Longitudinal Study on the Impact of Three Major Regulations on the Korean Pharmaceutical Industry in the Last 30 Years

Abstract

\n Background: The pharmaceutical industry is heavily regulated. Partly for this reason, new drugs generally take over ten years to reach market entry from the product development stage. Although regulations affect the pharmaceutical industry over a long time, extant studies have usually focused on the short period before and after implementing a new regulatory policy to determine the impact of that policy. The purpose of this study is to examine whether and how significant regulatory policies affect long-term innovation in the pharmaceutical industry in Korea.Methods: This study focused on three significant regulatory policies: the product patent system, changes in the Good Manufacturing Practice (GMP) system, and the Drug Expenditure Rationalization Plan (DERP). This study used Interrupted Time Series (ITS) analysis to investigate the policies long-term impacts before and after their implementation.Results: Our results show that the introduction of the product patent system in 1987 significantly increased the number of Korean patent applications. The revised GMP policies effect was also statistically significant, both before and after implementation and between preemptive companies and non-preemptive ones. The DERP, however, did not significantly delay new drug registration in Korea due to companies negotiations with the regulatory authorities or the system that links drug approval and price evaluation.Conclusion: This study showed that the policies of the product patent system, GMP policies, and DERP regulations have significantly altered the course of the pharmaceutical industry in Korea. This study suggests that it is necessary for companies to preemptively respond to systemic changes in development and production strategies to deal with regulatory changes and achieve sustainable growth. Also, this study implies that the governmental authorities need to develop a regulatory policy that links innovation and competitiveness in domestic pharmaceutical companies.