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KMID : 1170320220280030029
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Korean Journal of Health Economics and Policy
2022 Volume.28 No. 3 p.29 ~ p.50
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Influence of price regulation on the generic price competition
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Jang Su-Hyun
Jang Sun-Mee
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Abstract
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Korean National Health Insurance (NHI) has introduced a new pricing system, 'the same price to the same ingredient' for the off-patent brand-name drugs and their generics since April 2012. This study evaluated the effect of the policy on the price competition of the target drugs from 2009 to 2017. Brand-name drugs and their generics enlisted in NHI after 2007 were used to calculate the ratios of generic to brand-name prices using NHI claims data. We also confirmed the ratios of monthly price to the first entry price of generics. Through an interrupted time series analysis, we evaluated the pharmaceutical costs and the market share of generics. With the introduction of the policy, the generic price has risen from 88% to 95% of the brand-name drug. The generic monthly price has risen 92.6% to 95.5% of the entry price. It led to a decrease in price competition. At the time of policy implementation, total pharmaceutical costs decreased significantly, but there was no significant change in the share of generic. Price control for pharmaceuticals hardly induced price competition according to the market competition. This shed light on the need to introduce a policy that can invigorate the consumer-oriented generic use promotion mechanism.
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KEYWORD
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price regulation, same price system to the same ingredient, generic drugs, price competition
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