Feb. 25.
2019☞ Positive List System = HTA introduction Rapidly Rising Pharmaceutical Expenditure :29.2% (2005)

Key driving factor of increasing Healthcare Expenditure
Additionally , √ Ageing population with Chronic diseases√ Diffusion of New Technologies, New Medicine

Policy Action“Drug Expenditure Rationalization Plan”
 Reform of the Reimbursement and Pricing System
Introduction of PLS
including Economic Evaluation, Price Negotiation (2007~) Re-evaluation of the currently Listed*
Stepwise proceeded for 5 years including delisting (2007~2011)
 Additional Price Regulation Scheme for the Reimbursed
Price-cut according to patent expiry and increase of the volume of sales

Goal Reinforce the Access to the Appropriate Medicine

 Rationalize expenditure and Allocate limited resources efficiently* that were listed under the former regime of negative listing system

Negative List System (NLS)
Reimbursement After the MFDS’s approval,
decision

Positive List System (PLS)
After the MFDS’s approval,- Almost all drugs* were automatically listed - Only reimbursable drugs that proven to be

making process on the drug formulary for reimbursement

clinicallyandeconomicallyvaluableare* Except for approved drugs with statutorily not included on the formulary
reimbursable indication
Pricing① New drugs① New drugs- Relative Pricing Scheme (Referencing and ca - Reimbursement decision and pricing bylculating by ratio of domestic and foreign price conductings of the same therapeutics)

reviewofappropriatenessofcoverage and reimbursement price* and price- “Innovative” drugs : External referencing (7 negotiation**countries)*Appraisal of the PBC – located at HIRA

- Domestically developed new drugs : price**NHIS

estimation based on manufacturing cost
② Generics Alternatives② Generics Alternatives≤ 80% of Off-patent drugs OR

68% of Off-patent drugs , from 6th generic, 90≤ 90% of the Lowest generic drugs% multiplied by order of entry▶Off-patent drugs : 20% Price-cut
NHI : National Health Insurance, MFDS : Ministry of Food & Drug Safety,
HIRA : Health Insurance Review and Assessment Service NHIS: National Health Insurance ServiceBefore PLS

After PLS

Total

No. of Drugs

43

179

222

Price ratio (Korea / OECDaverage adjusted with PPP)

76.4 %

62.1 %

64.8 %

1 ) Lee et al. 2014

Acceptance Rate of New Drugs
100%
84.2%
71.8%

73.3%

53.7%

50%

0%
UK, NICE

Canada, CDR

AUS, PBAC

HIRA(2007-2012.6)*(2004-2012.6)*(2005.11.-2012.3.)*(2007-2015)*** Bae et al. (2013)** HIRA Statistics

Life expectancy at birth and
Health spending per capita
2013 (or latest year)

Source : OECD Health Statistics 2015

Drug Benefit Listing Status
Number of Drug Products on the Drug Benefit List
(Unit: number of drug products)

Year

Covered drugs

Uncovered drugs

Total

Prescriptiondrugs

OTC drugs

Jan. 1, 2019

20,901

19,365

1,536

14,575Jan. 1, 2018

22,38920,493

1,896

14,248Jan. 1, 2017

21,39919,527

1,872

15,941

Jan. 1, 2016

20,401

18,458

1,943

15,309Current Status of NHI Expenditure on Pharmaceuticals

Total NHI expenditure(100 million KRW)

Total pharmaceuticalexpenditure(100 million KRW)

Share of pharmaceuticalexpenditure (%)* 162,098 (100 million KRW) = 14.5 Billion USD* Until 2013, figures for the 4 categories were adjusted to reflect fixed-cost fee schedules on top of the fee-for-service feeschedule. Since 2014, however, the 4 categories have been calculated based on fee-for-service fee schedule and therefore,
the fixed cost charged by long-term care hospitals or for DRG are excluded from pharmaceutical expenditure.

Flow Chart of Coverage Decision for Drugs
Within 45~75 days

Generics① Price determination② Benefit quality
assessment

Pharmaceuticalcompany
HIRA(Pharmaceutical Benefits Committee)① Clinical utility② Benefit standard•

Coverage
application

•

New
drugs

Replaceability, curative benefit, benefit
standard
Whether it is essential drug

NHIS

MoHW
⑥NHIPDC④Benefit quality
assessment③ Cost-effectiveness⑤
Pricenegotiation• Cost increase against effectiveness
improvement• ICER value, quality of materials

Within 120(150) days

Within 60 days

review⑦
Notificationof the priceWithin 30 days

1. Benefit assessment- Pharmaceutical Benefits Committee

Coverage decision

2. Economic evaluation- Economic evaluation Sub-committee

Economic evaluation, validity of submitted materials- Effectiveness and cost, appropriateness of model, etc.

