Soo Yeon Park, Lee & Ko
8. Pharmaceutical and Medical Device Pricing and Reimbursement 8.1 Price Control for Pharmaceuticals and Medical Devices The government’s price control for pharmaceuticals is based on the relevant laws such as the National Health Insurance Act (NHIA), the Rules on the Standards of National Health Insurance Medical Benefits, and the Standards for Decision or Adjustment on Drugs. Also, the government’s price control for medical devices is in accordance with NHIA, the Rules on the Standards of National Health Insurance Medical Benefits, and the Standards for Decision or Adjustment on Activity and Medical Materials for Treatment, etc. The MOHW, the Health Insurance Review and Assessment Ser- vice (HIRA) and the National Health Insurance Service (NHIS) control the price of pharmaceuticals and medi- cal devices. In Korea, the prices for the majority of medical servic- es and pharmaceuticals are reimbursed by the NHIS, and most legal residents of Korea are insured by the NHIS. The NHIS classifies the reimbursable items into the following categories: pharmaceutical products, therapeutic procedures, and treatment materials. Here, treatment materials refer to consumable medi- cal devices used in therapeutic procedures. If a medical service or a pharmaceutical product is covered by the NHIS, a patient cannot be charged more than the co-payment amount corresponding to the maximum reimbursement price published by the MOHW. If a medical service or pharmaceutical prod- uct is not covered by NHIS, the healthcare provider is free to determine the price of such product or service. For pharmaceuticals and medical services to be reim- bursed, the HIRA and the MOHW assess whether to include them in the reimbursement scheme after eval- uating clinical efficacy, cost-effectiveness, and other factors. Regarding medical devices covered by the NHIS, a device may be either assigned its own maximum reimbursement price or have its cost included in the maximum reimbursement price for the relevant medi- cal service that utilises such a device.
8.2 Price Levels of Pharmaceuticals or Medical Devices For pharmaceuticals, foreign prices may be refer- enced in the negotiation of the maximum reimburse- ment price. In general, however, the economic evalu- ation for pharmaceuticals takes precedence over such external price referencing in determining the price of drugs. Foreign prices have a direct impact only when a drug is exempt from economic evaluation under rel- evant pricing regulations. In contrast, for medical devices (ie, pricing of the device or the medical service that utilises such a device), foreign prices are not referenced but the import price or the price of listed products with similar functions are considered. 8.3 Reimbursement From Public Funds A substantial part of the costs of pharmaceuticals and medical services (using medical devices) is covered by the national health insurance scheme. However, even when covered by the national health insurance scheme, the full amount is not paid by the health insurance, as the patient is responsible for the appli- cable co-pay amount. Rules on the Standards of National Health Insurance Medical Benefits, and the Standards for Decision or Adjustment on Drugs define the items not subject to reimbursement. Such items include procedures, drugs, or treatment materials that are performed or used in cases where there is no hindrance to work or daily life, are not intended to improve essential bodily functions, or are preventative treatments not directly aimed at treating diseases or injuries. There is a difference in the way pharmaceuticals and medical services are covered by health insurance. In the case of pharmaceuticals, products not listed on the reimbursement list are not covered by health insur- ance (positive-listing system). When a manufacturer or importer submits a request for reimbursement for a pharmaceutical product that has obtained market- ing authorisation, the product undergoes an evalu- ation of reimbursement appropriateness by HIRA. Subsequently, negotiations with the NHIS determine the maximum reimbursement amount. This process establishes the product’s eligibility for health insur-
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