logo logo

US welcomes S Korea’s new drug policy within FTA: Seoul official

Hankyoreh, Korea

U.S. welcomes S. Korea’s new drug policy within FTA: Seoul official

21 August 2006

Singapore, Aug. 21 (Yonhap News). South Korea and the United States ended the first of a two-day meeting on pharmaceuticals and medical equipment on Monday, with Washington reiterating its acceptance of Seoul’s new drug policy plan within an envisioned free trade agreement (FTA), South Korean officials said.

South Korea and the U.S. launched FTA talks in Washington in early June, hoping to sign the deal within a year.

However, the second round of FTA talks held in Seoul last month came to an abrupt halt when the U.S. strongly protested South Korea’s plan to adopt a new drug insurance law aimed at offering quality drugs at an affordable price.

The proposed law calls for the revision of the country’s drug insurance policy so new drugs will not automatically be placed on a list of "positive drugs" that enables people to be reimbursed under related insurance policies.

New drugs will require strict mandatory screening by the Ministry of Health and Welfare for a period of about one year to check their cost-effectiveness. More expensive products will have a smaller chance of making it to the list granting reimbursement privileges.

The ministry ultimately aims to push drugmakers to develop quality drugs at lower prices to ensure they secure a listing.

The U.S. wants South Korea to expand access to the local pharmaceutical industry, but in Seoul’s planned reform, U.S. drug companies would be excluded from prescription reimbursements in the national health insurance program.

After Monday’s closed-door meeting, Cheon Man-bok, director of the Ministry of Health and Welfare’s FTA team, said in a press briefing that the U.S. negotiation team reconfirmed their acceptance of Seoul’s envisioned drug plan. Both parties proposed their demands and have searched to find an acceptable middle ground, while agreeing to work together to effectively carry out the third round of talks next month, Cheon said.

Cheon led the Seoul delegation in the Singapore talks, while Arrow Augerot, deputy assistant U.S. trade representative for Korea, represented the Washington team.

The South Korean official did not provide further details.

The sideline talks, which were held at the U.S. Embassy in Singapore on Monday, were scheduled to take place before the third round of the FTA meeting next month in Seattle. The parties will convene on Tuesday at the South Korean Embassy in the Southeast Asian city-state.

The two sides are expected to accelerate efforts to fine-tune details surrounding their pharmaceutical trade as Seoul plans to enforce the new policy within the year.

Seoul aims to push Washington to grant South Korean drugs "good manufacturing product" status, meaning they are acknowledged as being made in line with a set of regulations and guidelines for the production of drugs, health foods and medical devices within the U.S. It is also expected to demand that South Korean doctors’ licenses be recognized in the U.S.

The U.S. is expected to call for the establishment of an independent drug screening agency in South Korea to ensure transparency in the screening process of new drugs for reimbursement benefits, the ministry said.

The country is also likely to seek an extension of U.S. drug patents in South Korea, which normally lasts for 20 years, and possibly raise the issue of replica drugs made by South Korean pharmaceutical firms, which eat into foreign competitors’ profit margins.

"Only expensive medicines from multinational pharmaceuticals will be available in South Korea if the government agrees to entertain Washington’s demands," Moon Kyung-tae, vice chairman of the Korea Pharmaceutical Manufacturers Association, said earlier in the day in front of the U.S. Embassy in Singapore to support the South Korean delegation.

Kim Jong-hoon, South Korea’s top FTA negotiator with the U.S., said in Seoul that the Singapore talks will not become a trade-off meeting, with Seoul yielding to Washington’s demands to gain its endorsement in other areas.

"There will be no give-and-take negotiations during the meeting.

It (the Singapore talks) will focus on the means and details of operating the new system of putting products on the ’positive list,’" Kim told Yonhap News Agency.

"It is not appropriate to say that we (Seoul) will yield to Washington’s demands in other areas in return for them accepting our new drug policy plan," said Kim.

Besides pharmaceuticals, the other main areas of disagreement in the trade talks are the opening of the agriculture and textile markets, and the country-of-origin issue regarding South Korean products made at an inter-Korean industrial complex in North Korea.

South Korea is the world’s 11th-largest economy and the U.S.’s seventh-biggest trading partner. Two-way trade amounted to US$72 billion last year, with South Korea posting a surplus of $16 billion, according to South Korean government data.