3. Benefit standard review- New drugs- Anti cancer drugs- Benefit standard advisorycommittee- Cancer deliberation committee-Benefit standard setting considering clinical utility

4. Risk Sharing Review- Subcommittee of risk sharing
system- Application of Risk Sharing Agreement, review validity of the
proposed type

Pharmaceutical Benefits Committee○ Composition: no more than 100 members (a pool of members), no more than 19
members (form a meeting)○ Legal characteristics: a consultative deliberation body of the president of HIRA for
efficient assessment of the quality of pharmaceutical benefits, etc.
○ Matters evaluated/assessed by the committee: coverage of a new drugs, benefit
criteria for new drugs, calculation criteria, ceiling prices for drugs, etc.
○ Subcommittees in place in the following areas: economic evaluation, risk-sharing
agreements, pharmaceutical benefit criteria, financial impact assessment

Price negotiation by NHIS
○ Takes the following into consideration: assessment results of the Pharmaceutical
Benefits Committee, expected volume of use, etc.
○ If negotiations fail, the Pharmaceutical Benefits Adjustment Committee makes
adjustments for the “essential drugs for treatment.”Flow Chart of the New Drug Evaluation
Inferior

Clinical usefulness

Non-Reimbursement

Benefit standard-Benefit standard
advisory committee-Cancer deliberationcommittee
Cost effectiveness

Non-inferior

Similar

Review of drug
administration costs
comparison

Cost effectiveness review

Economic
evaluation
 Reimbursement status
in other countries
Budget impact

Superior

Essential drug
Exempt from costeffectiveness review

Economic
evaluation+
Risk sharing

Economic
evaluation
exemption

Economic evaluation sub- Sub-committee of RSA
committee

Pharmaceutical Benefits Committee(Review & Recommendation )HIRA’s reimbursement determination*If the clinical usefulness is non-inferior, only cost-minimization analysis is possible

Selection Criteria for Reimbursement Approval○ A drug is clinically useful and cost-effective and has been
evaluated as acceptable to reimbursement when considering
reimbursement status and reimbursement prices in foreigncountries, principles of reimbursement, insurance financing status- Clinical usefulness (fungible, severity of disease, therapeutic
benefits)- Cost-effectiveness (drug administration cost, degree of
improvement in clinical effects and cost-effectiveness)- Impact on health insurance finance(number of applicablepatients, anticipated use volume, substitution effects withexisting drugs or treatments)- Reimbursement status in foreign countries, reimbursement
priceNumber of New Drugs Evaluated per Year
Number of New Drugs Evaluated per Year
2013

2014

2015

2016

2017

2018

61

48

81

65

83

58

Benefit Listing Procedure and Evaluation
Criteria by Type of New Drug

☞ Essential Drug To Patient Care
Economic Evaluation

Risk Sharing Agreement
Economic Evaluation Exemption Procedure
Administration Cost ComparisonA drug meeting with all of the following subparagraphs– A drug wherein no other substitutable treatments(including drugs) areavailable– A drug used for serious, life-threatening diseases– A drug proven for its clinically meaningful improvement, such as,
significant extension of survival period of time

Price level of essential drug to patient care
- The average level of adjust prices of A7 foreign countries(A7 = USA, Japan, UK, France, Germany, Swiss, Italy)

No.

Name of drug productIndication
1. Philadelphia chromosome-positive (Ph+) chronic myeloid leukemia

1

Sprycel tab.

CML), with resistance or intolerance to prior therapy including imatinib.
2. Ph+ acute lymphoblastic leukemia(ALL) with resistance or intolerance toprior therapy.

2

Cystadane pow.

Homocystinuria.

3

Naglazyme inj.

Mucopolysaccharidosis VI(MPS VI; Maroteaux-Lamy syndrome).

4

Elaprase inj.

Hunter syndrome (Mucopolysaccharidosis II, MPS II).

5

Myozyme inj.

Pompe disease.

6

Zavesca cap.

Gaucher disease.

7
8

9

10

Inovelon film-coated tab. Seizures associated with Lennox-Gastaut syndrome

Remodulin inj.
Soliris inj.

Carbaglu tab.

