[Ip-health] Glivec price hikes: The US/Korea agreement that allows the USTR to set drug prices in Korea

[James Love]

I believe the basis for the recent increase in the Korean price for
Gleevec/Glivec is a US/Korea trade agreement which regulates the prices
of drugs in Korea.  Even though the USA doesn't regulate the prices of
drugs in the United States, it regulates the prices in Korea.  In this
case, it regulates the prices to be higher.   Jamie

http://www.ustr.gov/reports/nte/2002/korea.PDF

"The Korean Government reached agreement
with the United States in 1999 to price new,
innovative drugs at the average ex-factory price
of A-7 countries (United States, United
Kingdom, Germany, France, Italy, Switzerland,
and Japan). In addition, in 1999, the two
countries agreed to the Actual Transaction Price
(ATP) system, which was intended to abolish
the typical hospital practice of demanding a
discount from pharmaceutical manufacturers
when purchasing drugs and then receiving a full
reimbursement from the government-operated
national health insurance system. The Korean
Government is considering changes to both the
A-7 pricing system and the ATP system, and the
U.S. Government informed Korea any changes
that could affect our bilateral agreements would
require the concordance of the United States.


http://www.cptech.org/ip/health/phrma/nte-98/korea.html

Pharma's submission on Korea in the 1998 NTE report:

"Under the future Ordinance, Korea's commitment to list imported
products on the National Reimbursement Schedule, and the existing
discrimination on discounting and profit margins, raises another concern
for the industry: how will the HIB determine the reimbursement price for
imported products. Because of the unofficial hospital margin of 24.17%
that effectively has been built into the pricing system for locally
manufactured products, current proposals for imported drug pricing
effectively sets the MIP price at a level that is 30% below the average
of G7 member prices. (The prices of pharmaceuticals in G-7 countries
most accurately and reliably reflect world prices.)

"Industry requests the support of the U.S. Government to ensure that the
new pricing system for imported products ensures that the actual supply
price in Korea is equivalent to the ex-manufacture price in G-7
countries, particularly for innovative and all patented products. The
MIP should also include a mechanism to address foreign exchange
fluctuations to counter the negative effects of major currency devaluations=
.

USTR 2000 NTE report:

http://www.ustr.gov/pdf/2000_korea.pdf

U.S. concerns on trade in pharmaceuticals with Korea have included: (1)
discrimination in the Korean reimbursement pricing system for That said,
Korea still maintains barriers to trade in pharmaceuticals. The
pharmaceutical pricing system under Korea=92s national health insurance
scheme has raised questions of discrimination against innovative drugs.
In 1999, the Korean Government formed a task force to revisit its method
for determining pharmaceutical reimbursement prices. At this stage, the
Korean Government is considering the recommendation of the task force.

USTR's 2002 NTE report:

http://www.ustr.gov/reports/nte/2002/korea.PDF

Pharmaceuticals
Korea is seeking to cut health care costs and is
continuing to consider a variety of proposals,
many of which would adversely affect Korean
patients and U.S. and other foreign
pharmaceutical companies. The Korean
Government often has developed such proposals
in a seemingly piecemeal manner without
adequate input from domestic or foreign
stakeholders. Moreover, the Korean
Government has often failed to provide the U.S.
Government with advance notice of these
proposals, despite the 1999 U.S.-Korea
United States on these proposed measures prior
to their publication and the U.S. Government is
concerned about the Korean Government=92s
failure to provide the United States with
adequate time for meaningful comment prior to
finalization of these proposals and time lines.
The U.S. Government plans to discuss these
concerns and the proposed measures in the
newly established working group.

The Korean Government reached agreement
with the United States in 1999 to price new,
innovative drugs at the average ex-factory price
of A-7 countries (United States, United
Kingdom, Germany, France, Italy, Switzerland,
and Japan). In addition, in 1999, the two
countries agreed to the Actual Transaction Price
(ATP) system, which was intended to abolish
the typical hospital practice of demanding a
discount from pharmaceutical manufacturers
when purchasing drugs and then receiving a full
reimbursement from the government-operated
national health insurance system. The Korean
Government is considering changes to both the
A-7 pricing system and the ATP system, and the
U.S. Government informed Korea any changes
that could affect our bilateral agreements would
require the concordance of the United States.


heeseob_n wrote:
> This is a multi-part message in MIME format.
> --
> [ Picked text/plain from multipart/alternative ]
> Dear all,
>
>
>
> According to Annual Reports released by Novartis, total sales of Gleevec/=
Glivec (cancer drug for leukemia) amounts to 768 million US dollars. Glivec=
 was first launched mid of 2001. For one and half years, Glivec becomes the=
 fifth biggest product of Novartis. From the sales of 153 m$ in 2001, Glive=
c achieved 303 % sales rising, 615 m$ last year.
>
>
>
> I do not know exactly how big is 768 million dollars. But it amounts to t=
he gross earnings all the Korean lawyers and law firms can make during a ye=
ar. Last week South Korean government raised the price of Glivec by 30 % fr=
om its previously set price. After SK government's decision, many of Korean=
 patients have staged a sit-down demonstration at National Human Right buil=
ding to argue that the price should be lowered to an affordable level.
>
>
>
> Who can say that the patent system secures reasonable remuneration for pa=
tentee's investment and development? In may view, Glivec case clearly shows=
 the patent profit is no more than a monopoly profit.
>
>
>
> ------------------------------------------------------
>
> HeeSeob Nam
>
> Patent Attorney, Intellectual Property Left
>
> Dabong Tower Bldg., 10th Fl.,
>
> 890-12 Daechi-dong
>
> Kangnam-gu, Seoul, Korea 135-280
>
> Tel. +82 2 3430 4300  Fax. +82 2 3430 4200
>
> E-mail: heeseob_n@yahoo.co.kr
>
> ------------------------------------------------------
>
>
>
> --
>
> _____________________________________________________________________
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--
James Love, Director, Consumer Project on Technlogy
http://www.cptech.org, mailto:james.love@cptech.org
tel. +1.202.387.8030, mobile +1.202.361.3040