Thursday, July 20, 2006

U.S. government pushed Korea to drop new drug policy

U.S. government pushed Korea to drop new drug policy
Written by Heeseob Nam (
July 21, 2006

Alexander Vershbow, U.S. Ambassador to the Republic of Korea, visited Korean Ministry of Public Health on July 19 and had a meeting with Korean Minister (Mr. Yoo). On July 18, Mr. Vershbow requested the meeting and the purposes of his visit are to deliver U.S. government’s concerns on the drug pricing policy of Korean government. On May, the Korean government announced to reform its drug pricing policy of the national healthcare system by adopting measures to positively list reimbursable prescription drugs rather than the current “negative list”, which only lists the exclusions. During the second round of the KORUS FTA, the US negotiators expressed its strong opposition to the positive list system and refused to attend the Pharmaceutical and Medical Device Working Group meeting.

Reportedly, Mr. Vershbow strongly argued that the positive list system should be reconsidered since it would strike a blow to transnational pharmaceutical companies. After the meeting, Mr. Vershbow told a pressman that “Very constructive discussion. We both share common interests in putting FTA talks back on the track. … We also believe that it is important for foreign pharmaceutical companies to have a playing field in Korean market.”

Many Koreans believes this is an intervention of domestic affairs and pressure upon Korean government to withdraw the introduction of beneficial new drug policy. Before his trip to the U.S. this weekend, Mr. Vershbow tried to deliver his government’s position to Korean government on one hand and seek possible ways to get much fruits in the FTA negotiations on the other hand.

It is revealed that in the meeting Mr. Vershbow expressed “conditional acceptance” of the positive list system. Reportedly, he told that if the Korean government delays the implementation of the policy and has further discussions for the details with the U.S., the positive list system would be allowed to implement. This double-faced strategy shows that the intention of the U.S. lies in getting more concessions from Korean side in the KORUS FTA negotiation, which include stronger protection of intellectual property rights on pharmaceuticals. Korean Minister of Public Health showed the possibility of compromise by saying “If the U.S. brings up reasonable proposals, I would consider them as faithfully as possible.”

According to Korean government’s plan, legislation steps will be taken next week for the implementation of the positive list system. Official announcements from the Korean government are only focused on defending the positive list system without mentioning anything about another key issues that would be impaired by the compromise.

* For Korean NGO Statement on the positive list system and negotiation of 2nd round of the KORUS FTA, refer to
** For an official speech of Mr. Vershbow on the KORUS FTA, refer to

Korean Civil Societies Statement on 2nd Round of Korea-US FTA Talks

Korean Civil Societies Statement on 2nd Round of Korea-US FTA Talks

- What the Korean government should take away from the crippled talks of 2nd round is not to withdraw certain negotiating teams but to stop the negotiation itself -

The second round of FTA talks between Korea and United States ended on July 14, 2006 with cancellation of the final day’s entire schedule. In the second round, drug pricing policy of the Korean government became the central issue. The Korean government announced to reform its drug pricing policy of the national healthcare system by adopting measures to positively list reimbursable prescription drugs rather than the current “negative list”, which only lists the exclusions. This positive list system was planned on May 2006 and is expected to take effect on September 2006 when the third round of the KORUS FTA talks will be held in Seattle.

The US negotiators refused to attend the Pharmaceutical and Medical Device Working Group meeting from July 11 and expressed its strong opposition to the positive list system. Wendy Cutler, Assistant USTR and chief American negotiator, blamed that the system “can be used to discriminate against innovative drugs,” which are usually supplied by U.S. and thereby “limit the access of Korean patients and doctors to most innovative drugs in the world.” Subsequently, the U.S. negotiating teams did not attend the sessions for trade protection and service sectors and Korean side followed suit on Friday by canceling the meetings for commodity trade and environment.

We would first like to discuss the actions of both Korean and U.S. governments towards the new drug pricing policy planned by Korean government. The positive list system has been in operation in many OECD countries. If it discriminates against innovative drugs and limits patients’ access to these innovative drugs, the positive list system would already be abolished and failed to exist. However, the potential problems that the U.S. chief negotiator argued did not occur in any countries. The U.S. position on the positive list system is motivated by its aim to keep high prices on drugs supplied by U.S. pharmaceutical companies and ignores constitutional obligation of Korean government to implement comprehensive and systematic policies to maintain public health. In this regard, the U.S. government deserves reproach.

