Regulatory Changes in the South Korean Medical Market: Medical Devices and Pharmaceuticals

I. SOUTH KOREAN ECONOMIC OVERVIEW

After 25 years of very high economic growth, South Korea’s economy was severely weakened last fall by the Asian financial crisis. By late December 1997, the country had amassed $90 billion in short-term debt, and the resulting financial instability and withdrawal of speculative investment caused the won to plummet 50%. By first quarter 1998, GDP growth had already fallen by 3.8%, the country’s worst performance since 1980. The major reasons behind South Korea’s financial collapse were slow export growth (exports grew by only 3.7% in 1996, a huge drop from 30% in 1995) and the inability of the Korean government to deregulate the economy and make its labor and financial markets more efficient.

However, the Asian crisis also marked a turning point in South Korea’s economic policies. Many of South Korea’s restrictions on foreign investment have been lifted in the past six months, including restrictions on foreign ownership of companies (February 1998) and foreign land ownership (March 1998). On May 6, 1998, the government also announced the opening of 11 additional sectors to foreign investment, including investment services, credit rating services, and petroleum product manufacturing. Korea is also planning to liberalize its trust companies, newspapers and telecommunications sector by January 1, 1999. Finally, the Ministry of Finance and the Economy (MOFE) announced on May 20, 1998 a plan to comprehensively restructure the country’s financial system, including a provision that the cost of restructuring must be borne primarily by Korean financial institutions themselves, not the government.

While the effectiveness of South Korea’s reforms remains to be seen, the country still possesses many of the fundamentals for growth – high savings rates, a strong emphasis on education, and a hard-working labor force. With the recent efforts to liberalize its economy, South Korea will continue to be an attractive market for foreign companies.

Foreign medical companies will be one of the greatest beneficiaries of South Korea’s economic liberalization, since the country’s $11 billion medical industry ($1.1 billion for the medical device market and $9.7 billion for the pharmaceutical market) is the largest in Asia behind Japan and China. In the past year, efforts to streamline medical regulations have led to numerous changes in the procedures foreign medical companies must follow to enter the South Korean market. Foreign medical companies interested in penetrating the large and profitable South Korean medical market must therefore have a clear understanding of the new regulatory environment in order to increase their competitiveness.

 

II. REORGANIZATION OF THE MOHW

South Korea’s efforts at reforming its medical industry began a few years ago with the reorganization of its Ministry of Health and Welfare (MOHW). MOHW, formerly the Ministry of Health and Social Affairs, is responsible for providing social welfare services for children, the elderly, disabled and handicapped persons. The organization is also responsible for disease prevention and the management of South Korea’s national medical insurance and national pension systems. MOHW employs about 4,000 people; it has two Director-General’s Offices, five Bureaus including a Pharmaceutical Affairs Bureau, and 27 affiliated organizations all over the country.

As part of South Korea’s liberalization efforts, MOHW has recently introduced such reforms as liberalizing the import of pharmaceuticals and establishing quality standards for the domestic manufacture of pharmaceuticals and medical devices (see section VI). MOHW also appointed a group of organization heads, journalists and scholars noted for their involvement in the Korean health care market as ombudsmen to increase transparency and accountability within the organization. Finally, the MOHW is working on refining medical benefit assurance programs and the social welfare system, as well as ensuring international competitiveness with government support for Korea’s health and medical industry.

Over the past year, the MOHW has changed the regulatory environment for pharmaceuticals and medical devices. The new regulations directly affect foreign manufacturers, and are described in the following two sections.

 

III. KOREA’S NEW REGULATORY FRAMEWORK FOR MEDICAL DEVICES

Introduction

South Korea’s market for medical devices has been growing rapidly. The market as a whole grew about 14% between 1996 and 1997, with imports increasing 15% over the same period. Korean market demand for advanced medical technologies has also been growing rapidly, as local care providers have increased their interest in upgrading their service quality and existing hospitals, at least prior to the crisis, have undertaken a major expansion of their facilities. As a result, import growth is likely to continue at a rapid pace.

