Monday, July 31, 2006

Korean A-7 Prices Compared to U.S. Prices

by Julie Patel
CPTech was asked by Heeseob Nam to compare prices in the United States (U.S.) and Korea for the certain medicines (in this case cancer drugs), including Iressa (for lung cancer), Velcade (for blood cancer), Gleevec (forchronic myeloid leukemia) and Temodar (for brain cancer), for which we were able to obtain US and Korean prices.

One objective is to compare the prices that the US government pays for medicines to the prices that the Korea government is obligated to pay, under the so called A-7 Pricing Agreement.

The A-7 pricing agreement was recently described by USTR as follows:
"In 1999, the United States and Korea reached agreement on how new innovative drugs were to be priced (based on A-7 pricing or the average ex-factory price of A-7 countries, i.e., United States, United Kingdom, Germany, France, Italy, Switzerland, and Japan) and reimbursed (based on Actual Transaction Price [ATP]). Since its implementation, anomalies have surfaced. A June 2004 industry survey revealed that A-7 prices have only been granted to 33 percent of new products since April 2000. Because of Korea’s restrictive application of the A-7 pricing methodology, U.S. drug companies have decided not to introduce at least nine new products in Korea from 2000 to the present. In December 2004, the United States proposed that Korea issue a one-page justification for when it decides not to provide A-7 pricing for new medicines. The proposal is currently under discussion."

2005 Trade Policy Agenda and 2004 Annual Report of the President of the United States on the Trade Agreements Program. Office of the United States Trade Representative. Section III. Bilateral and Regional Negotiations (full document available here)
We looked at three different measures of US prices, and compared them to the Korean A-7 prices, provided by Mr. Nam.
  1. The U.S. Big 4 price which is only available to Veterans Administration, Department of Defense, Public Health Service (Indian Health Service), and U.S. Coast Guard customers and are based on pricing calculations outlined under the U.S. Public Law.
  2. The U.S. Federal Supply Schedule Price which is multiple award, multi-year federal contract that is available for use by any Federal Government agency. It satisfies all Federal contract laws and regulations. Pricing is negotiated based on how vendors do business with their commercial customers. The FSS program also provides additional opportunities for savings to the customers with negotiated quantity and tier discounts.
  3. The U.S. retail price as offered by, for someone who does not have insurance. This price is normally higher than the prices paid by US consumers who have private insurance or other methods of obtaining negotiated prices.
  4. The Korean prices determined by a 1999 A-7 pricing agreement.


For all products for which we have data, the prices paid by the US government, under the "big four" or FSS schedules, were always lower than the prices that Korea must pay under the A-7 pricing agreement. In some cases, the differences were very large. Compared to the "Big 4" prices, the A-7 prices were 20 to 84 percent higher.

Prices for four drugs
(price per year or completed treatment)
Drug Big 4 FSS A-7
Iressa $14,516 $18,775 $23,696
Velcade $47,991 $47,991 $57,685
Gleevec(600) $28,654 $43,898 $52,831
Temodar $16,935 $16,935 $20,255

As a share of income, the differences are even more clear. In the table below, current prices are expressed as a percentage of 2004 per capita GNI ($14,000 in Korea, and $41,440 in the U.S.), illustrating the relative hardship that Korea faces with the A-7 pricing agreement.

Prices as a share of income
Drug Big 4 FSS A-7
Iressa 35%
Velcade 116%
Gleevec(600) 69%
Temodar 41%

For the three products available from, A-7 prices were higher for two, and lower for one. The prices are prices faced by uninsured persons.

(price per year or completed treatment)

Iressa $21,964
Velcade na

Gleevec(600) $48,769
Temodar $28,523

<------------Data on the four drugs-------------------->

Iressa is indicated as monotherapy for the continued treatment of patients with locally advanced lung cancer. The recommended daily dose of IRESSA is one 250 mg tablet with or without food. Treatment is continued as long as the patient continues to benefit.

