Why are fever-reducing drugs out of stock amid the flu pandemic? A deep dive into drug distribution challenges and government's structural solutions

with the recent flu pandemic, pharmacies are experiencing severe shortages of fever-reducing medications, and certain formulations, such as liquid Tylenol, which is essential for pediatric care, have been out of stock for nearly a month, causing extreme inconvenience to patients. the Korean Medical Association attributes the prolonged Tylenol shortage to the increase in fever cases following COVID-19 vaccination, but advises patients to play it safe by consulting their pharmacist as there are plenty of acetaminophen formulations with the same ingredients on the market.

in fact, the top out-of-stock alert requests are not only for children's Tylenol suspension, but also for other pediatric fever reducers such as cetophen suspension and triptans, showing how the crisis is spreading. but these drug shortages are more than just a seasonal spike in demand, they reveal a structural instability that has been recurring for years. this year, more than 20,000 drug stock-outs were reported every month until October, and supply and demand instability has become a chronic problem, not only for cold medicines, but also for key medicines like antibiotics and blood pressure medications. despite the fact that the drug distribution system is directly related to public safety, it is pointed out that the transparency system has been introduced later than other industries, which means that the problem of stockouts cannot be resolved naturally.

three structural impediments to chronic stockouts

experts believe that chronic stock-outs of medicines go beyond manufacturing or production issues and stem from an opaque and inefficient domestic distribution structure.

1. overly competitive wholesalers

while there are only 300 drug manufacturing plants in the country, the number of drug wholesalers has more than doubled in the last decade to nearly 4,000. this is more than ten times the number of manufacturing plants, creating an environment of excessive competition. drugs are priced at a fixed list price under the drug pricing system, and wholesalers' margins are extremely low, typically between 2-5%. In this low-margin structure, managing quick turnover through bulk supply is key to wholesalers' survival, but the proliferation of players has made this system difficult.

when a particular drug goes out of stock, competing wholesalers scramble to restock, further destabilizing the market. this creates a backlog of medications that don't get to pharmacies or patients in time. to prevent such disruptions, there have been calls for greater transparency in the distribution process through the introduction of serialization of drug packaging units, which is expected to help ensure the accuracy of distribution transactions and reduce uncertainty in inventory management.

2. rampant illegal activities disrupting market order

taking advantage of the imbalance in the supply and demand of medicines, market order disruption has also been frequently detected. for example, a controversial case of 'sandwiching' by wholesalers who forced pharmacies with difficulty obtaining the obesity drug Saxenda to bundle orders of the relatively low-demand drug Wigobi. this deprives pharmacies of the option of ordering medicines and is prohibited under the Pharmacy Act as "disrupting market order, such as selling out of stalls.

in addition, some wholesalers have been caught engaging in hard-selling behavior, offering out-of-stock drugs only if a certain amount is purchased, and even certain salespeople have been caught spreading false texts that an antitussive expectorant syrup might be out of stock, causing it to actually run out of stock. Illegal distribution of these specialty drugs has also been active online, with more than 150 cases of illegal online sales and advertisements for GLP-1-based obesity drugs such as Saxenda and Xigovi being caught.there is a serious lack of oversight of the entire distribution system.

3. 'Korea passing' due to low drug prices

another pillar of chronic shortages is the so-called "Korea Passing" phenomenon, where innovative new drugs are slowed or avoided altogether.because drug prices in Korea tend to be lower than in other major markets, multinational pharmaceutical companies are often reluctant to enter the Korean market. this is due to pharmaceutical companies' concerns that lower drug prices in Korea will be used as a benchmark when negotiating drug prices in other countries, such as China, which could adversely affect global profits.

in particular, the Korean drug pricing system has been criticized for not adequately valuing new drugs. When negotiating drug prices, the National Health Insurance Service starts with the price of older drugs developed decades ago, or or operate a "usage-price linkage system " that requires drug prices to be renegotiated and reduced when a certain amount of a drug is used.these structural constraints are a major contributor to the lack of access to new medicines for patients, making it difficult for pharmaceutical companies to introduce new medicines and get the right price.

a government-wide plan to improve drug pricing and distribution to address the crisis

to address these structural challenges, the Ministry of Health and Welfare has announced a plan to overhaul the entire drug pricing system, which is centered on three pillars: rapid introduction of innovative new drugs, stable supply of essential drugs, and rationalization of drug expenditures.

1. rationalization and reduction of generic drug prices

the government is adjusting the drug price structure in favor of generic drugs by referring to the examples of major overseas countries. it has decided to reduce the price of generic drugs, which is currently 54% of the price of original drugs, to the 40% range.we will also strengthen "cascading drug price reductions," where the later a drug is introduced, the lower the price. these measures are aimed at stabilizing drug spending and encouraging pharmaceutical companies to focus on new drug research and development (R&D), rather than generic drugs. the main measures in the reform plan will be phased in from July 2026.

2. introduction of a 'flexible drug price contract system' to strengthen access to new drugs

to address the issue of "Korea passing" and speed up the introduction of innovative new drugs into Korea, a tentative "drug price flexibility contract system" has been established. this is a dual pricing systemthat differentiates the price displayed on the outside of a drug (the list price) from the price actually paid by the NHIS (the actual transaction price).

the government plans to announce the list price at the level of major overseas countries (A8 adjusted maximum price) to reduce pharmaceutical companies' concerns about referencing global drug prices, while the KHNH and pharmaceutical companies will sign a separate reimbursement contract to lower the actual payment. the system will be implemented from the second quarter of 2026, with the goal of increasing patient access to innovative new drug treatments.

