- Statutory Obligation to Reduce Innovator Drug Price
Under the Korean National Health Insurance Act (the “Act”) and related rules and regulations, even during the patent term of an innovator drug, in case the prices of potential generic drugs are registered with Health Insurance Review and Assessment Service(“HIRA”) by generic companies for eventual market launch, the innovator drug price is automatically and mandatorily reduced.? Such reduced innovator drug price can be recovered to its original price, only if there is a final judgment from the Korean Supreme Court, the highest appellate court in Korea, holding that the generic drugs infringe the innovator drug’s patent.
Therefore, the generic companies who do not respect the innovator drug’s patent term, but go ahead with their generic launch incur irreparable huge damage to the innovator company because of the automatic price reduction.? Moreover, such damage suffered by the innovator company grew bigger due to the recent amendment of the Act, which permitted larger reductions of the innovator drug price (53.55% of their original price).
- Suspension of Automatic Price Reduction Through Administrative Proceedings
Against the backdrop of the above, Lee & Ko has successfully represented an innovator drug company, a multinational pharmaceutical company, in administrative proceedings to object and suspend the automatic drug price reduction.? Such suspension of automatic reduction was granted for the first time since the Act has been in effect for the past few decades. ?Lee & Ko argued in the proceedings that: (i) registering potential generic drug price with MFDS is effectively an infringement of the innovator drug’s patent, and thus, should be considered illegal; (ii) mandatory reduction of the innovator drug price imposed on the innovator company based on such illegal act by the generic company is not fair and should not be permitted; and (iii) enforcement of such automatic price reduction incurs irreparable damage to the innovator company, and thus, the enforcement should be suspended. ?It took only ten days from the administrative petition submitted for the suspension of automatic price reduction that Lee & Ko obtained a favorable decision from the administrative court on behalf of its client.
- From Now, Unless Innovator Drug’s Patent Is Finally Invalidated, Irreparable Damage from the Automatic Price Reduction Can Be Prevented
In light of the favorable decision obtained by Lee & Ko above for the innovator drug company, unless innovator drug’s patent is finally invalidated in the Supreme Court, the innovator drug company may bring administrative proceedings at any time during the term of its patent to suspend the mandatory and automatic price reduction, which is triggered when generic companies prepare for their market launch and register their generic drug price with HIRA.
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