Drug Bill Clouds US FTA
By Park Chung-a
Staff Reporter
Ryu Si-min
Minister of Health and Welfare
The government reaffirmed on Tuesday its determination to enact a new drug-pricing measure that is aimed at offering quality medicine at a cheap price _ obstacle during the second round of free trade agreement (FTA) talks with the United States.
The Ministry of Health and Welfare said that it will issue a pre-announcement on Thursday, 60 days before changing the country’s drug insurance policy, so that drugs approved by the ministry as better-priced and more effective will be covered by the nation’s health insurance system. In addition, legal grounds to reduce the prices of generic drugs are included in the measure.
The scheme is called the “positive list system” which is aimed at creating an environment in which pharmaceutical industries can come up with ways to offer effective drugs at cheaper prices.
Under the measure, new products of overseas and domestic drug makers will be subject to strict tests and should be approved by the ministry within 360 days to ensure cost efficiency and reimbursement.
Usually, the pre-announcement is made 20 days before legislation of new policy. However, as the United States protested the new policy, the ministry decided to issue the pre-announcement.
“If the United States expresses its objection within this period, we will try to reflect its opinion as much as we can,” Choi Young-hyun, a ministry official, said.
Although the ministry has claimed that enactment of new pharmaceutical policy should be seen as an independent issue from FTA talks with the United States, Washington has made it clear to include the process, as well as the date for legislation of the new policy, as an important agenda of the talks.
At last week’s meeting with Alexander Vershbow, U.S. ambassador to South Korea, Health and Welfare Minister Ryu Si-min reiterated the government’s position, saying that South Korea’s measure for medicine pricing “will proceed as planned because it is a domestic policy.”
The United States has said if the new policy goes into effect from September, their newly invented and original drugs, which have already been undervalued in Korea, will be dealt a serious blow as many of their new drugs will be excluded from the insurance coverage and their drugs cannot be but fixed at low price.
The United States also claims that its pharmaceutical manufacturers will be discouraged from bringing new drugs into Korea.
The third round of FTA talks, which will take place in the United States on Sep. 4, faces bumpy road unless the Seoul government decides to revise it.
However, South Korean officials and experts claim the new law is unlikely to damage the world’s largest economy.
“We think there aren’t any clauses or contents that could be disadvantageous for the United States,” said a ministry official, who asked not to be named. “There is little justification for the withdrawal of the South Korean drug pricing measure because it has already been implemented in many other advanced nations.”
Besides pharmaceuticals which have unexpectedly emerged as a bone of contention in the trade talks, the other areas of disagreement in the talks are country-of-origin issue regarding South Korean products made in the industrial complex in North Korea as well as the opening of the agriculture and textile markets.
South Korea is the world’s 11th-largest economy and the seventh-biggest trading partner for the United States. Two-way trade amounted to $72 billion last year, with South Korea posting a surplus of $16 billion, according to South Korean government.
The two countries hope to finish off the talks by the end of March 2007.