South Korea to cut pharma prices by average 17% to save $1.94 billion

In a move that is likely to curb current growth prospects for the pharmaceutical industry in South Korea, the government says it plans to cut drug prices by an average of 17% starting in 2012 as part of its efforts to reduce excessive medical outlays that have become a social burden. Some 8,776 of the 14,410 drugs registered to the national health insurance system will be affected.

The nation’s Ministry of Health and Welfare said at a meeting of the health insurance policy review committee last Friday that cutting drug prices could help reduce spending by up to 2,100 billion won ($1.94 billion) a year. It also unveiled plans to cut generic drug prices by up to 33% starting next year, prompting fierce protests from pharmaceutical companies, reports The Korea Herald.

In 2010, South Koreans spent a total of 43,700 billion won on medical-related outlays, of which 12,008 billion won involved drug costs, which have grown by around 10% annually.