The impact of South Koreas new drug-pricing policy on market competition among off-patent drugs

Introduction: A new pricing policy was introduced in Korea in April 2012 with the aim of strengthening competition among off-patent drugs by eliminating price gaps between originators and generics. Objective: Examine the effect of newly implemented pricing policy. Methods: Retrospectively examining the effects through extracting from the National Health Insurance claims data a 30-month panel dataset (January 2011-June 2013) containing consumption data in four major therapeutic classes (antihypertensives, lipid-lowering drugs, antiulcerants and antidepressants). Proxies for market competition were examined before and after the policy. Results: The new pricing policy did not enhance competition among off-patent drugs. In fact, price dispersion significantly decreased as opposed to the expected change. Originator-to-generic utilization increased 6.12 times (p = 0.000) after the new policy. Conclusions: The new pricing policy made no impact on competition among off-patent drugs. Competition in the off-patent market cannot be enhanced unless both supply and demand side measures are coordinated.