However, the Korean government should be the focus of greater criticism since it provided an excuse. Before the official launch of KORUS FTA this February, the Korean government made a promise the U.S. to address, as a precondition of the KORUS FTA, four areas of concern to the U.S.: beef; automobiles; pharmaceuticals; and screen quotas. With respect to the pharmaceuticals, Korean government agreed at the trade action agenda meeting last October, that no new drug reimbursement pricing policies would be introduced in the near future. Further, Korean government promised to set up an independent mechanism under which pharmaceutical companies could appeal the drug reimbursement decisions.

We view the actions of both governments’ negotiators to be intentional performances to disguise the substantive issues surrounding the problem. To the U.S. negotiators the Korean government’s pharmaceutical drug policy becomes the weapon for obtaining another greater concessions from the Korean side during the next round of talks. The U.S. pharmaceutical companies, even under the positive list system, has the power to file a suit against the Korean government through investor-government dispute and/or non-violation provisions after the KORUS FTA becomes effective. Reportedly, both sides have agreed to the investor-government dispute provision and as such the U.S. pharmaceutical companies may claim damages from the Korean government and request for abolishment of the positive list system. Further, when Korean side concedes to accept the U.S. request to introduce patent term extension and independent appeal system in drug pricing process, the positive list system loses its effect. Moreover, the U.S. pharmaceutical company, usually a patent holder for the drugs, is a single producer and the Korean government’s power to negotiate the drug price would be limited. In addition, the independent appeal system would further weaken the negotiating power of the Korean government. Therefore, the strong opposition displayed by the U.S. to the positive list system is merely negotiating strategy and tactic to gain more leverage in order to intervene on such matters as Korean drug policy and obtain term extension on drug patent, and linkage between patent and drug approval process from Korean side.

Likewise, the action of the Korean government is nothing more than fabricated performance. The Korean government has already agreed to protect intellectual property right holders as the investors, which would certainly weaken the effective function of the positive list system. During the second round, tens of thousands citizens intensely protested against the KORUS FTA, and public opinion in Korea took a turn from pro-FTA. The Korean government’s action to cancel the final day’s meeting was to appease the public and nothing more.

The dramatic performance staged by both sides clearly reveals the presence of significant problem in connection with free trade talks, as the nation’s public policy such as national healthcare system becomes a political pawn subject to trade negotiation. This will happen regularly when the proposed KORUS FTA is signed. Free trade agreement, in particular the KORUS FTA, would allow every public policy to be controlled by business interests. The shows played by both governments should be stopped. The business interests cannot take precedence over public interests.

July 14, 2006

Association of Korean Doctors for Health Rights
Association of Physicians for Humanism
Health Right Network
IPLeft, Intellectual Property Left
KANOS, Korea HIV/AIDS Network of Solidarity
Korea Dentists Association for Health Society
Korea Leukemia Patients Group
Korea Social Insurance Trade Union
Korean Federation of Medical Groups for Health Right
Korean Pharmacists For Democratic Society
Korean Progressive Network ‘Jinbonet’
Nanuri+ HIV/AIDS Human Rights Advocacy Group of Korea
Public Pharmaceutical Center
Solidarity for Worker’s Health

Monday, July 17, 2006

Who Gains from TRIPS Agreement

Source: Global Economic Prospects and the Developing Countries (2002), Chapter 5 Intellectual Property: Balancing Incentives with Competitive Access, at Page 133

The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433


Yang and Maskus (2001) studied technology licensing. The figures in the last column of table 5.1 update their results of estimating the impacts of international variations in patent rights on the volume of unaffiliated royalties and licensing fees (a measure of arm’s length technology transfer) paid to U.S. firms. Japan had a large absolute response, reflecting the importance of licensing in the Japanese economy.

However, large impacts were also discovered in the Republic of Korea, Mexico, Brazil, and Indonesia. Indeed the analysis suggested that licensing volumes would double in Mexico and India, and would go up by a factor of nearly five in Indonesia.

