President Moon Jae-in has pledged to foster the bio-health industry as a major growth engine. Still, related government ministries are going in the opposite direction, neglecting locally developed incrementally modified drugs (IMD), a lawmaker said.

“The revised bill for generic drug prices, which was announced in July, contains a clause that removes the price advantage for IMDs,” Rep. Oh Jae-sae of the ruling Democratic Party of Korea said Monday based on reports from health regulators. “If implemented, it will hinder the development of the pharmaceutical bio-industry.”

The Ministry of Food and Drug Safety recognizes IMD when it demonstrates efficacy or reduces side effects, improves usability, and advances in medical technology, compared to existing original medicines.

The modified drugs are an intermediate phase for local pharmaceutical companies, which lack new drug development capability, as IMDs have a higher probability of success than new drugs with reduced costs and time. Multinational pharmaceutical companies also look at developing IMD as a new business model.

Among the new drugs approved by the U.S. Food and Drug Administration (FDA) for the past decade, IMD accounts for 70 percent.

Korea also established the criteria for assessing the value of IMD in 2008 and the preferential price standard for IMD in 2013 to motivate the development of IMD by calculating the median price of IMD between new drugs and generics.

As a result, local pharmaceutical companies have made significant achievements by, for instance, re-exporting IMD to original companies. Korean pharmaceutical companies are investing 1.6 trillion won ($1.3 billion), or 8.3 percent of their total sales, into developing IMDs.

Industry officials point out, however, the government’s new plan to revise the IMD price system calls for reducing the price of IMDs similar to that of generic drugs after only three years after the first generic launch, going against the President’s intention to foster the bio-industry.

In May, the government vowed to spend 4 trillion won a year for the bio-health sector by 2025 and get rid of regulations that hamper the growth of pharmaceutical goods, medical devices, and healthcare services.

“The simplification of the system to unify the incentive periods of synthetic and biologics will lead to Korea’s loss of its foothold for the bio-industry,” Rep. Oh said. “The implementation of the IMD drug price system, which is contrary to the bio-innovation strategy and the comprehensive pharmaceutical industry development plan, should be reviewed.”

Oh also called for health regulatory agencies to be consistent in implementing new policies.

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