Market competition and regulation-based pricing in South Korea’s generic drug market: factors associated with price dispersion following the 2020 pricing reform

South Korea revised its generic drug pricing system in July 2020 by introducing the post-20th entrant pricing rule, which assigned lower reimbursement prices to later generic entrants. This study examined the extent of price dispersion and its associated factors under the post-2020 pricing system. We constructed a dataset of reimbursed drugs approved since January 1, 2000, that remained listed as of October 1, 2025, and had at least one generic counterpart. Drugs were grouped by identical ingredient, formulation, and strength (IFS), and price dispersion was measured using the maximum discount rate (MDR) and average discount rate (ADR). Multivariable linear regression models and fractional logit models were used to examine factors associated with price dispersion. A total of 1,208 IFS groups were included. Market competition was strongly associated with price dispersion. Compared with duopoly markets, MDR increased by 9.8, 18.6, and 28.9 percentage points and ADR by 2.9, 4.5, and 4.2 percentage points in low-, moderate-, and high-competition markets, respectively (all P < 0.005). In contrast, the post-20th entrant pricing rule showed only a limited association with price dispersion, remaining significant only for MDR in the fractional logit model. Market competition was the primary determinant of price dispersion following the 2020 reform of South Korea’s generic drug pricing system, whereas the contribution of the post-20th entrant pricing rule was limited. Regulation-based pricing and market-oriented incentives should be regarded as complementary policy approaches to promoting price competition.