Korean pharmaceutical companies are trimming budgets, reorganizing sales teams and reconsidering capital spending after the government lowered the reimbursement rate (the share paid by national health insurance) for new generic drugs to 45 percent of the original medicine's price from 53.55 percent. The lower rate, announced on Aug. 1, applies to new generics that applied for coverage in July and is expected to affect prices from October, while already covered drugs will be adjusted over 10 years. Industry groups estimate the overhaul could cost the sector as much as 3.6 trillion won in sales and 14,800 jobs. The policy is meant to reduce reliance on generic drugs and reward companies that keep investing in R&D (research and development), with preferential rates of 60 percent for innovative drugmakers and 50 percent for quasi-innovative ones. Executives and industry representatives say the immediate effect may be the opposite, leaving companies with less cash to fund technology, talent and expansion.