Balance of patent royalties and license fees

Korean Balance of (Patent) Royalties and License Fees (Million USD)

January -95.3
February -83.0
March -235.2
April -188.8
May -107.3

2005 -2571
2004 -2584.8
2003 -2258.8
2002 -2166.9
2001 -2129.4
2000 -2533
1999 -2205.9
1998 -2109.2
1997 -2161.5
1996 -2245.6
1995 -2085.6
1994 -1565
1993 -1284.8
1992 -1523.7
1991 -1520.8
1990 -1327.3
1989 -1100.2
1988 -772.7
1987 -564
1986 -457.3
1985 -319.6
1984 -260.8
1983 -166
1982 -158
1981 -86.8
1980 -99

Direct Import of Medicines and Patent

Written by Heeseob Nam on December 2002

1. Direct Importation and Related Regulations

According to the Foreign Trade Act, any person who intends to import goods needs to obtain an approval (import license) from the Minister of Commerce, Industry and Energy[1] (MCIE). However, exemption from the import license requirement is provided under the Foreign Trade Act if the goods to be imported are self-treatment drugs for a patient and the patient obtains a recommendation from the Commissioner of the Korea Food & Drug Administration[2] (KFDA) (Article 14(2) [3] of Foreign Trade Act, Article 27 of Presidential Decree of Foreign Trade Act, and Article 7-3 of Foreign Trade Administration Rule (Public Notice No. 2001-137 of the MCIE)).

Further, under Article 34 of the Pharmaceutical Affairs Act, any person who intends to import drugs needs to obtain approval for each drug from the KFDA or file a report with the Korean Association for Drug Imports and Exports[4] (KPTA) and then submit a Plan for Customs Entry Report to the KPTA. However, when the importation is for the purpose of a patient’s self-treatment, the above requirements are exempted.

In order to obtain exemption for a self-treatment drug, a patient must submit an application to the mayor’s office or the provincial governor’s office having jurisdiction over the hospital at which the patient is receiving treatment, or the Korea Orphan Drug Center. The application needs to be accompanied by the following documents: Recommendation Application for Exemption of Drug Importation Approval; and Medical Certificate issued by a national hospital, public health center, or medical institution as prescribed under Article 3(2) of the Medical Care Act.

In the Recommendation Application, the consignor, origin, HS code[5], description/size, unit/quantity, unit price, and amount of the drug must be clearly stated, and in the Medical Certificate, the name of the drug, usage and dosage for self-treatment must be stated.

2. No Legal Restrictions on the Type of Drugs for Direct Importation

According to the official responses of the Ministry of Health & Welfare[6] (MHW) and the KFDA[7] to our civil petition, there are no restrictions on the type of drugs and it is not necessary that the imported drug be officially approved and marketed in the exporting country for the exemption. In other words, even if the drug is patented in Korea or the drug is recognized as a new and innovative orphan drug, the recommendation for exemption is possible. Further, even if the exporting country does not verify the safety and efficacy of the imported drug, the recommendation can be issued only with the Medical Certificate. Please note that despite above mentioned no-legal restrictions, we need to conduct our own evaluation as to the safety and efficacy of your product.

In principle, drugs exempt from the import approval requirement must be self-treatment drugs having a value of less US$ 2,000. However, in case of drugs for ailments that require a specified treatment period, the import value may exceed US$ 2,000 if the minimum treatment period and drug quantity is specified. The US$ 2,000 limit will also not apply in cases where drugs are imported for two persons or more and each person's drug prescription is attached to the import approval exemption application.

3. Patentee Unable to Block Customs Clearance of Directly Imported Drugs

According to Article 235 of the Customs Act, an owner of a copyright or a registered trademark may request the Commissioner of the Korea Customs Service[8] (KCS) to withhold customs clearance of any allegedly infringing goods. However, the Customs Act has no such provision applicable to patent infringing goods.

According to the official position of the KCS, the Commissioner does not permit the withholding of customs clearance based on a claim by a patentee that a certain shipment of goods entering Korea infringes such patentee’s patent rights. The reason for such different treatment is that unlike copyright or trademark infringement cases, it is not readily determinable whether a good infringes a patent. Therefore, to stop customs clearance of allegedly patent infringing goods, the patentee can only rely on formal court proceedings for the issuance of an injunction. However, in the case where drugs are directly imported by patients, the patentee may not even rely on formal court proceedings to prevent importation because, as more fully explained below, the act of directly importing patent infringing products for non-commercial or non-industrial purposes does not constitute patent infringement.

4. Direct Importation By Patients Does Not Constitute Patent Infringement

Unless permission is received from the patentee, the act of importing a patented drug into Korea for industrial or commercial purpose constitutes an infringement of the patent for such drug registered with the Korean Intellectual Property Office[1] (KIPO). Since Glivec is a patented drug (Patent No. 261366) owned by Novartis AG of Switzerland and a compulsory license for the Glivec patent has not yet been issued to the petitioners (People’s Health Coalition for Equitable Society, Association of Physicians for Humanism, and Korean Pharmacists for Democratic Society), anyone who imports a Glivec-like drug for supply to a third party (e.g., CML patient) will be liable for patent infringement.