Korea’s MOHW introduced a new regulatory system for medical devices on September 1, 1997. The new system is a result of negotiations between the US and Korean governments to streamline Korea’s medical regulatory system, and greatly improves opportunities for foreign companies to penetrate the large Korean medical device market.
The new regulatory system will undergo a transitional period from September 1, 1997 to September 1, 1999. Medical devices that were imported before September 1997 can continue to be imported under the old procedures, but all medical devices imported during the transitional period will need to comply with the new regulations by September 1999. All medical devices imported after September 1997 must comply with the new regulations, listed in Table 1:

Table 1. New Regulations Affecting the Medical Device Industry in Korea

Name of Regulation Date Implemented
Regulations for the Designation of Medical Devices and Others May 1997
Guidelines for Preparing Applications for Approval of Standards and Testing Methods (STM) for Medical Devices June 1997
Regulations for Testing Medical Devices and for Approving the Compliance of Quality Control Standards June 1997
Guidelines for Approving the License of a Medical Device Manufacturer and the Manufacture or Import of Medical Devices June 1997
Regulations for Good Manufacturing Practices (GMP) and Quality Control Standards June 1997
Regulations for Administering Imported Medical Devices June 1997
Regulations for Reviewing the Safety and Effectiveness of Medical Devices and Others June 1997

General Approval Requirements for Medical Device Importers

Before importing medical devices to South Korea, a firm must first obtain a Medical Device Importer’s License through the city government. Companies seeking to obtain this license will be required to show that neither they nor their personnel will deviate from existing medical device regulations.

Second, all medical device importers must obtain a Quality System Approval by September 1999 from the Korean Academy of Industrial Technology (KAITECH). If an importer decides to expand its business to new categories of medical devices, it must obtain additional Quality System Approvals for each of the new categories.

A Quality System Approval is granted by KAITECH based on the following factors: 1) accurate maintenance of all records regarding imported devices, 2) personnel and test facilities for quality assurance, and 3) the quality of personnel and equipment used for after-sales services. KAITECH judges importers’ quality management standards using its “Quality Management Standards for Imported Medical Devices (QMS) Regulations.”

Finally, medical device importers must undergo a compliance inspection at least every two years by KAITECH. This periodic inspection process ensures that foreign companies are complying with the QMS regulations mentioned above. Again, U.S. manufacturers can be exempted from these compliance inspections if they present updated Good Manufacturing Practice (GMP) documents demonstrating continued compliance to U.S. GMP. These documents usually take the form of FDA audit records.

Major Changes in the New Regulatory System

In December of 1995, Korea established a risk-based medical device classification system in which each of the three different device categories was assigned different requirements for obtaining registration approval (see Table 2 below). Class I devices posed the lowest risk to the patients, while devices in Class II and III bore increasing levels of risk.

Table 2. Risk-Based Classification of Medical Devices in Korea

Class I:
Products that do not come into direct contact with, or pose any hazards to, the human body (includes knives, scissors, drills, beds, and wheelchairs for medical use).

Class II:
Products whose safety and effectiveness can be guaranteed if they are designed and manufactured according to relevant standards relating to their raw materials, components, structure, and performance (includes transcutaneous electrical nerve stimulators, ultrasound scanners, defibrillators, and electro-encephalographs).

Class III:
Products that have a serious effect on the human body, such as life-supporting devices or permanent implants (includes pacemakers, prosthetic heart valves, vascular graft prostheses, and artificial tissue).

A. Changes in Registration of Class I Devices

While the classification of devices has remained the same, some regulatory changes have occurred after 1997. For example, importers of Class I devices previously had to notify the Korean Medical Instruments Industrial Cooperative (KMIIC) with a “documentary review” covering general information on their product (name, type, efficacy, technical specifications, and instructions). Approval is still not required of Class I device importers under the new regulations; a “Technical Specification Notification” covering the same topics as the documentary review is still the only major item required. However, importers must now notify the Korean Food and Drug Administration (KFDA) instead of the KMIIC, which was phased out a few years ago.

