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There are several mechanisms by which the government can reduce the disposition of a product after the provision is put in place, including (i) for products sold below the provision to hospitals (in this case, the provision may be reduced to reflect the actual price of the transaction), (ii) a “price-volume link” system to reduce the disposition of products that sell well above the volume expected by the company; and (iii) mrP reductions or suspension of reimbursement (or the imposition of a fine instead of a suspension of reimbursement) where it is established that a company has granted bribes to health professionals or medical facilities. Once a drug is approved, companies can apply to the Health Insurance Insurance Review and Assessment Service (“HIRA”) for the product to be listed for reimbursement in accordance with the NHI. With respect to new drugs, the reimbursement list usually includes a two-step process: (i) HIRA first decides whether the product is eligible for reimbursement from the NHI by assessing the clinical benefit and cost-effectiveness of the product; and (ii) the company and NHIS negotiate the maximum reimbursement price (“MRP”) of the product based on factors such as the price of the product in other countries, local prices for comparable medicines and the impact on the NHI budget. For some oncology and orphan drugs, for which pharmacoeconomic assessment (“PE”) is difficult to perform, the assessment is optional or the company may enter into a risk-sharing agreement (“RSA”). Generic and combined MFPs are defined on a defined formula and the list of reimbursements can be completed within three months. As noted above, PE data are an important factor that is taken into account in determining the provision and, depending on the type of drug, alternatives (such as the WAP provision of alternative treatments or a “modified price” depending on the national distribution margin) may also be available. In general, the margin of the supply chain is taken into account when determining the provision. As a general rule, refund/discount plans are not allowed, except for products subject to an RSA or for which the pe assessment has been exempted. This means that the listed and effective price for the vast majority of drugs is the same in Korea.

Once the product has been listed under NHI, its disposition may be reduced if the volume of the product far exceeds what the company had anticipated at the time of the negotiations with the NMO or if the volume exceeds a certain threshold due to the broadening of the level of reimbursement or the growth of the product market. Once a product is patented and the generics are listed, the layout of the branded/original product is reduced. It is extremely rare for the disposition of a product to be increased according to the refund list – this would only be the case in exceptional circumstances. B, for example, if a company attempts to remove the product from the Korean market, as the current provision is significantly lower than the costs of production and import. For new drugs, the MRP is generally established after the MOU assessment to assess the cost-effectiveness of the product and negotiations with NHIS. NHIS and the company negotiate the provision on the basis of factors such as the amount recommended by the DREC, the reimbursement price in other jurisdictions and the local price of comparable drugs. As mentioned above, companies can accept a provision of 90 to 100% of WAPs of substitutes, in which case they can quickly obtain a refund list without having to negotiate with NHIS. Keywords: Forecast volume; THE VPA; Pharmaceutical spending Price-volume agreement.