Key Measures Introduced

The National Health Insurance Service (NHIS) has announced revisions to the 'Detailed Operating Guidelines for Volume-Price Linked Negotiations' to promote growth in the pharmaceutical industry and strengthen readiness for unexpected infectious disease outbreaks. The update includes a provision to exempt pharmaceutical companies focused on research and development (R&D) from 30% of the drug price reduction rate, targeting products from firms that have successfully implemented price reduction agreements at least twice in the past five years. Specifically, drugs from companies recognized by the government as innovative pharmaceutical firms, or those that reinvest 10% or more of total revenue exclusively into R&D, qualify for this measure. The goal is to secure funding necessary for new drug development.

Strategic Support for Industry Structure

This measure goes beyond simple tax benefits and represents a strategic decision to enhance the structural stability of the pharmaceutical industry. Under previous conditions, pharmaceutical companies faced severe disruptions to their revenue models when drug usage surged due to national crises or changes in welfare policies, regardless of their own intentions. To prevent this, the NHIS has introduced a new mechanism to maintain the nominal price cap for newly developed drugs, including cell therapies, which are considered world-first innovations. Instead of reducing prices, companies will now make direct cash payments to the NHIS through a 'reimbursement contract' to cover the difference. This mechanism is critical for protecting export competitiveness, preventing domestic price reductions from triggering downward price demands from overseas buyers.

Comparison with Previous System

Under the prior volume-price linked system, drug prices were uniformly reduced in response to increased usage. However, this structure imposed identical reduction burdens regardless of whether usage increases stemmed from company actions or external factors. The revised framework addresses this by introducing special protections for cases where usage increases result from policy changes, such as the expansion of health insurance coverage for infertility treatments or unexpected infectious disease outbreaks. For example, drugs classified as 'Type A' that sold 30% more or 'Type B' drugs whose sales increased by over 60% in the year following a price reduction remain subject to price negotiations. However, companies with strong R&D investment can still receive a 30% reduction rate exemption. Conversely, drugs with total sales under 300 million won, those priced more than 10% below the market average, or those at risk of production suspension due to low pricing are excluded from these relief measures.

Implementation and Future Outlook

The revised guidelines took immediate effect on June 25, 2026, and are being applied immediately to drugs currently undergoing price adjustments with the NHIS. The reimbursement contract will be maintained for a base period of three years, extendable by another three years if needed. The one-time reimbursement contract system applies only when usage increases occur independently of company intent, directly impacting pharmaceutical companies' financial stability and commitment to new drug development. This policy is widely regarded as a structural support initiative by the government to ensure sustainable growth in the pharmaceutical sector.