Monday, July 17, 2006

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] http://eportal.kipo.go.kr:8581/home/portal/ehtml/index.jsp
[1] http://www.mocie.go.kr/english/home/default.asp, Trade Policy Division; Tel +82-2-500-2366 Fax: +82-2-502-1754
[2] http://www.kfda.go.kr/english/english.html
[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] http://www.kpta.or.kr/ 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
[6] http://www.mohw.go.kr/english/index.html
[7] KFDA Officials: Mr. Sang-yeul Lee (Tel: +822-380-1824, Fax: +822-359-6965, Email: sangyeul@kfda.go.kr) or Mr. Sang-Bong Kim (Tel: +822-380-1824)
[8] http://www.suctoms.go.kr/

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