Comparison of major Asian countries’ reimbursement mechanisms for innovative pharmaceutical products

Published on May 31, 2021 by Raghu Patale

Asia is home to 57% of the world’s population and accounts for around 40% of the world’s pharmaceutical market. It is one of the most challenging pharmaceutical markets due to its disorganised nature. It continues to grow due to increasing populations, market size, ageing populations, and illnesses.

The challenges related to the health technology assessment (HTA), which determines reimbursement pricing, differ from country to country in Asia and are in a nascent stage unlike in most of the developed European countries. For instance, high- and upper-middle-income countries use the HTA to guide reimbursement and coverage decisions. Asia comprises a number of lower-income countries that use the HTA for planning and budgeting purposes.

Most Asian countries do not use pharmacoeconomic evaluations or head-to-head comparison models for setting reimbursement prices for drugs; instead, they rely on external reference pricing and internal price benchmarking for tendering and negotiating prices. Some countries use bridged versions – for example, South Korea also uses QALY/ICER evaluations, and Japan uses cost-plus pricing and a price maintenance premium to determine the prices of innovative drugs. With the level of challenges, updates and complexities in Asian reimbursement models, it is important to understand the differences in the HTA models of these countries. In this paper, we attempt to provide a comparison of the HTA reimbursement mechanisms and decisions to increase clarity.

Parameters	China	Japan	South Korea
Governing bodies	NHSA NDRC MOHRSS National Center for Medicine and Health Technology Assessment	NHSA NDRC MOHRSS	NHI HIRA DBCAC DREC
Reimbursement application	Cannot submit application; selected by expert panel from HTA	Yes	Yes
Exemption from pricing assessment	List A: essential, inexpensive drugs	Products used for rare diseases and paediatric diseases New products with peak sales forecasts of less than JPY5bn Already listed products with peak sales less than JPY100bn	If the companies choose to accept a price of 90-100% of the WAP of the substitutes
Timeline	1.3 years in 2020	Maximum of 90 days from market authorisation	Approximately 240 days
Mechanism of setting reimbursement pricing	International reference pricing (IRP) from a basket of 12 recommended countries Price benchmarking with reimbursed alternative product Negotiations and competitive bidding	Average of foreign reference pricing from the US, UK, Germany and France Comparative method if a similar drug is already listed Cost-calculation method if no similar drug is listed, based on different operating costs, profits and taxes	Reimbursement will be determined by pharmacoeconomic evaluations for a drug that has significant clinical benefits Reimbursed at a price equivalent to the WAP of the substitutes when clinical usefulness is comparable to that of its substitutes Reimbursement is assessed based on external reference pricing for drugs targeting a disease that has no alternatives, such as a rare disease or cancer
Bidding and negotiation	Yes	No	Yes (negotiation)
Special agreements	Pay for performance	No	Price-volume agreements Risk-sharing arrangements Refunds Money-back guarantees Expenditure caps Fixed cost per patient Reducing price according to the market-based actual transaction price system Reducing the price of the original medicine when its patent expires Pricing of line extension medicines
Post-launch price revision	For competitively negotiated drugs after a two-year agreement	Cost-effectiveness assessment after launch Drug price revision based on market price Re-pricing of products with the largest market shares	Actual transaction pricing Pricing of line extension medicines Price cutting of patent-expired originals and generics
Average discount	50.6% (2020)	Average cut of 4.4% within a range of 1-9% (2020)	Median discount rate of the first price cut was 5.0% (range: 0.1-20.0) for PE 3.0% (range: <0.1-30.0) for WAP 5.0% (range: 0.6-10.9) without a CE pathway (2007-17)

For granular details of reimbursement mechanisms in these countries, please refer to the respective links below:

Japan’s reimbursement mechanism for innovative pharmaceutical products

China’s reimbursement mechanism for innovative pharmaceutical products

South Korea’s reimbursement mechanism for innovative pharmaceutical products

Abbreviations:

QALY – Quality-adjusted life year

ICER – Incremental cost-effectiveness ratio

NHSA – National Healthcare Security Administration

NDRC – National Development and Reform Commission

MOHRSS – Ministry of Human Resources and Social Security

NHI – National Health Insurance

Chuikyo – Central Social Insurance Medical Council

MHLW – Ministry of Health, Labour and Welfare

HIRA – Health Insurance Review Agency

DBCAC – Drug Benefit Coverage Assessment Committee

DREC – Drug Reimbursement Evaluation Committee

PE – Pharmacoeconomic

WAP – Weighted average price

CE – Cost-effectiveness

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