Korea’s Biopharma Regulatory Reform Push To Focus On Innovation, Streamlining

South Korea is aiming to implement a broad range of regulatory reform steps to better compete with global rivals and speed up patient access to novel therapies.

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Korea Sees Promise, High Growth Potential In Biohealth Industry

South Korea has announced further plans to support the growth of the biopharma sector, with a focus this time on boosting exports and creating new digital markets, as well as selecting key areas of regulatory innovation to prioritize. 

The country sees the sector as having high potential for growth, export expansion and internationalization, given that the Korean industry earned international recognition during the COVID-19 pandemic, the Ministry of Health and Welfare (MHW) said.

As an example, the country's exports of in vitro diagnostics and medical devices rose sharply from $430m in 2019 to $4.65bn in 2021. Some companies such as Seegene saw sales surge to KRW1.4tn ($1.1bn) in 2021 from KRW102.3bn in 2018, while others like SD Biosensor surged to KRW2.9tn in 2021, led by a sharp rise in exports amid the pandemic. 

In addition, South Korea already has the world’s second-largest biologics manufacturing capacity, while the number of projects in the national new drug pipeline surged from 573 in 2018 to 1,883 in 2022.

Nevertheless, Korean economic growth has been falling steadily in line with the global economic situation, pushing other countries to prepare national strategies and laws to ensure strength in the global biopharma market. Some such as the US have established organizations committed to supporting high-risk, high-return innovative research - for example, the Advanced Research Projects Agency for Health (ARPA-H) - while Japan has also come up with multiple R&D support initiatives.

The main points of the new industry support plan announced by the Korean MHW are below - the government also intends to announce a five-year program to foster and support the sector later this month.

• The ministry will devise a Korean-type ARPA-H project this year to address major health issues such as cancer and infectious diseases.

• It plans to establish a biopharma innovation committee, led by the health ministry, as a government-wide governance body to review and establish relevant laws. Creating a single "control tower" for the industry has long been on the industry’s wish list.

• Enacting a digital healthcare law to ensure medical data is used safely, improvement of digital healthcare regulations and support for digital health firms.

• Incentives to speed up investment in the Korean biopharma sector, including biologics contract manufacturing.

Innovative Drugs, Digital Healthcare Part Of Regulatory Innovation 

The government believes that Korean firms can lead the global digital health market, which is still in its early stages with no particular leaders globally yet. Given current difficulties in using health and medical data due to medical, bioethics and personal information protection laws, it is seen a necessary to revise the legal system and guidelines in a "consistent and comprehensive way." 

Any improvements in the regulatory area will take into consideration stakeholder views, bioethics and personal information protection, and the aim is to focus on seven core areas – six technologies (innovative medical devices, innovative/essential drugs, digital healthcare, cutting-edge regenerative medicines/biologics, genome testing, and brain/machine interfaces), as well as infrastructure - that have large growth potential. A shift to a "negative" regulatory system, which approves first and regulates later, will also be considered.

In the innovative medical devices sector, repeated regulatory improvements still haven’t been felt by companies, while demands for rapid market entry and reimbursement that reflects value have been increasing. These issues need to be addressed as innovative devices which could change the paradigm of disease prevention, management and treatment emerge and the market expands, and to support innovation.

The government aims to reform regulations in stages, with an initial focus on innovative devices with high demand, clear evidence of efficacy and fewer safety concerns. In the longer term, the plan is to allow the temporary use (for up to three years) of such devices without reimbursement, while conducting technology evaluation. Based on the result, a decision on reimbursement would be made. 

Other key proposed measures include:

• Reimbursement measures for digital therapeutics: At present, it is difficult to apply reimbursement to such products because cost and effectiveness may differ depending on patient utility. For example, when evaluating treatment of addiction using a mobile app, usage varies as some users may complete the program and others don't, making it difficult to validate actual clinical value. Through discussions with stakeholders, the government will propose appropriate guidelines considering these features.

• Innovative and essential drugs: Korea needs to deal with changes in the pharma industry environment, including expansion of treatments for cancer and rare diseases and increases in global co-research. The government intends to propose a system to support the timely development and introduction of innovative drugs and to discuss decentralized clinical trials.

• Rapid reimbursement of new drugs: While Korea is taking steps to enable faster access to new drugs, there are ongoing social demands for more rapid reimbursement of products for serious diseases. The government will consider a pilot project to progress regulatory approvals, reimbursement evaluations and price negotiations in parallel for effective cancer and rare disease treatments with no alternative.

• Stable supply of essential medicines: The supply of essential drugs should be ensured through proper price compensation, the government believes. It plans to promptly raise ceiling prices if needed and to prioritize the purchase of medicines using domestic raw materials to prepare for new influenza outbreaks and biologic terrorism.

• Decentralized clinical trials: During the pandemic, interest in DCTs increased, helped by new technology, making it necessary to draw up rules for a more more systemic definition and new approaches. Korea needs to review its policy direction amid expectations use of this approach will continue to rise, and the government will form a consultative body with the private sector for concrete policy directions, including new guidelines.

• Strengthening pricing of innovative drugs: While Korea’s drug pricing system continually lowers reimbursement prices, it is seen as necessary to improve the system to support innovation. The government aims to form a consultative body with the private sector to enable "reasonable compensation" for novel new drugs and create an environment for the development of blockbusters. This could the include expansion of a risk-sharing system and a preference for the use of domestic raw materials.

• Improvement of innovative pharma company system: Korea's system to formally designate innovative pharma companies has not changed since 2012, which has made it difficult to reflect industry trends such as the increase in R&D activity by smaller bioventures, rising collaboration, open innovation and the emergence of new forms of companies such as no research, development only organizations (NRDOs). The country now intends to differentiate evaluation standards by company type and to revise the conditions for innovative designation by raising the requisite R&D cost ratios by two to three percentage points. This will be included in a special law to foster the pharma industry to be announced this year.

• Digital healthcare: Digital technologies and demand for remote medical services emerged during the pandemic. While remote medical treatment is temporarily allowed in Korea under the Infectious Disease Prevention Law, the government will seek to institutionalize remote treatment through legal revisions. However; face-to-face should be used in principle and remote treatment used in an adjuvant way. 

In a move related to all the above proposed changes, Korea's Ministry of Food and Drug Safety (MFDS) has launched CHORUS (channel on regulatory submission and review) - a constant, two-way communication method between the government and private sector related to approval reviews.

This aims to explore and implement regulatory improvements and about 30 MFDS officials and pharma industry executives will participate initially.