U.S. suppliers of Class I devices are now also required to present two pieces of information to their Korean importers. First, they must submit a Certificate to Foreign Government (CFG) issued by the FDA, or, if a CFG is not available, a Certificate of Free Sale (CFS) normally available from the government in the state where the device is manufactured. Second, they must submit a document containing information on the raw materials used in the medical device, its appearance or structure, manufacturing process, effectiveness or efficacy, uses, instructions, packing units, and labels. Information on the manufacturer should also be included.

B. Changes in Registration of Class II and III Devices

However, Class II and III medical devices require approval by government agencies before they can be sold and distributed. Approval of both these device types is contingent on: 1) a Review of Standards and Testing Methods (STM) covering the same requirements as the Technical Specification Notification for Class I devices, and 2) a local Type Test prior to importation that covers physical tests by a test agency and identification of products with the approved STM. Again, the approving agency for the STM approval is the KFDA. For the type test, importers can choose which approving agency they want depending on the type of medical device being tested (see Table 3 below). Finally, foreign importers must obtain final import approval after the STM and type test results are submitted and approved by the MOHW.

Table 3. List of Approving Agencies for Type Tests (Class II and III Devices)

Agency Name Special Device Concentration
Korea Academy of Industrial Technology (KAITECH) (general)
Korea Testing & Research Institute for Chemical Industries (KOTRIC) General medical devices like catheters
Korea Merchandise Testing & Research Institute (KOMTRI) General medical devices like catheters
Korea Electric & Electronic Testing Institute (KETI) (general)
Seoul National University College of Dentistry Dental products only
Yon-Sei University College of Dentistry Dental products only
Kyung-Hee University College of Dentistry Dental products only

Prior to 1997, testing of Class II devices was not required if the manufacturers could show that these devices were manufactured according to certain standards regarding their raw materials, components, structure, and performance (see Table 2). Furthermore, while imported medical devices were previously tested by agencies designated by MOHW, foreign manufacturers are now required to test their products themselves in local test labs that they maintain in South Korea. To ease the financial burden on foreign companies for maintaining in-house test labs, tests that require expensive medical equipment can be contracted out to independent test labs authorized by the Korean government.

Exemption of Regulations for Imported Medical Devices

South Korea’s increased emphasis on improving the safety and quality of medical equipment does not mean that its new regulatory framework has become more restrictive. The new regulations abolished a previous requirement that mandated testing of every shipment for 11 medical device categories, making the type tests (which are only required before the first importation) a much more efficient substitute. Also, foreign-made medical devices can be exempted from local testing requirements if foreign manufacturers show, by presenting foreign compliance GMP documents and other foreign test data, that their quality standards are equal to or higher than Korean GMP (see section V). Ultimately, since most of South Korea’s medical device importers (the major ones being the U.S., Europe, and Japan) already follow international standards such as ISO 9000 or GMP, they will most likely find their market position improved as the Korean government looks to harmonize its standards with those accepted internationally.

C. Example: U.S. Medical Device Companies

U.S. medical devices can be waived from local testing and maintaining in-house labs when they submit: 1) test data conducted in the U.S. based on the same criteria indicated in the approved STM; 2) documents of protocols used for U.S. tests where appropriate; and 3) a letter from the FDA or FDA audit records indicating that the U.S. test labs conducting those tests are in general compliance with U.S. Good Laboratory Practice (GLP). In addition, many international standards like ISO 9000, EN46000 and Japanese GMP are also acceptable for U.S. firms that are manufacturing devices in third countries and then exporting them to South Korea.

KAITECH requires a regular audit of Korean importers’ records at least every two years to verify that foreign manufacturers continue to comply with U.S. GMP or ISO quality systems. When U.S. manufacturers pass a regular GMP audit by the U.S. FDA or ISO audit, they should also make sure that they continually provide their Korean importers with the new U.S. FDA GMP or ISO documentation, so they can continue to be exempted from local testing requirements.

