Flagship products from South Korea's first-generation medical artificial intelligence companies have entered formal assessment procedures one after another as their exemption periods for new health technology assessment expire. Medical AI tools that had been used only conditionally in clinical settings now face a test of whether they can be recognized as official diagnostic and treatment procedures. Even if they clear the assessment, however, another hurdle remains in setting national health insurance reimbursement rates, raising tension across the industry.
According to the pharmaceutical and biotechnology industry on the 21st, the National Evidence-based Healthcare Collaborating Agency (NECA) held a final deliberation on the 18th on new health technology assessment for Vuno's (338220.KQ) "VUNO Med-DeepCARS," including its function for monitoring the risk of cardiac arrest within 24 hours. An official at Vuno said the company understands that the NECA review has been completed. "No separate findings or requests for supplementary material have been delivered to the company so far, so we are waiting for the official announcement," the official said. New health technology assessment is a system that verifies the safety and efficacy of new medical procedures. Because medical AI performs diagnosis and treatment in ways that do not exist in the current medical system, it must pass the assessment to be recognized as an official medical procedure. As a result, medical AI products have until now been used conditionally in only some clinical settings through the new health technology assessment exemption or the innovative medical technology program.
Passing the assessment also lowers the burden on hospitals adopting the technology, because requirements such as temporary use periods, mandatory reporting of the institutions using the product and written patient consent are removed. An official in the medical AI industry said the change is significant in that it creates a new medical procedure code. "Later-entrant AI companies can also use this code, and on that basis, discussions on applying national health insurance coverage can begin," the official said.
Because this is effectively the first step toward entering the formal regulatory framework, the medical AI industry is watching the outcome of the review closely. Other major medical AI companies including Lunit (328130.KQ), JLK (322510.KQ) and Deepnoid (315640.KQ) are also set to undergo new health technology assessment sequentially starting early next year. The conditional use period for JLK's cerebral infarction subtype classification solution "JBS-01K" expires in February next year. Lunit's breast cancer screening support AI "Lunit INSIGHT MMG" is currently going through its final exemption extension procedure. Deepnoid's brain aneurysm imaging diagnosis solution "DEEP:NEURO" is also scheduled to enter new health technology assessment next year.
Even after passing the assessment, another hurdle remains in national health insurance reimbursement rates. Because hospitals need to minimize patient costs to actively adopt medical AI, the level at which insurance coverage is set affects the commercial viability of these products. Decisions on national health insurance coverage are made after the new health technology assessment is completed.
Another official in the medical AI industry said that if reimbursement is set too low, commercial viability will suffer and later entrants that use the same code will inevitably be hurt as well. "The reimbursement level of the first case could become the benchmark for judging the business sustainability of the entire industry," the official said.
Companies are accordingly working not only on technical performance but also on proving the need for insurance coverage. Separately from the new health technology assessment, Vuno is focusing on demonstrating improvements in actual patient outcomes, such as reductions in cardiac arrest and death, along with economic benefits including shorter stays in general wards and intensive care units. Lunit is likewise working to show that INSIGHT MMG does more than assist existing readings by radiology departments, improving cancer detection rates and patient outcomes.
Meanwhile, according to a Samjong KPMG report on the AI-driven transformation of the healthcare industry, South Korea's AI healthcare market, estimated at $377 million in 2023, is projected to grow at an average annual rate of 50.8% to reach $6.672 billion by 2030.
