S. Korea to cut drug prices by average of 17 pct

SEOUL, Aug. 12 (Yonhap) -- South Korea will cut drug prices by an average of 17 percent starting in 2012 as part of its efforts to reduce excessive medical outlays that have become a social burden, the government said Friday.
   The Ministry of Health and Welfare said at a meeting of the health insurance policy review committee that cutting drug prices could help reduce spending by up to 2.1 trillion won (US$1.94 billion) per year.
   In 2010, South Koreans spent a total of 43.7 trillion won on medical-related outlays, of which 12.8 trillion won involved drug costs. Drug costs have grown every year by around 10 percent, or about 1 trillion won.
   The ministry said that it is in the process of revising related laws that can help reduce the amount of money that has to be paid by the country's medical insurance system to hospitals, clinics and drugstores.
   "Once the measures go into effect, people could save around 600 billion won per year on drug-related outlays, with the savings reaching 1.5 trillion won for the medical insurance system," the ministry said.
   It said the cuts are being taken because the percentage of drug-related outlays in the country's medical insurance system is 1.6 times the average for other Organization for Economic Cooperation and Development countries.
   The ministry added that to help with local pharmaceutical companies' lost earnings, the government plans to give special support in research and development (R&D) so they can continue to make new drugs.
   Related to the plan that does not need parliamentary approval, local pharmaceutical companies said the measures would effectively make it impossible for companies to generate profits that can limit critical R&D efforts.
   Companies that universally protested the announcement warned that by cutting drug prices the government will allow foreign pharmaceutical companies to dominate the local market.