 

IV. SOUTH KOREA’S NEW REGULATORY FRAMEWORK FOR PHARMACEUTICALS

Introduction

As with medical devices, South Korea is trying to simultaneously improve the quality and safety of its pharmaceutical products while making the pharmaceutical industry more efficient. This will greatly help foreign pharmaceutical companies, who already enjoy a reputation for their high-quality products. Recent policy efforts include South Korea’s expansion of its market to support new and innovative drugs such as anti-tumor agents, preventing retail sales of pharmaceuticals from falling below factory prices, liberalizing regulations concerning drug compounding space, reducing customs duties on pharmaceuticals to 8%, and re-dividing ethical drugs and over-the-counter drugs as part of a larger plan to promote specialization in the pharmaceutical industry.

Before the reforms had occurred, the South Korean pharmaceutical market was growing about 7 – 10% annually, with imports growing about 12 – 13% annually from 1996 – 1998. The country’s market growth is expected to continue at about 11.5% annually through the year 2000, by which time South Korea will rank eighth in the world of global pharmaceutical markets.

Import Requirements

A. Obtaining Licenses

Korean importers of foreign pharmaceuticals must first obtain a Trader’s License from the Korean International Trader’s Association (KITA). This requires submitting a copy of the foreign company’s business registration and an application for membership in KITA along with the general application form. Obtaining a trader’s license usually takes a few days, and is required for all pharmaceutical products.

Korean importers must then apply for a Pharmaceutical Importer License from the KFDA. To do this, they must submit: 1) a copy of their Trader’s License, 2) details of their laboratory and warehouse facilities, 3) a Health Exam Certificate, and 4) license and identification for the company’s employed pharmacist. The KFDA takes a maximum of about 45 days to approve a Pharmaceutical Importer License.

B. Obtaining a STM Certificate

Generic Drugs

The next step requires Koran importers to apply for a Standards and Testing Methods (STM) certificate from the KFDA’s National Institute of Health. This requirement can be waived if the exact product in question has already been approved under a different company, or if the STM for the product is already published and publicly available. In this case, only notification of import to the KFDA is necessary. Otherwise, however, Korean importers must apply for the STM certificate by submitting: 1) an application form, 2) a copy of their Pharmaceutical License, 3) a Certificate of Free Sales, and 4) a Certificate of Manufacture.

The approval time to obtain a STM certificate is about 10 to 25 days for generic drugs, and 60 – 90 days, at least in theory, for new applications, new drug combinations, and/or new delivery channels.

New Drugs

For new drugs, importers must now obtain a “Safety and Efficacy” approval from MOHW’s New Pharmaceutical Product Development Department (NPPDD) and the KFDA’ s National Institute of Safety Research (NISR) by submitting: 1) a new drug data/summary sheet, 2) a copy of their completed application submitted for new drug approval, and 3) product samples. The new drug data should include the drug’s: 1) origin/development, 2) physiochemical/biological properties, 2) stability, 4) toxicology, 5) pharmacology, and 6) clinical trials, as well as a technical file listing the drug’s specification and testing method. The NPPDD and KFDA/NISR may also decide to consult with MOHW’s Central Pharmaceutical Affairs Committee (CPAC) regarding conditional product approval for new drugs.

Taking the U.S. as an example, a U.S. pharmaceutical manufacturer of a new drug must first provide two certificates: 1) a Certificate of Free Sale, including the product formulation and percentage breakdown by ingredient, and 2) a Certificate of Manufacture showing that the U.S. manufacturer is in compliance with relevant U.S. FDA regulations. Both of these certificates are available from the FDA or state government, and may be combined. Sample certificates are also available from the Korea Pharmaceutical Trader’s Association (KPTA). Like the Korean importer, the U.S. supplier must also provide a copy of the completed application submitted for new drug approval, a new drug data/summary sheet, and product samples. For new drugs, the maximum approval time for an STM Certificate is about 145 days, excluding hold time when the application is not complete.