For patients receiving Iressa (250mg/day) it will cost per day, month, and year:
  • U.S. Big 4: $39.88/day, $1,116.64/Mo, $14,516.32/Yr
  • U.S. FSS: $51.58/day, $1,444.24/ Mo, $18,775.12/ Yr
  • U.S. $60.34/day, $1,689.52/ Mo, $21,963.76/ Yr
  • Korean A7: $65.10/day, $1,822.80/ Mo, $23,696.40/ Yr
Velcade is used to treat a type of blood cancer called multiple myeloma. It is a cancer of the plasma cell, an important part of the immune system that produces antibodies to help fight infection and disease.

Velcade is given by injection into the bloodstream twice a week for two weeks (days 1, 4, 8, and 11) followed by a 10-day rest period (days 12-21). This three week treatment schedule is considered as ONE CYCLE of treatment. A physician will decide how many cycles a patient will receive depending on their particular stage of cancer.

For patients receiving Velcade (3.5 mg) 2x/week for 2 weeks will cost per month (about 1 cycle), and per year (about 17 cycles):
  • U.S. Big 4: $2,823/Mo, $47,991/Yr
  • U.S. FSS: $2,823/Mo, $47,991/Yr
  • U.S. Unavailable
  • Korean A7: $4,807.04/Mo, $57,684.48/Yr
Gleevec is indicated for the treatment of patients with chronic myeloid leukemia (CML) in blast crisis, accelerated phase, or in chronic phase after failure of interferon-alpha therapy. CML is a type of cancer in which the bone marrow produces an excessive number of abnormal white blood cells. These abnormal cells suppress the production of normal white blood cells, which act to protect the body against infection. In time, the abnormal cells spread to sites outside of the bone marrow.

The recommended dosage of Gleevec is 400 mg/day for patients in chronic phase CML and 600 mg/day for patients in accelerated phase or blast crisis. The prescribed dose is administered orally, once daily with a meal and a large glass of water. Treatment is continued as long as the patient continues to benefit. Gleevec is sold in 100mg tablets.

For patients receiving Gleevec (400mg/day) will cost per day, month and year:
  • U.S. Big 4: $52.48/day, $1,469.44/Mo, $19,102.72/Yr
  • U.S. FSS: $80.40/day, $2,251.20/Mo, $29,265.60/Yr
  • U.S. $89.32/day, $2,500.96/Mo, $32,512.48/Yr
  • Korean A7: $96.76/day, $2,709.28/Mo, $35,220.64/Yr
For patients receiving Gleevec (600mg/day) will cost per day, month, and year:
  • U.S. Big 4: $78.72/day, $2,204.16/Mo, $28,654.08/Yr
  • U.S. FSS: $120.60/day,$3,376.80/Mo, $43,898.40/Yr
  • U.S. $133.98/day,$3,751.44/Mo, $48,768.72/Yr
  • Korean A7: $145.14/day, $4,063.92/Mo, $52,830.96/Yr
Temodar is used to treat adults newly diagnosed with a form of brain cancer (glioblastoma multiforme) while also being treated with radiotherapy and then used as a maintenance treatment. The daily dose of Temodar capsules for a given patient is calculated by the physician, based on the patient's body surface area (BSA) which is based on a person's height and weight. The resulting dose is then rounded off to the nearest 5 mg. Patients continue to take Temodar until their physician determines that their disease has progressed, up to two years, or until unacceptable side effects of toxicities occur.

On average patients newly diagnosed with this type of brain cancer are administered Temodar orally for 42 days concomitant with focal radiotherapy followed by maintenance Temodar for 6 cycles, in which each cycle consists of 5 days of treatment and 23 days of rest, with varying dosages dependent on a person's BSA and response to treatment. This treatments constitutes at one treatment procedure and will be the basis for our calculations.

For instance, a man who is 6 feet tall, weighs 190 pounds and has a BSA of 2.1 would have the following drug course and cost per TREATMENT PROCEDURE (includes initial 42 days of 160mg Temodar treatment and 6 cycles (Cycle 1 with 315mg and Cycles 2 through 6 with 420mg of Temodar) thereafter):

Cost per treatment procedure (72 days of actual treatment):
U.S. Big 4: $16,935.06
U.S. FSS: $16,935.06
U.S. $28,523.38
Korean A7: $20,255.06

Collective (total) milligrams (mgs) of Temodar taken by a person per treatment procedure is 18,795 mgs.


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