The National Health Insurance Service (NHIS) is revising its drug price adjustment system for medicines with rapidly increasing usage. The move aims to ease the burden of price cuts for pharmaceutical companies that invest in research and development (R&D) and to support the export competitiveness of domestically produced new drugs by expanding refund agreements.

The NHIS announced on June 27 that it has partially amended and published the "Detailed Operational Guidelines for Usage-Drug Price Linked Negotiations" to foster the growth of the pharmaceutical industry and enable flexible responses to unexpected infectious diseases.

The revised guidelines clarify the types of drug price reduction negotiations, the calculation methods for actual drug usage, and the procedures for refund agreements where pharmaceutical companies return a portion of their revenue.

The most notable change in this amendment is the support measure for pharmaceutical companies dedicated to developing new drugs.

The policy applies to drugs that have undergone price reduction negotiations at least twice over the past five years and have faithfully cooperated with government policies.

Among these, if a drug is produced by an innovative pharmaceutical company certified by the government, or by a company that reinvests more than 10% of its total revenue solely into R&D, it will be granted a 30% exemption from the original drug price reduction rate under the new guidelines.

This is intended to help companies secure the capacity to invest in new drug development.

Measures to protect domestically produced drugs entering overseas markets from disadvantages have also been strengthened.

When official drug prices are cut in the Korean market, foreign governments or buyers often demand similar price reductions, which can hinder the export efforts of pharmaceutical companies.

To prevent this, the guidelines allow for "refund agreements" for drugs such as the world's first developed new drugs or cell therapies. Instead of lowering the official maximum price, which is the price patients see on prescriptions, the pharmaceutical company can pay the difference back to the NHIS in cash.

These agreements will be maintained for a base period of three years and can be extended for an additional three years if necessary.

The revised guidelines went into effect on June 25 and are immediately applicable to drugs currently undergoing price adjustment negotiations with the NHIS.

(Photo: Yonhap News TV, Yonhap News)