Finally, local clinical trials are required for new drugs that have been sold freely in the Korean market within the last 3 years (products sold for more than 3 years do not require this sort of testing) and for new drugs that have not been sold outside of the country in which they were developed.

In order for clinical trials to be conducted, U.S. suppliers must first present their Certificate of Free Sales and have their Clinical Trial Plan approved by MOHW. Afterwards, clinical tests must be approved by the local testing agency and sent for review by MOHW. Importers of new drugs must also obtain a conditional product approval from MOHW. While the clinical trials themselves take about 9 to 18 months, the total time from the issuance of the Certificate of Free Sale to MOHW’s issuance of a manufacturer’s permit takes an average of 21 months.

C. Obtaining Import Approval and an Import License

As noted before, import approval covers all drugs that have not already been approved previously. For those drugs that have been approved before, only import notification to the KFDA is necessary.

For import approval, Korean importers must submit: 1) a pro forma invoice or quotation, 2) an Import License form, 3) a copy of their Pharmaceutical Importer License, and 4) a copy of their Product Approval. The review time for approval depends on the product. And while import approval applies to all shipments, approving agencies differ. For the first shipment, the KFDA or MOHW are the approving agencies; for later shipments and in-vitro diagnostics, the KPTA is the approving authority.

To obtain an import license and open a Letter of Credit (L/C), Korean importers must submit a pro forma invoice or quotation, a copy of their import approval, and an L/C form. The approving agency is the bank, and the approval time is generally about 1 day.

D. Clearances

The first thing U.S. companies must do is obtain a pre-clearance report upon the arrival of the shipment. This procedure, which usually takes about a day, requires Korean importers to submit an application form, a copy of their product approval, their import license, and a Bill of Lading (B/L) to the Korean Health and Environment Research Institute (HERI). The U.S. supplier must also submit a B/L.

Next, U.S. suppliers must obtain a customs clearance from the Korea Customs Service (KCS). Both the U.S. suppliers and Korean importers must provide a copy of their import license, B/L, an invoice, and a packing list. Within three days of receiving the customs clearance, U.S. companies and their Korean importers must submit product samples for testing to HERI and thereby obtain a Certificate of Analysis. Unlike all of the steps listed above, this procedure is waived for second or later shipments.

E. Pricing and Labeling

Korean importers are then required to submit a Standard Retail Price Report to the KPTA and a Korean Labeling Report to the KFDA. For the Standard Retail Price Report, importers must submit an application form, import cost breakdown, and copies of their import approval and import license. For the Labeling Report, importers must submit a copy of their Import Approval, Certificate of Analysis, Standard Retail Price Report, and a sample of their Korean label. In Korea, the containers and packages for all imported pharmaceuticals must be clearly marked to show: 1) manufacturers’ and importers’ names and addresses, 2) the name of the product, 3) the date of production and batch number, 4) the names and weights of the ingredients, 5) quantity, 6) the number of units, 7) the storage method, 8) distribution validity date, 9) instructions for use, 10) Import License number, 11) effectiveness, and 12) suggested retail price. The maximum review time for the Standard Retail Price Report and the Labeling Report is about 5 – 7 days for each, and after the first shipment neither procedure needs to be repeated.

Post-Import Requirements

After the Price and Labeling Reports are submitted, importers can attach Korean labels to each product unit, and distribute their product for sales. However, U.S. suppliers must follow a number of post-import requirements to assure the government that their shipments are still meeting relevant quality standards.

First, U.S. suppliers should maintain Product Standards Records for more than three years after receiving their import customs clearance. This involves keeping records on: 1) the product name, approval number and approval date, 2) the product’s origin (country and company), 3) the actual Product Approval, 4) a copy of the Korean form, and 5) the STM Certificate. The MOHW may audit these records at any time. Foreign suppliers of new drugs also have to conduct a six-year Post-Marketing Surveillance (PMS) that is approved by MOHW, and involves monitoring side effects and keeping records for a six-year period. Submission of these records to MOHW is necessary for obtaining final approval for their product.

