Korea-US Free Trade Agreement on Pharmaceuticals and Medical Devices

After 10 months of lengthy discussions and meetings, South Korea and the United States have finally wrapped up an epic free trade agreement. Among the various industries, the FTA also included provisions on the pharmaceutical and medical devices markets.

Among these provisions is a commitment to ensure transparency in Korea’s pricing and reimbursement system for drugs and to promote access to innovation for drugs. Another provision under the FTA includes the creation of an independent review mechanism for pricing and reimbursement decisions.

There has been considerable debate about reimbursement in Korea, especially since Korea introduced a “positive list” system of preferred drugs for reimbursement. Many pharmaceutical manufacturers and importers had difficulty getting products added to this list which focuses more on generics and lower-priced medicines. For the FTA talks, the US has regarded the positive list system as a mostly domestic, Korean matter and not appropriate for the agreement.

Other provisions under the FTA include commitments to ethical business practices, establishment of a Medicines Committee, and increased transparency in the pharmaceutical and medical devices markets. Korea has already begun to increase transparency of drug-related transactions by promoting Radio-Frequency Identification (RFID). RFID tags would be affixed to products to not only track them, but to also prevent illegal distribution and counterfeiting.

The agreement provides standards for increased protection of intellectual property rights, including patents, trademarks, and copyrights. There are also rules on civil, criminal and customs enforcement. Finally, the agreement contains provisions on establishing a patent linkage system to ensure adequate enforcement of pharmaceutical intellectual property rights. This way, registration of a generic form of a patented medicine would be denied while a patent is still in force.