Article 94 of the Patent Act provides that “a patentee has an exclusive right to work a patented invention both commercially and industrially.” The terms “commercial” and “industrial” for purposes of the Patent Act do not necessarily mean a for-profit activity and hence the importation by NGOs, even if it is for a non-profit purpose, may constitute a patent infringement. However, an individual’s working of a patented invention (e.g., purchasing a patented drug by a patient) is not an infringing act since it is neither commercial nor industrial. Therefore, the legal importation of your product should be made directly by the patients themselves. The Petitioner for the compulsory license will not be able to legally import your product for distribution to patients until they obtain the compulsory license from the KIPO.

[1], Trade Policy Division; Tel +82-2-500-2366 Fax: +82-2-502-1754
[3] Any person, who intends to export or import goods designated by the Minister of Commerce, Industry and Energy in order to perform duties in accordance with treaties concluded and promulgated under the Constitution of the Republic of Korea and the generally accepted international laws and regulations as well as to preserve living resources, shall obtain the approval of the Minister of Trade, Industry and Energy; provided, that this shall not apply to the export and import of goods satisfying the standards as prescribed by the Presidential Decree, such as goods, the export or import of which is urgently required, or other goods the export or import procedures of which need to be simplified.
[4] According to the report of the KPTA, importation of medicine from India is US$ 32,099,918 including final product of US$ 48,568 from 1957 when the KPTA was established.
[5] Harmonized Commodity Description and Coding System
[7] KFDA Officials: Mr. Sang-yeul Lee (Tel: +822-380-1824, Fax: +822-359-6965, Email: or Mr. Sang-Bong Kim (Tel: +822-380-1824)

Sunday, July 16, 2006

Statement against Korea US FTA

NGO's Joint Statement Against KORUS FTA

We say NO to FTA, which threatens people's health right

People's health is under threat.

Neo-liberal globalization is the keyword explaining the current global political and economic system. Its policies and orders, implemented through multinational as well as bilateral or regional trade agreements, deterioratepublic interest and deprive the people of their rights to access to public service in the name of Free trade. FTA aims to promote privatization and commercialization of essential services such as health care, education, culture, electricity, water, and every aspects of life. As a result, it restricts access to medicine and threatens food security and safe environment.The proposed KORUS FTA contains provisions that put profit of transnational corporations (TNCs) ahead of people's health right. These are the reasons why we say No to KORUS FTA.

1. FTA facilitates privatization and commercialization of public services including healthcare system

We believe that everyone has the right to health service such as prevention, treatment and rehabilitation based on one's needs. Commercialization of health service and privatization of public health facilities restrict people's access to proper health care. Approving profit hospitals and private health insurance system undermines the national healthcare system which has been mandatory in Korea. We oppose the KORUS FTA as it undermines the healthcare system as public goods.

2. TRIPS plus provisions seriously restrict people's access to medicine

Every nation is responsible to ensure its people to access medicine at affordable price. FTAs seriously block people's access to medicine by forcing various measures to strengthen patent and intellectual property protections on medicine. For instance, linkage between patent and drug approval, patent term extension for examination delay, exclusive right on drug approval data, expanding patentable subject matter, limiting the circumstances under which compulsory license may be issued, and prohibiting parallel import would restrict the entry of generic competitors and undermine the ability to access to medicine at affordable price. We are also concerned of other measures such as A-7 average price for innovative drug used to raise the drug price and serve to benefit patent owners. We demand that any measures that restrict compulsory licensing and parallel import against the spirit of Doha Declaration on TRIPS Agreement and Public Health should be stopped.

3. FTA threatens the safety of food and water

We believe that water is a common resource that everyone has the right to get access. Also, safety should be the priority concern in food trading. We worry that the decision to restart import of beef that is not safe from mad cow disease is made by Korean government simply because beef was considered as a barrier to FTA talk. It should have been based on medical and epidemiologic evidence provided by independent party. The agreements on SPS(Sanitary and Phytosanitary Measures) & TBT(Technical Barriers to Trade) should not be used as measures to promote export against people's health. Thus we oppose KORUS FTA that privatize water; reach agreements on SPS & TBT that threatens health; and decide import of beef on political basis.

4. The investor-to-government claim system can infringe on government's duty and right to protect public goods.

We have witnessed many cases that investor-to-government claim system seriously infringes on people's right to health, safe environment, and public security system. Under NAFTA, Ethyl and UPS claims against government showed that public health policy could be ruined for the profit of corporations. We also know the case that the attempt of New Brunswick state government to introduce a policy to improve public health system was set back by an investor's claim. Therefore we oppose the KORUS FTA that contains provisions of investor-to-government claim system.

