How will election pledges affect drug reimbursement in Korea? – Korea Biomedical Review

Lee Jae-myung, the presidential candidate from the ruling Democratic Party, recently announced that he would allow national health insurance to cover hair loss treatment, wooing young voters in their 20s and 30s suffering from thinning hair. His election pledge has been evaluated as the most popular one announced by presidential candidates.

Lee Bo-hyoung, CEO of Macoll Consulting Group

However, patients with other serious illnesses vehemently criticized Lee for potentially placing insurance benefits for hair loss treatment over the health insurance program’s principle of saving lives first.

Suppose Lee wins and implements his proposed policy. In that case, it is quite interesting to see what basis he will use to justify it under the current health insurance system, executed in a very detailed and strict manner.

I am also curious to see how the criteria and process of granting health insurance benefits, already built through numerous discussions, will be affected by political purposes.

One of Korea’s health insurance characteristics is that the National Health Insurance Service (NHIS) is the exclusive purchaser of healthcare services and drugs.

Whether the NHIS grants insurance benefits for a specific drug, how and at what price has a profound effect on the medical practice of the pharmaceutical industry and patients suffering from particular diseases.

The total revenue of the NHIS reached 77 trillion won ($63.8 billion) in 2020, and 20 percent of it came from drugs. Therefore, numerous stakeholders are involved in drug reimbursement and pricing decision-making.

Under the current system, the government takes a procedure for determining insurance benefits for a specific drug first, and then another to decide on the drug price.

Government agencies for each procedure apply their own internal rules.

According to the health insurance benefit determination procedure, the government does not grant reimbursement for drugs supplied since December 2006 by default. Instead, the government selects excellent clinical efficacy and cost-effectiveness and approves insurance benefits.

This procedure starts with a pharmaceutical company applying new drug listings to the Health Insurance Review and Assessment Service (HIRA). Next, the agency holds a meeting of the Drug Reimbursement Evaluation Committee (DREC) in response to the application for reimbursement and evaluates whether the drug is eligible for insurance benefits.

The DREC comprises 102 members, including healthcare experts like doctors and pharmacists, related associations and consumer groups, and government officials.

If the DREC recommends reimbursement for a certain drug, the NHIS, as a single purchase, negotiates with the pharmaceutical company over a drug price cap and an expected claim amount. If the two sides conclude the negotiation, the Ministry of Health and Welfare’s Health Insurance Policy Review Committee reviews the talk results, and the Health and Welfare Minister confirms it through a public notification. Then, the ministry discloses the drug to the general public. Drugs that have not been negotiated cannot receive insurance benefits.

The Health Insurance Policy Review Committee, installed under the health and welfare ministry, deliberates and decides on health insurance policies, including the criteria for reimbursement, reimbursement costs, and health insurance premiums.

The committee comprises 25 members, including representatives from insured employees and employers, eight from the medical community, and a representative of public interest.

On behalf of the Korean people, the committee, including employers, suppliers, and a public interest representative, does the final review on whether the government is using insurance finances effectively.

Many stakeholders are intertwined in this dual procedure system, and decision-making authorities are dispersed. So, a single group or a person can’t dominate a decision.

Also, this system focused on how efficiently the government manages health insurance premiums paid by the subscribers.

Therefore, the system requires a difficult and slow decision to reflect changes in the healthcare industry and a new health demand of the Korean people.

Amid the controversy over insurance benefits for hair loss treatment, the upcoming presidential election will be a significant inflection point regarding whether Lee’s pledge will override the existing criteria and procedures of health insurance coverage that have been established for a long time.