Second, U.S. suppliers must maintain Import Management Records. Like the Product Standards Records, these records must also be maintained for more than three years after the U.S. supplier receives its import customs clearance. The MOHW may audit any one of the following documents: 1) the product name, approval number and approval date, 2) the product’s origin (country and company), 3) the date of first import (customs clearance), 4) the product’s quality inspection result and notification date, 5) the submission date of the request to review the Korean form, 6) the import (customs clearance) date and quantity by manufacturing number, 7) the in-house inspection date and result, and 8) the purchaser of the product, date of sale, and quantity.

A third procedure U.S. suppliers must carry out for more than three years after obtaining their import customs clearance is the maintenance of Quality Assurance Records and performance of Quality Assurance Tests. Importers are required to keep on file: 1) the product name, approval number, and approval date; 2) the STM Certificate, 3) their test scores and results by manufacturing number, 4) the test facility and equipment needed for quality management, 5) handling and storage instructions for the standard sample product and reagent, and 6) handling and storage instructions for lab plants and animals used in safety tests. Testing should be done either in the importer’s in-house testing facility or annually at a testing agency. If tests are outsourced, the U.S. supplier should provide the name of the lab conducting the test, the test contract, test items, the shipment method for lab plants and animals, etc.

Finally, U.S. suppliers must submit a Monthly Report of Import Statistics to the KPTA detailing the quantity imported by product type. This report should by submitted by the fifth day of the following month, and is required for all products.

Registering Pharmaceuticals in the Korean Market

There are generally two types of foreign companies registering and selling in the South Korean pharmaceutical market. The first are large companies that have actually set up subsidiaries, are incorporated according to Korean law, and can afford to have their own regulatory staff. The second sell through the Korean market through a Korean partner (agent/distributor). Korean law dictates, however, that only Korean companies, not foreign suppliers, can engage in regulatory registrations. Thus, where there is no subsidiary based in South Korea, all companies have identified a Korean agent/distributor to perform both the regulatory aspects of importing and marketing/distribution. Having a Korean distributor is extremely important since Korean regulations are still quite complex and often require applying for registration in Korean, performing constant follow-up and engaging in ongoing face-to-face meetings with Korean regulatory officials.

V. OTHER KEY REGULATORY ISSUES IN THE KOREAN MEDICAL INDUSTRY

South Korea’s growing medical market and heavy emphasis on quality and innovation will certainly benefit foreign medical manufacturers in the future. However, there are still barriers to foreign investment in the medical industry – particularly in pharmaceuticals – that the Korean government is only beginning to remove. In order to remain competitive, foreign medical suppliers must make sure keep abreast of the existing restrictions and new opportunities in the changing regulatory environment.

Deregulating Testing Requirements

As mentioned before, the Korean government exempts medical device importers from GMP inspection requirements if they present documentation showing they are already in compliance with such existing international standards as ISO 9000. However, this does not exempt foreign medical device companies from type testing of their products – either locally in South Korea or abroad. The two quality assessments are fundamentally different – type testing is aimed at verifying the safety and effectiveness of the devices, while standards like GMP ensure the homogeneity of products. Therefore, even in cases where compliance with GMP is confirmed, type testing is considered necessary and cannot be exempted.

Clinical testing of imported drugs, however, is another matter. While foreign test data can in many cases be substituted for local type testing, foreign test or registration data has not been accepted as a substitute for local clinical drug trials – even for drugs previously approved overseas according to rigorous international standards. Foreign pharmaceutical companies have therefore had to undergo an expensive and time-consuming clinical trial procedure that can last up to three years, pushing up the time that companies can begin marketing their drugs to about five years.