Any international agreement, bilateral and regional trade agreements should not contain provisions that adversely affect people's health status. We conclude that KORUS FTA would infringe on people's health right. Also we conclude that it will be a barrier to the global movement to enforce people's health right. Thus, we oppose KORUS FTA, and ask individuals and organizations all over the world to join our action.

22 June, 2006

건강권실현을위한보건의료단체연합 (Korean Federation of Medical Groups for Health Right)
건강사회를위한약사회 (Korean Pharmacists For Democratic Society)
건강사회를위한치과의사회 (Korea Dentists Association for Health Society)
건강세상네트워크 (Health Right Network)
공공의약센터 (Public Pharmaceutical Center)
공익제보자와 함께 하는 모임기독청년의료인회 (Christian Medical Association for People Health)
노동건강연대 (Solidarity for Worker's Health)
다산인권센터 (Dasan Human Rights Center)
문화연대 (Cultural Action)
미디액트 (MEDIACT)
민주사회를위한변호사모임 (MINBYUN-Lawyers for a Democratic Society)
언론개혁기독교연대 (Christian Coalition for Media Reform)
원불교인권위원회 (Won Buddhism Committee for Human Rights)
의료소비자시민연대 (Consolidation for Medical consumer)
이윤보다 인간을 (People before Profit)
인도주의실천의사협의회 (Association of Physicians for Humanism)
전국농민회총연맹 (Korean Advanced Farmers Federation)
전국병원노동조합협의회 (Korea Hospital Union Association)
전국보건의료산업노동조합 (Korea Health and Medical Workers Union)
전국사회보험노동조합 (Korea Social Insurance trade Union)
정보공유연대 IPLeft (Intellectual Property Left 'IPLeft')
진보네트워크센터 (Korean Progressive Network 'Jinbonet')
참의료실현청년한의사회 (Association of Korea Doctors for Health Rights)
평화인권연대 (Solidarity for Peace and Human Rights)
한국노동네트워크 (The Council of Labornet in South Korea)
한국HIV/AIDS감염인연대 KANOS (KANOS, Korea HIV/AIDS Network of Solidarity)
함께하는시민행동 (Citizens’ Action Network)
HIV/AIDS인권모임 나누리+ (Nanuri+HIV/AIDS Human Rights Advocacy Group of Korea)

ACT UP-Paris
ACT UP East Bay
Agua Buena Human Rights Association, Costa Rica
AIDS ACCESS Foundation , Thailand
Aids Budget Unit-IDASA
AIDS Policy Project
Alternative Law Forum, India
Asian Americans United
Association for the Sovereignty of Colmombia
Center for Health and Gender Equity (CHANGE), USA
Communicy HIV/AIDS Mobilization Project (CHAMP)
Essential Action (US)
Essential Drugs Project (UK)
Foundation for Media Alternatives
Frederick Noronha, Co-Founder, BytesForAll
Gestos- Soropositivity Communication & Gender (Brazil)
Glivec Concern Group from Hong Kong
Global AIDS Alliance
Global Alternate Information Applications (GAIA), India
Global Justice
Health Global Access Project (GAP) (US)
Housing Works, Inc. (US)
Lucia Victor Jayaseelan, Coordinating Officer , Committee for Asian Women (CAW)
Michel Bauwens, Foundation for P2P Alternatives
Middle East Children Alliance
Metropolitan Community Church of New York
Neighbors Against McPenntrification
Patients not Patents (US)
People's Health Movement US
Positive Malaysian Treatment Access & Advocacy Group (MTAAG+)
Thai Network for People Living with HIV/AIDS(TNP+)
The Educational Network for Global and Grassroots Exchange(ENGAGE)
The Foundation for Integrative AIDS Research (FAIR)
The International Community of Women Living with HIV/AIDS (ICW)
The Student Global AIDS CampaignTreatment Action Group (TAG)
Uganda Treatment Access movement
VOICE, Bangladesh

Royalty Guidelines and Actual Royalties in Exporting Pharmaceutical Patents

Royalty guideline is set forth in Enforcement Ordinance for Disposal, Management andCompensation of Public Officials’ Invention (“Ordinance”) enacted July 1, 1999. The sameroyalty guideline was prescribed in Enforcement Ordinance for Disposal and Management ofGovernment Owned Patent that was enacted April 1976 and abolished July 1, 1999.

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