[Ip-health] Summary of Korea-US FTA based on SKG press release

[heeseob nam]

This summary is based on the press release of South Korean Government
(SKG) on the conclusion of FTA negotiations with US. The released
materials by SKG are all in Korean, and thus my translations of some
terminologies and expressions may be different from the actual English
text.

1. Drug Pricing and Reimbursement System under National Health Insurance

Demands of US include assurance of the minimum price (such as A-7
average price) of new drugs; introduction of price negotiation process
for generic drugs; future adjustment of reimbursement price in
consideration of inflation; withdrawal of SKG's plan to lower the
price of off-patent drug to 80%; and putting off evaluation of
cost-effectiveness of drug.

SKG said it denied all of the demands and the final text does not
contain such demands. However, I do not know how the positions of SKG
are reflected in the text.

As I know, general principles include "to recognize the value of
patented medicine [actual English text may have different
expression]." What I am concerned is that the meaning of "value of
patented medicine" is unclear and the pharmaceutical companies may
argue the value of patented drugs is ignored when Korean government
cuts the price in the negotiation process between SKG and the
pharmaceutical companies.

2. Transparency

2-1. Independent review process

It is agreed to accept the US demand to establish an independent
review process in which a body independent from a national health
organization reviews decisions of the organization regarding the price
and reimbursement. SKG argues that the independent body has no
authority to overturn the original decision.

However, as I heard, there is no written agreement on the "no
authority to overturn the original decision."

2-2. Dissemination of Information

It is agreed to permit a pharmaceutical company to disseminate
information regarding its pharmaceutical through the Internet linked
to the company's website.

3. Pharmaceutical and Medical Devices Commission

SKG uses the term "commission" rather than working group. The mandate
of the commission includes review of the implementation of agreement
and promotion of mutual understanding of the agreement.

4. Intellectual Property Rights

4-1. Patent Term Extension Due to Approval Delay

It is agreed to provide a patent term extension to compensate for
delays in drug approval process. When the drug is imported drug, the
delay in exporting country may be excluded.

However, it is not clear if the exporting country includes US and
Korea. And there is no limitation on the maximum period of the
extension.

4-2. Patent Term Extension Due to Delay in Granting Patent

It is agreed to allow a patent term extension in case of delays in
granting patent more than three years from the request of patent
examination.

4-3. Data Exclusivity

US demanded the market exclusivity on data submitted for approval. SKG
accepted this demand as SK has provided 6-year protection for new drug
since 1995.

As I know, the data exclusivity covers "same and similar product" in
both 5-year and 3-year exclusivity and the languages are quite similar
to the AU-US FTA.

4-4. Compulsory License

There is nothing with respect to the grounds of compulsory license of
patented invention. I heard that US withdrew its demand to narrow the
grounds.

4-5. Approval and Patent Linkage

It is very likely that the agreed text on the linkage is quite similar
to AU-US FTA.

According to the explanation of SKG, US demanded the inclusion of
automatic stay of approval of generic manufacturer's application in
case of a patent infringement action by a patent holder, but SKG
denied. [I can not understand this position.] SKG further explains
that SKG may introduce an automatic 9-month or 4-month stay rather
than 30-month stay in US law. The 9-month or 4-month stems from the
time span from the filing of preliminary injunction to a court
decision. However, SKG has no data on the average period in court
decisions in civil actions (not the preliminary injunction) of
pharmaceutical patent infringement.

4-6. Bolar Provision

As I know, the Bolar provision included in the FTA text does not
replace or exclude the broader exception for research and experimental
use of a patented invention under current Korean Patent Act.

--
HeeSeob Nam
IPLeft (www.ipleft.or.kr)
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