(Pulmonary arterial hypertension
Paroxysmal nocturnal hemoglobinuria(PNH),
treatment to reduce hemolysis)Hyperammonemia due to the deficiency of thehepatic enzyme N-acetylglutamate synthase (NAGS)

Benefit Listing Procedure and Evaluation Criteria
by Type of New Drug

Essential Drug To Patient Care

☞ Economic Evaluation
Risk Sharing Agreement
Economic Evaluation Exemption Procedure
Administration Cost Comparison

? ICER ( Incremental Cost / Incremental effectiveness )(Eg.) cost / QALY : cost for 1 year of life-year gained with perfect health status* QALY : Quality adjusted life year
: standard unit for mix of quality and quantity of health benefit

The higher ICER value, the more opportunity cost occurred
The higher ICER threshold, the higher willingness to pay in the society

Retrospective Average ICER value in Listed drugs
50.0
40.3

25.0

24.8
10.5
10.8

0.0
(million KRW/QALY) 2007 ~ 2013 Oct

common drugs

anticancer and rare disease drugs
2013 Nov ~ 2015

Economic
Evaluation
Limited social perspective: additional analysis from theinsurer perspective (preferred)

Perspective
Time horizon
Target population
Types of evaluations
Selecting comparator

Outcomes
1. Literature search- strategies, database, terms
2. Data selection
3. Data extraction and evaluation

Costs

Data source (NHI)

Data source (RCTs)
Outcome indicators(intermediate, final)

1. Cost-minimization analysis (CMA)
2. Cost-effectiveness analysis (CEA)
3. Cost-utility analysis (CUA)

Cost items(price, resource use)

1. Direct health care cost
- drugs, services, examinations, etc.
2. Direct non-health care cost
- transport, time lost, care giver

Modelling
1. Target population (who model is applied to)
2. Model type(i.e. decision tree, Markov model)
3. Assumptions in modeling and clinical evidences
4. Model structure(health state, time horizon, cycle length)
5. Model parameters (i.e. transition probabilities)
6. Costs / Outcomes
7. Limitations of the model(when the final outcome cannot beperceived from the clinical study)

ResultDiscounting
Sensitivity analysis
Generalization

1. One-way sensitivity analysis (should be performed)
2. Multiple-way sensitivity analysis
3. Probabilistic sensitivity analysis
QALYs
1. Measuring instruments for utility weights- generic preference-based measure (preferred): direct(SG, TTO, RS)/ indirect (EQ-5D, HUI, SF-36)- condition-specific measure- non-preference-based measures
2. Preferred subjects : the general public
who could represent the local population

Benefit Listing Procedure and Evaluation
Criteria by Type of New Drug

Essential Drug To Patient Care
Economic Evaluation☞ Risk Sharing Agreement (RSA)
Economic Evaluation Exemption Procedure

Administration Cost Comparison

Definition: A contract between the insurer and pharmaceutical companies
to share the risk of efficacy/effectiveness of a new drug andbudget impact with pharmaceutical companies (Jan. 2014 ~)Intent: To secure the availability of irreplaceable and expensive drugs(such as anti-cancer medicine) while keeping the principle of
selecting cost-effective drugs
Target: Anti-cancer medicines that has no alternative or bioequivalencedrug or treatment, orphan drugs that are used for life threatening
condition(Contract period) Conventionally 4 years (3 years+1 year for evaluation)

Types of Risk Sharing Agreement① Continued treatment on condition + refund (Continued administration
depending on response and refund)- After certain period of administration, evaluate each patient’s response.
Patients with positive response higher than the expectation will keep
receiving the NHI benefit, and the reimbursement for the rest will be
refunded to NHI by the applicant.

② Cap on total amount (Portion of benefit claim above certain amount isrefunded)- When annual drug benefit claim exceeds pre-set annual expenditure,
portion of the excess is refunded by the applicant to the NHIS
③ Refund (Portion of claimed benefit is refunded)- Portion of total drug benefit claim is refunded by the applicant to the
NHIS④ Cap on each patient (Portion of excess of each patient is refunded)- Cap for each patient is pre-determined. When exceeded, portion of theexcess is refunded by the applicant to the NHIS

Current Status of Drugs Included in RSA
No.

IngredientClassification

Indication

Type

1

cetuximab

Anticancer

colon and rectal cancer

Refund2

Enzalutamide

Anticancer

metastatic castration-resistant prostate cancer

Refund3crizotinib

Anticancer

ALK-positive advanced non-small cell lung cancer

Refund4

eculizumab

Rare disease

Paroxysmal nocturnal haemoglobinuria (PNH)

Refund5

Galsulfase

Rare disease

Mucopolysaccharidosis VI

Refund6

regorafenib hydrate

Anticancer

7

pomalidomide

Anticancer

relapsed and refractory multiple myeloma

Refund8Pertuzumab

Anticancer

HER-2 positive metastatic breast cancer

Etc.

