Health authorities have recently accelerated follow-up procedures surrounding choline alfoscerate drugs because pharmaceutical companies submitted the results of a clinical reassessment for the mild cognitive impairment indication last month. As the submitted clinical results failed to meet the primary endpoint, the outlook for whether the indication will be retained—and the scale of health insurance reimbursement clawbacks—is expected to take shape soon.
According to the pharmaceutical and biotech industry on the 26th, a clinical reassessment is a procedure to re-establish, through clinical trials, the efficacy of drugs already approved and on the market. This marks the first large-scale confirmatory domestic clinical trial targeting choline alfoscerate drugs. When choline drugs received domestic approval in 2000, they benefited from the "foreign pharmacopeia-based system," under which any ingredient listed in the pharmacopeias of advanced countries could be granted indications and health insurance reimbursement without separate clinical trials.
The controversy surrounding choline drugs was fully triggered when a public-interest audit—asserting that "more than 1 trillion won in health insurance funds is being spent on a drug without evidence"—was filed with the Board of Audit and Inspection in 2019. Among the eight countries Korea references for its drug pricing policy (A8: the U.S., U.K., Germany, France, Italy, Switzerland, Japan, and Canada), seven—excluding Italy—treat choline drugs as food ingredients or health functional foods, and even Italy, which developed choline drugs, classifies them as pharmaceuticals but does not apply health insurance reimbursement.
Accordingly, in 2020—20 years after their introduction—the Ministry of Health and Welfare decided to reduce reimbursement (converting to selective reimbursement) for some indications, including mild cognitive impairment. The Ministry of Food and Drug Safety further required pharmaceutical companies to prove efficacy through clinical reassessment, and stated it would delete the indications if they failed. The National Health Insurance Service also signed conditional clawback contracts with pharmaceutical companies to recover 20% of prescription amounts paid from the date of clinical trial plan approval to the point of deletion, should the indications be deleted.
Currently, the only thing pharmaceutical companies can rely on is the formal clinical reassessment results, as they have suffered consecutive losses against the government in the reimbursement-reduction cancellation lawsuit, the clawback-negotiation order cancellation lawsuit, and the clawback-negotiation contract invalidation lawsuit.
The Supreme Court ultimately ruled in the government's favor in the clawback-negotiation order cancellation lawsuit and the reimbursement-reduction cancellation lawsuit in 2024 and 2025, respectively. The clawback-negotiation contract invalidation lawsuit was lost at the first trial in the Seoul Administrative Court last year and is currently in appeal.
Initially, the government planned to reduce reimbursement simultaneously with its announcement and to complete the clinical reassessment by 2025. But with litigation over choline drugs continuing for five years and the clinical trials delayed by the medical-government conflict, the reimbursement reduction was carried out last year, and the final results of the mild cognitive impairment clinical trials were only submitted last month.
The problem is that the choline drug clinical trials for mild cognitive impairment (degenerative and vascular) conducted by pharmaceutical companies failed to achieve the primary endpoint. There was no significant difference in the maintenance or improvement of cognitive function between the group taking choline drugs and the group that did not. In a supplementary analysis targeting a patient group that faithfully adhered to some dosing criteria (PPS), a 7.76 percentage point difference was found. However, given that PPS characteristics may bias toward patient groups that manage their health well, it remains uncertain whether the Ministry of Food and Drug Safety will accept it. A ministry official said, "As the reassessment results report has been submitted, we plan to review it based on scientific validity." The clinical trial results for the Alzheimer's-type dementia indication are scheduled to be submitted in December next year.
If the Ministry of Food and Drug Safety ultimately decides to delete the indications, the National Health Insurance Service will begin large-scale clawback procedures. According to UBIST, a pharmaceutical market research firm, prescription amounts for choline drugs were 622.3 billion won in 2023, 612.3 billion won in 2024, and 545.6 billion won in 2025, maintaining an annual market of 500 billion to 600 billion won until recently. Simply applying 20% of prescription amounts from June 2021, when the clinical trials began, to the present, the clawback scale exceeds 500 billion won. An official from Pharmacists for Healthy Society, which filed the public-interest audit, argued, "In the case of choline drugs, the possibility of side effects such as stroke and cerebral hemorrhage from long-term use has been raised, so retaining the indications is not the answer."
Reflecting this situation, pharmaceutical companies selling choline drugs are recognizing clawback provision liabilities in their accounts. Daewoong Bio and Chong Kun Dang, which have the largest prescription volumes, have each recognized estimated liabilities approaching 100 billion won, assuming the clinical reassessment fails. Hanmi Pharm, Alico Pharmaceutical, Dongkoo Bio & Pharma, Kukje Pharma, Dongkwang Pharmaceutical, Genepharm, Dongkook Pharmaceutical, and Whanin Pharmaceutical are also reflecting recoverable amounts ranging from tens of billions to hundreds of billions of won in their financial statements.
