Government to Hike Essential Drug Prices, Expand Support Amidst Repeated Production Losses

The government is set to expand support for essential medicines, which have faced recurrent supply disruptions due to low profitability. The pharmaceutical and medical industries have repeatedly raised concerns about supply instability for essential medicines and drugs facing withdrawal from the market, including antibiotics, pediatric medicines, anticancer drugs, anesthetics, and IV fluids – items indispensable in healthcare settings. Some medical institutions are increasingly struggling, resorting to alternative medications due to an inability to secure specific drugs, leading to growing chaos on the front lines.

The pharmaceutical industry attributes the supply instability to structural issues, citing a low drug pricing system and insufficient incentives for production. Many essential medicines remain priced low, creating a situation where producing them only deepens financial losses. The industry explained that rising costs for raw materials, labor, and logistics are further burdening companies. They pointed out that even basic inflation is not adequately reflected in drug prices, leading to greater losses with continued production.

In response, the Ministry of Health and Welfare has announced a partial revision to the 'Criteria for Drug Pricing and Adjustment,' which includes measures to realistically adjust price standards and expand administrative support for the stable supply of drugs facing withdrawal. Starting in August, the price standards for these drugs will increase by up to 10%. Specifically, oral drugs will see prices rise from the current 525 won to 578 won; oral liquid formulations from 40 won per minimum unit to 44 won; external preparations from 2,800 won to 3,080 won; and injections from 5,257 won to 5,783 won. Furthermore, to reflect rising production costs and encourage corporate participation, a policy-based incentive system will be introduced: a 3% premium for companies that have maintained stable supply without reporting discontinuation over the past three years, with an additional 1% for each of seven criteria, including being a nationally essential medicine or using domestically produced raw materials.

While the pharmaceutical industry agrees with the government's direction to expand support, they emphasized the need for institutional frameworks to build a long-term, sustainable supply system. This includes reflecting cost increases beyond simple price hikes and providing support at a level that allows companies to maintain minimal economic activity. An industry representative stated that the current level of support is insufficient to resolve structural supply issues, adding that government backing is crucial for continued production for public benefit, thereby reducing drug shortages and supply instability.