The government has taken steps to stabilize the supply of essential medicines by increasing the prices of exit-prevention drugs, but industry insiders believe these measures are insufficient to encourage expanded production. The rising costs of production are outpacing price adjustments, leading to decreased incentives for manufacturers.
As of this month, there are a total of 629 exit-prevention drugs, with Samjin Pharmaceutical's 'Samjin Lorazepam Injection' recently added to the list. Il Dong Pharmaceutical has resumed production of its product 'Ativan (Lorazepam)' after completing a transfer process. Lorazepam is identical in composition and formulation to Ativan, which has been used in medical settings, and is classified as a national essential medicine and exit-prevention drug.
The exit-prevention drug system is designed to manage medications that are essential for patient treatment but have low economic viability, making them difficult to supply. This system was introduced to support the supply of drugs that cannot be sustained by market forces alone.
The primary factor threatening the supply chain of exit-prevention drugs is low profitability. According to a report by the Health Insurance Review and Assessment Service, low profitability accounted for 20.3% of the reasons for the production and supply stoppage of exit-prevention drugs, the highest percentage recorded. Other reasons included issues with raw material supply (19.0%), production facility problems (17.7%), poor sales (16.5%), and inability to reassess (6.3%). While essential medicines are highly relied upon in medical settings, there is a lack of incentives to continue production.
The same report noted that the United States operates a drug shortage reporting system centered around the Food and Drug Administration (FDA) to stabilize the supply of essential medicines. Pharmaceutical companies that contribute to preventing drug shortages are awarded non-financial incentives. Japan supports domestic production of raw materials and adjusts drug prices for exit-prevention drugs twice a year if necessary. South Korea also has related systems in place, but the focus on managing health insurance finances has led to stringent verification processes, making it difficult for the industry to feel the benefits.
In response, the government plans to improve the system by raising the designation criteria for exit-prevention drugs by 10% and increasing the price standards for different formulations starting next month. The price for oral medications will rise from 525 won to 578 won, from 40 won to 44 won for oral liquid medications, from 2,800 won to 3,080 won for topical medications, and from 5,257 won to 5,783 won for injectable medications.
However, industry representatives argue that these measures alone are not enough to maintain the supply base. Although the prices of exit-prevention drugs are adjusted irregularly, the costs of raw materials, exchange rates, oil prices, and labor are constantly changing, making it difficult to reflect these realities in a timely manner.
One industry insider stated, "We have continuously requested that the designation of exit-prevention drugs and the application for cost compensation be made available on a regular basis. Most raw materials are imported from China and India, and payments are made in dollars, making us highly susceptible to exchange rate fluctuations. When oil prices rise, factory operating costs and logistics costs also increase, so we need a system that can timely reflect these costs."
Industry voices emphasize that exit-prevention drugs, unlike general medications, have a strong public good nature, necessitating institutional support to maintain a stable supply system. Another industry representative noted, "While there are differences by item, in most cases, even a 10% increase in the price of exit-prevention drugs does not make the economics work. Comprehensive measures that consider raw materials, distribution, and production costs are needed."
* This article has been translated by AI.
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