[Ip-health] Korea: Ministry fears effects of FTA on healthcare system

[robert weissman]

http://english.hani.co.kr/arti/english_edition/e_national/129704.html

[reposted on bilaterals.org:
http://www.bilaterals.org/article.php3?id_article=3D4879]

The Hankyoreh | Seoul | 6 June 2006

Ministry fears effects of FTA on healthcare system

If U.S. demands are met, drug prices will rise, they say
South Korean chief negotiator Kim Jong-hoon, third from left, and US
counterpart Wendy Cutler, far right, kicked off talks on FTA in
Washington, D.C. Washington/AP Yonhap

South Korean consumers will pay more for pharmaceuticals if U.S. demands
on a free trade agreement between the two countries are met, according
to the Ministry of Health and Welfare.

Ministry documents obtained by the Hankyoreh detail expectations that
the U.S. will request agreement on drug prices during the four-day FTA
negotiations between the two countries, which began June 5 in
Washington, D.C. and Geneva, Switzerland. The U.S. is also forecast to
demand opportunities for U.S. pharmaceutical companies to either adjust
or submit objections to drug pricing systems in South Korea, the
documents showed.

=93If our government accepts U.S. demands as requested, it will prompt
prescription drug prices and their insurance costs to rise in the mid-
and long-term,=94 the ministry analyzed. The ministry is particularly wary
of the effects such an agreement would have on the nation=92s health
insurance system, the documents showed.

In another document obtained by the Hankyoreh, the ministry expects the
U.S. to request South Korea to extend the patent period of copyrighted
drugs, as well as other measures which would increase the price of
generic drugs while limiting their flexibility of use. =93If the U.S.
demands are met, it will undermine the domestic generic drug industry
and force insurance-covered drug prices to rise,=94 the documents read.

=93During this round of talks, the U.S. is expected to present its strong
position in order to force South Korea to bow to demands by
[multinational drug] companies,=94 the ministry said. The ministry
expected this to be a major hurdle to overcome in the free trade talks.

Intellectual rights and the value of innovation

The ministry expects the U.S. to force South Korea to accede to their
pricing of innovative drugs during the first round of FTA talks. The
U.S. is also forecast to demand South Korea set =91transparent procedures=
=92
in its pharmaceutical policy. For instance, the South Korean government
would have to notify U.S. pharmaceutical companies whenever it changes
drug-related policies, including prices, and the companies would be able
to submit their "opinions" on the matter. The Korean ministry called
such measures an institutional tool to prevent the Korean government=92s
drug policy from conflicting with the interests of U.S. pharmaceutical
companies.

Another contentious area during the FTA talks may be the protection of
intellectual property rights, the ministry expected. In past trade
talks, the U.S. argued that South Korea has shirked on its
responsibility to protect copyrighted pharmaceuticals because of a
too-close relationship between the Korea Drug and Food Administration
and the Korean Intellectual Property Office.

Insurance system in jeopardy

If South Korea accedes to U.S. demands, it will significantly undermine
its power in negotiating insurance-covered drug prices with U.S.
pharmaceutical companies, the ministry expected.

The Korean ministry=92s evaluation was based in part on a recent accord
between the U.S. and Australia. The Australian upper house pointed out
that the drug policy agreement signed with the U.S. was aimed at
accepting U.S. demands, rather than promoting the health of the people
of Australia.

The release of this information has drawn attention from public health
and civic organizations, which raised concerns about whether the Korean
negotiators are up to the task of defending the health-care rights of
the people of South Korea, as they are expected by some to err on the
side of economics in the negotiations. Civic groups anticipated the
result to pose an overall negative impact on the Korean health and
medical policies.

But an easy acquiescence with U.S. demands is not expected.
"Prerequisite reviews are necessary regarding the impact of U.S. demands
on domestic pharmaceutical companies, insurance-covered drug prices, and
the overall domestic legal system,=94 the Korean ministry=92s documents rea=
d.