Tuesday, April 17, 2007

Summary of Korea-US FTA (Health Related)

This summary is based on the press release of South Korean Government (SKG) on the conclusion of FTA negotiations with US. The released materials by SKG are all in Korean, and thus my translations of some terminologies and expressions may be different from the actual English text.

1. Drug Pricing and Reimbursement System under National Health Insurance

Demands of US include assurance of the minimum price (such as A-7 average price) of new drugs; introduction of price negotiation process for generic drugs; future adjustment of reimbursement price in consideration of inflation; withdrawal of SKG's plan to lower the price of off-patent drug to 80%; and putting off evaluation of
cost-effectiveness of drug.

SKG said it denied all of the demands and the final text does not contain such demands. However, I do not know how the positions of SKG are reflected in the text.

As I know, general principles include "to recognize the value of patented medicine [actual English text may have different expression]." What I am concerned is that the meaning of "value of patented medicine" is unclear and the pharmaceutical companies may argue the value of patented drugs is ignored when Korean government
cuts the price in the negotiation process between SKG and the pharmaceutical companies.

2. Transparency

2-1. Independent review process

It is agreed to accept the US demand to establish an independent review process in which a body independent from a national health organization reviews decisions of the organization regarding the price and reimbursement. SKG argues that the independent body has no authority to overturn the original decision.

However, as I heard, there is no written agreement on the "no authority to overturn the original decision."

2-2. Dissemination of Information

It is agreed to permit a pharmaceutical company to disseminate information regarding its pharmaceutical through the Internet linked to the company's website.

3. Pharmaceutical and Medical Devices Commission

SKG uses the term "commission" rather than working group. The mandate of the commission includes review of the implementation of agreement and promotion of mutual understanding of the agreement.

4. Intellectual Property Rights

4-1. Patent Term Extension Due to Approval Delay

It is agreed to provide a patent term extension to compensate for delays in drug approval process. When the drug is imported drug, the delay in exporting country may be excluded.

However, it is not clear if the exporting country includes US and Korea. And there is no limitation on the maximum period of the extension.

4-2. Patent Term Extension Due to Delay in Granting Patent

It is agreed to allow a patent term extension in case of delays in granting patent more than three years from the request of patent examination.

4-3. Data Exclusivity

US demanded the market exclusivity on data submitted for approval. SKG accepted this demand as SK has provided 6-year protection for new drug since 1995.

As I know, the data exclusivity covers "same and similar product" in both 5-year and 3-year exclusivity and the languages are quite similar to the AU-US FTA.

4-4. Compulsory License

There is nothing with respect to the grounds of compulsory license of patented invention. I heard that US withdrew its demand to narrow the grounds.

4-5. Approval and Patent Linkage

It is very likely that the agreed text on the linkage is quite similar to AU-US FTA.

According to the explanation of SKG, US demanded the inclusion of automatic stay of approval of generic manufacturer's application in case of a patent infringement action by a patent holder, but SKG denied. [I can not understand this position.] SKG further explains that SKG may introduce an automatic 9-month or 4-month stay rather
than 30-month stay in US law. The 9-month or 4-month stems from the time span from the filing of preliminary injunction to a court decision. However, SKG has no data on the average period in court decisions in civil actions (not the preliminary injunction) of pharmaceutical patent infringement.

4-6. Bolar Provision

As I know, the Bolar provision included in the FTA text does not replace or exclude the broader exception for research and experimental use of a patented invention under current Korean Patent Act.

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