Within the next few years, however, the KFDA is planning to abolish the requirement that all foreign drugs undergo domestic clinical tests, citing the inefficiency of the present system that deprives patients of new and innovative drugs already tested for safety. South Korea’s efforts in this area are bolstered by its plans to join the International Conference on Harmonization (ICH), a body that discusses a number of technical requirements related to the approval of pharmaceutical products, and through a harmonization of standards aims to avoid the redundant testing of drugs. Presently, South Korea is exempting domestic clinical tests only for drugs that have been sold in at least two countries for more than three years. Any drugs failing to meet the requirement have to go through tests on at least 30 people.

South Korea and Good Manufacturing Practice (GMP): Harmonizing Standards

South Korea’s protectionist policies to date have actually undermined good manufacturing practices of Korean pharmaceutical companies by allowing them the luxury of a lax business environment. In the past few years, however, South Korea has increased its efforts to bring Korean medical products up to international standards. In 1994, South Korea formally established its own Korea Good Manufacturing Practice (KGMP), which is similar to GMP and ISO 9000, and which domestic medical companies have to follow in order to manufacture and market their products. And in 1995, South Korea also began enforcing KGCP (Korean Good Clinical Practice for Trials on Drugs) for domestic pharmaceutical companies.

By harmonizing its standards with those accepted internationally, Korea will hopefully begin speeding the approval of foreign medical products that have passed international standards. Korea already considers U.S. FDA approval documents to be more than sufficient indicators that a company’s medical devices are safe and meet rigorous quality standards. And Korea has already made it clear that foreign-made medical devices can be exempted from local testing requirements if foreign manufacturers show, by presenting foreign compliance GMP documents and other foreign test data, that their quality standards are equal to or higher than KGMP.

As mentioned before, however, acceptance of foreign data is still quite limited for pharmaceutical companies. To make sure they meet Korean requirements for drug safety and efficacy, foreign drug manufacturers can therefore apply for KGMP certification. When MOHW receives an application to be considered for KGMP, they may request the chairman of the Korean Pharmaceutical Manufacturers Association to investigate the Application Records for Appraisal on the performance of KGMP. MOHW will then decide whether or not to issue certification of KGMP to the manufacturer by inspecting the company’s actual manufacturing operations. As part of the certification, MOHW also lists the dosage forms that are in compliance with this Korean standard.

Inconsistencies in Recognizing International Standards: FDA Approval and the Communautés Europèenes (CE) Mark

In the medical industry, the CE mark is the European counterpart to U.S. FDA approval, and represents one of the highest quality standards for medical equipment in the world. However, MOHW is still wary about equating the two as similar measures of product quality, and continues to favor FDA approval as the “better standard.”

As a result, U.S. suppliers that have received CE certification but not FDA GMP will have a harder time getting their imports approved by the Korean government, despite the fact that the CE Mark provides an assurance of product quality and safety roughly equivalent to that of FDA approval. In trying to harmonize its medical standards with those accepted internationally, South Korea also needs to improve its understanding of the international pharmaceutical industry by removing its arbitrary barriers to foreign investment.

Improving the Environment for Foreign Medical Companies

Indeed, realizing that recovery from its economic woes will depend heavily on restoring foreign investors’ confidence, the Korean government announced in January 1998 a comprehensive, $360 million liberalization plan to create large-scale free investment zones allowing foreign enterprises to function more effectively. Foreign firms operating in the special zones will receive aid from various policy funds now solely granted to Korean companies, and various restrictions on administrative procedures, labor, environment and hiring of foreign workers will also be lifted.

 

VI. CONCLUSION

South Korea’s medical market is still heavily regulated, and there remain many obstacles to foreign medical companies in the form of unnecessary testing and registration requirements. However, South Korea is changing its medical regulatory environment to make the market more accessible to foreign companies. So long as efficiency and improved quality of medical treatment are top priority for Korea’s MOHW, foreign medical companies can expect expanding opportunities in South Korea’s medical market in the years to come.