[Ip-health] Korea/EU -- EU companies frustrated with drug pricing guidelines

[James Love]

http://koreaherald.com/SITE/data/html_dir/2004/06/12/200406120040.asp

EU companies frustrated with drug pricing guidelines

(ram@heraldm.com)

By Rambabu Garikipati

2004.06.12

The European Union has undertaken a frustrated and protracted battle
with Korea's health and welfare system to provide a more transparent
business environment for international pharmaceutical companies, said
Frans Hampsink, president of the EU Chamber of Commerce in Korea.

"So far the EU voice in the ministry and its agencies is treated as an
annoyance and not worthy of being answered. The government's past
response is one-sided and without due care or concern to the investment
and support EU research pharmaceutical companies have established in
this country," he said.

The chamber president stated that guidelines in the sector were
developed within a financial framework focusing upon limiting access to
modern medicines of international origin.

"Actual experience so far has shown that there appears to be little or
no consideration given to sound medical or scientific rationale
supporting guidelines. Additionally, industry is not permitted to engage
in consultation with the guideline drug committee in order to challenge
guideline validity," he said.

EUCCK Vice-President Dieter Brinkmann (center) addresses a news
conference yesterday, flanked by chamber President Frans Hampsink (left)
and Secretary General Jean-Jacques Grauhar. [The Korea Herald]

Speaking on the occasion, Geoffrey J. Whitehead, chairman of the
chamber's pharmaceuticals committee, said denying access to modern
medical therapies and life-saving medicines through a distorted pricing
process seemed to be the order of the day.

The Korean government uses pricing to indulge the local generic industry
and distorts even further the market mechanism, he said. The present
system of pricing is outdated and discriminatory and ultimately
restricts the Korean population from accessing modern medical therapies,
he added.

"The Korean pharmaceutical pricing system is counterproductive to the
extent that it plays on the absence of absolute and objective definition
of innovation. In other words, the Korean Ministry of Health and Welfare
reinterpreted its earlier commitment to apply the average of the leading
economies reimbursement price by playing with the notion of innovation,"
he said.

The authorities originally accepted to set prices of innovative
medicines at the average of the prices in France, Germany, Italy, Japan,
Switzerland, the United Kingdom and the United States. However, only a
few products have been placed under the A7 pricing system, as it is called.

Since "innovative" has never been precisely defined and needs to be
agreed on for each product, this qualification remains up to the
arbitrary decision of those bodies charged with the responsibility of
defining whether a product attains the classification. In most cases, it
is used to justify not applying A7 pricing. Furthermore, when the
innovative classification is rejected, pharmaceutical companies are not
given a chance to express and develop their positions until the ministry
publishes the price, Whitehead said.

According to Philippe Auvaro, president of Aventis Pharma Co. Ltd.,
while the whole process of pricing application and approval leaves
several opportunities for parties to convene, consult and appeal each
other's decisions, the core of the decision-making process nevertheless
remains obscure and opaque.

"Innovation is supposed to be the major engine of market dynamics. By
paying too much for the old and 'sub-original,' the Korean government
turns the market upside down, and takes the risk of depriving the
population of modern treatments, or at best to delay their access
thereto," he said.