9

trastuzumab emtansine

Anticancer

HER-2 positive metastatic breast cancer

Utilization Cap

10

Pembrolizumab

Anticancer

non-small cell lung cancer

Refund11

Nivolumab

Anticancer

non-small cell lung cancer

Refund12

Palbociclib

Anticancer

metastatic breast cancer

Refund13

osimertinib mesylate

Anticancer

non-small cell lung cancer

Etc.

14

Carfilzomib

Anticancer

multiple myeloma

Refund15

Ramucirumab

Anticancer

Gastric cancer

Refund16

Carbozantinib

Anticancer

Lung cancer

Utilization Cap

unresectable or metastatic gastrointestinal
stromal tumours (GIST)

RefundBenefit Listing Procedure and Evaluation
Criteria by Type of New Drug

Essential Drug To Patient Care
Economic Evaluation

Risk Sharing Agreement☞ Economic Evaluation Exemption
Procedure

Administration Cost Comparison

Application criteria
Criteria

Contents① Treatment agent for rare disease or anti-cancer agent
No alternative treatment methods (incl. drugs)② Clinical needNo products or treatment methods that are in equivalent
therapeutic positions that are used to treat serious, lifethreatening disease
Approved by MFDS based on the data from a single-arm
clinical trial without a control group③ The difficulty ofApproved by MFDS based on the data from phase 2 clinicalproducingtrial with a control group, without the phase 3 condition
evidence
The difficulty of producing evidence is deemed difficult by theCommittee due to the small number of target patients④ A drug listed in 3 or more of advanced 7 foreign countries based on which theadjusted average foreign price is calculated as determined by the Committee* Price of economic evaluation exemption- the lowest price of the adjust prices of A7 foreign countries

Economic evaluation exemption procedure List
No.

Drug productIndication

1

Caprelsa tab.

Medullary thyroid cancer

2

Adcetris inj.

Hodgkin Lymphoma/Anaplastic Large Cell Lymphoma(HL/ALCL)

3

Vimizim inj.

Mucopolysaccharidosis type IVA (MPS IVA; Morquio A syndrome).

4

Imbruvica cap.

Mantle cell lymphoma(MCL)

5

Zykadia cap.

Crizotinib failed, ALK-positive, non-small cell lung cancer(NSCLC).

6

Blincyto inj.

Acute lymphoblastic leukemia(ALL)7

Diterin tab. (Generic of Kuvan tab.)Tetrahydrobiopterin(BH4)-responsive Phenylketonuria (PKU).

8

Difitelio inj.

9

Zelboraf tab.

Unresectable or metastatic melanoma with BRAF V600E mutation.

10

Lynparza cap.

BRCA-mutated advanced ovarian cancer

11

Meqsel tab. (Mekinist tab.)Unresectable or metastatic melanoma with BRAF V600E or V600K mutations.

12

Olita tab.

Locally advanced or metastatic EGFR T790M mutation-positive NSCLC(non-small cell lung cancer).

13

Sylvant inj.

Multicentric Castleman’s disease (MCD), HIV(-) and HHV-8(-).

14

Lartruvo inj.

Soft tissue sarcoma

15

Iclusig tab.

Chronic myeloid leukemia(CML)

16

Vyndaqel cap.

Polyneuropathy

17

Praxbind inj.

Unique Reverse agent to dabigatranSevere hepatic veno-occlusive disease (VOD), following hematopoietic
stem-cell transplantation (HSCT).

Benefit Listing Procedure and Evaluation
Criteria by Type of New Drug

Essential Drug To Patient Care
Economic Evaluation

Risk Sharing Agreement
Economic Evaluation Exemption Procedure☞ Administration Cost Comparison

If the new drug’s clinical utility is “non-inferior or similar” toalternative drugs, the price of the new drug is set as the “weighted
average price of alternatives.”– Every year, there are not many new drugs applications that showsuperior clinical utility compared to alternative drugs. Accordingly,
many new drug prices are set as the “weighted average price ofalternatives.”

For a drug whose price is evaluated to be set as the “weighted
average price of alternatives,”– If the pharmaceutical company accepts 90% - 100% of “weighted average
price of replaceable drug” (considering the characteristics of new drugs
such as the level of difficulty in development), the NHIS can skip pricenegotiation (60 days)Type

Threshold price for negotiation exemption① New ingredient, ② Biologics,③ Orphan drug

Weighted average price of replaceable drug

④ Existing ingredient drug

Weighted average price * 0.9⑤ pediatric drug

Weighted average price * 0.95