Comparative analysis of post-listing drug price changes under South Korea’s price reduction system

Abstract Background Pharmaceutical spending has risen steadily across health systems, intensifying concerns about patient access to medicines and the financial sustainability of health insurance systems. While newly listed drugs are a major contributor of expenditure growth, increasing policy attention has focused on how drug prices evolve after reimbursement listing through post-listing price regulation mechanisms. Methods We conducted a longitudinal empirical analysis using administrative data from South Korea’s National Health Insurance system. All new drugs approved by the Ministry of Food and Drug Safety and listed for reimbursement between 2013 and 2022 were identified, and their reimbursement prices were followed through September 30, 2024 to identify post-listing price adjustment events. Price reduction mechanisms were classified into four categories: indication expansion, price–volume agreements, transaction price-based adjustments, and patent expiry with generic entry. The reduction rate for each event was calculated relative to the reimbursement price immediately preceding that event. Descriptive analyses examined the timing and magnitude of price reductions over the product life-cycle, together with subgroup analyses by orphan and/or oncology status. Results Among 212 newly listed drugs, 160 (75.5%) experienced at least one post-listing price reduction. By 36 months after listing, 115 of the 194 products still under observation (59.3%) had undergone at least one price reduction and the mean cumulative price reduction was 6.0%; by 84 months, 93 of 114 products (81.6%) had done so and the mean cumulative reduction had increased to 15.0%. Transaction price-based adjustments were the most frequent mechanism, accounting for 202 of 494 adjustment events (40.9%), but were associated with the smallest average reduction (0.5% per event). In contrast, reductions following patent expiry accounted for only 44 events (8.9%) yet produced the largest average reduction (28.7% per event). The first price reduction occurred at a median of 29 months (interquartile range [IQR] 20–36) after listing, and indication expansion was the trigger associated with the earliest initial reductions. Whether any reduction occurred at all differed markedly across subgroups: 33 of 34 oncology drugs underwent at least one reduction, whereas 17 of 30 orphan drugs (56.7%) and 10 of 26 orphan–oncology drugs (38.5%) underwent none during the observation period. Conclusions Post-listing price reductions in South Korea cumulatively shape drug prices over the product life-cycle. Policy-driven adjustment mechanisms and competition-driven reductions differ markedly in both how often they apply and how much they reduce prices, so considering frequency and magnitude together may support more effective pharmaceutical expenditure management.