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US pharma calls for action as Korea FTA nears

World News | February 29, 2012


Lynne Taylor

US pharma calls for action as Korea FTA nears

US drugmakers have called for fast action to address biopharmaceutical pricing and reimbursement issues in Korea ahead of March 15, when the US-Korea Free Trade Agreement (KORUS FTA) is set to take effect. 

On March 15, almost 80% of US exports of industrial products and almost two-thirds of its exports of agricultural products to Korea will become duty-free, thus opening up "Korea's $1 trillion economy for America's workers, businesses, farmers and ranchers, while also strengthening our economic partnership with a key Asia-Pacific ally," says US Trade Representative (USTR) Ron Kirk.

Also coming into force will be significant commitments including strengthened protections for intellectual property rights (IPR), "backed by the agreement's strong enforcement provisions, which will enable the US to hold Korea to its promises under the pact," according to a statement from Ambassador Kirk's office.

However, the Pharmaceutical Research and Manufacturers of America (PhRMA) says that, while this FTA represents a 21st-century standard that should be a model for other agreements including the Trans Pacific Partnership (TPP): "we are highly concerned that the Korean government has not implemented certain provisions requiring transparency and due process in the manner that Korea prices and reimburses biopharmaceutical products."

"We strongly urge the US and Korean governments to work together quickly to implement fully these provisions," said PhRMA chief executive John J Castellani.

Last year, PhRMA had told members of the House Ways and Means Committee that the KORUS FTA represented “a ‘gold standard’ for opening foreign markets to US biopharmaceutical innovative products and protecting the intellectual property embedded in those products."  

Given that Korea has a single-payer system, the most important hurdle to be overcome in gaining access to the national healthcare system is "being granted a meaningful right to participate in the Korean market. The KORUS FTA accomplishes this important objective by establishing a level playing field so that US research-based biopharmaceutical companies can compete on equal terms with Korea's domestic firms," the industry association told legislators.

However, in its submission to the USTR's annual Special 301 Report on the global state of IPR protection and enforcement for 2012, the PhRMA asks for Korea to be placed on the USTR's Watch List, because of continued concerns over: - lack of effective patent enforcement; - vague and unclear regulations regarding data protection, particularly in regards to new indications; - lack of transparency, accountability and predictability in government policy-making; and - lack of reward for innovation in government pharmaceutical pricing and reimbursement policies.

Notwithstanding its concerns, Mr Castellani says that PhRMA has long viewed the FTA as "an important opportunity for Korean patients to access biopharmaceutical medicines produced in the US. With rising living standards and increasingly sophisticated access to information, Korean patients, like patients everywhere, want access to the most advanced medical treatments," he says.

Meantime, a commentary in the Dong-A Ilbo (East Asia Daily) newspaper warns that the FTA "is no guarantee that Korea will grow into a powerful trade country if improperly implemented," and that pharmaceuticals is one of the domestic industries likely to "suffer losses."

The private sector and the government need to work together to maximise the effects of the deal, says the newspaper, which quotes the Korea Pharmaceutical Manufacturers Association as calling for domestic deregulation to help boost exports of new drugs derived from natural sources, for which there is growing interest in the US.

• The US and Korea completed work over the President's Day (February 20) weekend to review each other's laws and regulations related to implementation of the agreement, as authorised by the FTA's implementing bill approved by Congress last October. 


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