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Pharmaceutical Pricing Policies in South Korea

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Pharmaceutical Prices in the 21st Century

Abstract

South Korean healthcare system has experienced an unprecedented growth and transformation in the span 15 years. The landmarks were the unification of insurance funds, and the separation of prescribing and dispensing of drugs (SPD). Several pricing policies have been introduced, revised and abolished to attempt to address unexpected increases in pharmaceutical expenditure which followed the separation of prescribing and dispensing of medicines. This chapter outlines the health care and pharmaceutical systems in South Korea, details pricing policies in the latest decade and reviews the effectiveness of these policies. While having a long-lasting history in pharmaceutical price control, South Korea has often introduced policies with a weak scientific basis and then abolished them without proper assessment and evaluation. Some evidence suggests that price controls have reduced pharmaceutical costs in the short-term, but evidence on the long-term impacts are largely absent. Given the cause of current cost inflation, i.e., increased use of pharmaceuticals and an ageing population, society needs a policy consensus to control prices and encourage rational prescribing.

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Notes

  1. 1.

    Values adjusted by purchasing power parity (PPP) to eliminate price level differences in inter-country comparisons, equalising currencies by using a basket of goods and services.

  2. 2.

    US$1 = 1,100 KRW in 2014.

  3. 3.

    France, Germany, Italy, Japan, Switzerland, the UK and the US.

  4. 4.

    The first to fifth generic drug is set at less than 80 % of cost for its off-patent alternative. The sixth and later product is set at the 90 % price of the least expensive alternative (MOHW Official Instructions 2005–14; provision 8).

  5. 5.

    For instance, ‘GenericA’, a generic product of the ‘OriginalA’ (price 100) was priced at the maximum of 80 (i.e. 0.8 × 100) in the previous system. Now, it is priced at maximum 64 (i.e. 0.8 × 0.8 × 100) because the price of ‘OriginalA’ is reduced to 80 in the new system.

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Author information

Authors and Affiliations

  1. College of Pharmacy, Yeungnam University, Gyeongsangbuk-do, South Korea

    Iyn-Hyang Lee

  2. Department of Health Sciences, University of York, York, UK

    Karen Bloor

Authors
  1. Iyn-Hyang Lee
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  2. Karen Bloor
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Correspondence to Iyn-Hyang Lee .

Editor information

Editors and Affiliations

  1. Faculty of Medical and Health Sciences, University of Auckland, Auckland, New Zealand

    Zaheer-Ud-Din Babar

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Lee, IH., Bloor, K. (2015). Pharmaceutical Pricing Policies in South Korea. In: Babar, ZUD. (eds) Pharmaceutical Prices in the 21st Century. Adis, Cham. https://doi.org/10.1007/978-3-319-12169-7_9

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