U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Medical Devices chapter because lack of transparency in Korea’s reimbursement decisions
has been a long-standing issue for U.S. companies. 393
The ITAC on Chemicals, Pharmaceuticals, Health/Science Products and Services (ITAC 3)
stated that it had encouraged provisions that increase the transparency of the Korea
regulatory system and that a “more objective process for establishing the guidelines and
conditions under which drugs can be reimbursed would improve access to innovative
medical discoveries that are developed abroad and would benefit Korean patients
significantly.” 394 The Intergovernmental Policy Advisory Committee (IGPAC) stated that it
commends the FTA for eliminating uncertainty about the Medicaid program by specifically
classifying it as a regional health-care program excluded from the provisions of Chapter 5
of the FTA. 395
Several observers criticized the intellectual property protections for pharmaceuticals in the
FTA. Several contend that these provisions would delay the introduction of generic drugs
to the Korean market and increase health-care costs in Korea. 396 A critic of the intellectual
property provisions for pharmaceuticals notes that the Korean National Health Insurance
Review Agency has a goal of reducing the percentage of health-care costs due to
pharmaceuticals, relying on generic drugs to keep costs low, and claims that “because the
proposed FTA is poised to result in greater restrictions on generic drugs through extending
its patent expiration and limiting drug information, the FTA is likely to drive up the cost of
health care in South Korea.” 397 A pharmaceutical industry representative responding to this
criticism said that if Korea, as well as other nations, adopts policies like the ones in this FTA
“it would provide an incentive for even greater expansion of innovation in pharmaceuticals,
the discovery of even more enhanced cures, and that, in the end, rebounds to the benefit of
all patients, globally, in Korea and otherwise.” 398
393 May, testimony before the USITC, June 20, 2007, 186. For additional information on the summary of
provisions for FTA chap. 5, see app. D of this report.
394 ITAC (3) on Chemicals, Pharmaceuticals, Health/Science Products and Services, Advisory Committee
Report, April 24, 2007, 7–8.
395 IGPAC, Advisory Committee Report, April 24, 2007.
396 Flynn and Palmedo, “Initial Response to the U.S.-Korean FTA Pharmaceuticals and IP Chapters,”
May 25, 2007; and KPI, “Policy Brief,” February 7, 2007. A member of the ITAC 3 representing the Generic
Pharmaceutical Association states that “this agreement blatantly excludes provisions to ensure affordable
access to safe and effective generic medicines.” ITAC (3) on Chemicals, Pharmaceuticals, Health/Science
Products and Services, Advisory Committee Report, April 24, 2007, 16.
397 KPI, “Policy Brief,” February 7, 2007.
398 May, testimony before the USITC, June 20, 2007, 248. In his testimony, Mr. May references in support
of his statement the report USDOC, ITA, “Pharmaceutical Price Controls in OECD Countries,”
December 2004.
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