3. overhauling the supply stabilization system for essential drugs

the system for "exit prevention drugs" - drugs that are essential for patient care but are not economically viable and need to be subsidized to cover production or import costs - will be completely revamped. this is because antibiotics for newborns, antipyretics, and penicillin, which are essential in emergencies, can lead to a crisis in essential health services if their supply is disrupted.

under the proposed reforms, the criteria for designating anti-deployment drugs will be realized and the actual standard for cost compensation will be significantly raised. In particular, the annual billing threshold will beraised from the current KRW 100 million toKRW 500 million, and the policy add-on will be set at a maximum of 7% to strengthen the actual cost compensation for pharmaceutical companies. in addition, we will extend preferential drug prices for national essential drugs using domestically produced raw materials to listed items, and actively provide incentives to stabilize supply, such as guaranteeing a longer period of time for the addition.

summary of the government's plan to stabilize drug supply and improve the drug price system

policy Goal detailed Improvement Plan highlights and expected implementation timeline generic drug (generic) management reducing the price calculation rate and strengthening tiered drug prices stepwise reduction of the reference price of generic drugs to 40% of the original (effective July 2026) enhancing access to new drugs introduce a flexible drug price contract system (dual pricing system) separate the list price from the actual transaction price to prevent "Korea passing." (To be implemented in Q2 2026) stabilizing essential medicines completely revamp the anti-exit drug system significantly increase the cost reimbursement threshold (KRW 500 million in claims) and establish a policy surcharge. (To be implemented in the second half of 2026)

long-term distribution efficiency debate: The benefits and harms of introducing ingredient name prescription

the debate on the introduction of 'prescription by ingredient name' is hotly debated as a way to solve the problem of drug stockouts in the long term and maximize distribution efficiency. it is a system that allows doctors to prescribe drugs by their ingredients instead of a specific trade name, and pharmacists to dispense a copy (generic) of the same ingredient, content, and formulation (substitution dispensing).

the need to promote formulary prescribing

pharmacy societies and civil society organizations that support the introduction of formulary prescribing emphasize that it can increase the efficiency of medication use and benefit patients. enabling alternative dispensing through formulary prescribing would eliminate the need for patients to travel to multiple pharmacies to obtain out-of-stock medicines, which is a practical alternative for patients, especially for medicines with unstable supply. furthermore , it has been estimated that prescribing by ingredient name could save an estimated KRW 7.9 trillion in drug costs annuallyand is part of a global trend toward increasing the sustainability of healthcare financing through drug cost savings.

recently, there have also been important practical advances in enabling substitution. the post-substitution notification process, which was previously handled by fax, will be improved with the integration of computerized systems. this is expected to significantly reduce the administrative burden on pharmacists and the psychological burden on hospitals, paving the way for a substantial increase in the rate of substitution, which has been low.

strong opposition from physician organizations

on the other hand, physician organizations are strongly opposed to the introduction of formulary prescribing. they argue that it infringes on doctors' "prescribing authority" and is a dangerous idea that puts the public's health at risk due to the potential for low-quality generics to be mixed in.

the medical community argues that the same ingredient can have clinical differences in efficacy or side effects due to different additives or formulations used by different manufacturers, which can lead to serious side effects or treatment failure for patients, especially for drugs with a narrow therapeutic range (narrow therapeutic window). furthermore , when adverse events occur when substituted with a generic drug, the quality of the drug, the prescribing and dispensing process, and the accountability of the pharmaceutical company remain unclear. ultimately , the debate is one where the public interest goal of eliminating drug stock-outs is intertwined with the professionalism of physicians and issues of ownership within the medical community.

conclusion: Toward a sustainable drug supply system

the recent drug shortages are not simply the result of an increase in pandemic diseases, but rather a complex structural challenge of an opaque distribution system with low margins and a lack of wholesalers, and delayed introduction of new drugs due to low drug prices.

the government's reform of the drug pricing system is an important policy attempt to simultaneously achieve the contradictory goals of promoting the introduction of innovative new drugs (flexible contracting system) and controlling drug expenditures (lowering generic prices). In particular, the substantial increase in the cost reimbursement threshold for anti-drug drugs to address the instability in the supply of essential drugs, which has been difficult to resolve through market economy logic, is considered an essential measure to maintain a patient-centered healthcare system.

however, to build a sustainable drug supply system, we need to address the remaining structural challenges: first, transparency in drug distribution. there is a need to regulate wholesaler proliferation, strengthen law enforcement against illegal reselling and kiosk hawking, and practically establish a drug serialization system to remove uncertainty in the distribution channels. second , a social consensus on the formulary prescribing debate. if social trust in the safety of patients and the quality of generic drugs is secured, and institutional mechanisms are put in place to clarify accountability in the event of adverse events, formulary prescribing can play a key role in solving drug shortages and reducing drug costs. Lasting supply stabilization will begin by addressing these structural obstacles one by one.