the head negotiator for the Korea-U.S. free trade agreement
South Korea’s health ministry said on Aug. 11 that the U.S. has agreed to accept the Korean government’s so-called positive-list system, which will only reimburse through insurance those pharmaceuticals approved by the Ministry of Health and Welfare.
Jeon Man-bok, the Ministry of Health and Welfare’s team leader for the U.S.-South Korea FTA, said in a press briefing that the two nations have agreed to hold a two-day working-level meeting on Aug. 21 in Singapore to discuss the pharmaceutical issue.
In June, both nations ended their second round of FTA talks with no major breakthrough achieved, mainly due to dispute over the Korean government’s new drug pricing policy.
Jeon said that the two sides "agreed to discuss procedural matters through meetings on medicine and medical equipment."
As Washington showed its willingness to accept Seoul’s drug pricing system, the Korean government is believed to have accepted the U.S. government’s request regarding related matters of procedure. The Korean government had called its pharmaceutical pricing system local policy and not a subject for negotiation during the FTA talks.
South Korea’s medical and public health industry had viewed the U.S.’s strong opposition on the drug pricing matter as a negotiation tactic. Washington’s real intention may be aimed at forcing Seoul to guarantee certain prices for new medicines produced by U.S. pharmaceutical companies.
From this point of view, the U.S. is expected to request South Korea to set up an independent body for foreign pharmaceutical companies to file complaints about drug pricing during the third round of FTA talks or the Singapore meeting. If South Korean negotiators accept the expected request, it will undermine or weaken South Korea’s policy sovereignty within its health insurance system. Australia accepted a similar compromise with the U.S. when the two were negotiating their FTA, which entered into force January 1, 2005.
The heath ministry said, "A view is needed to see the Korea-U.S. FTA talks as a harmonious procedure, not a weakening of policy sovereignty. As U.S. pharmaceutical companies will be directly affected by insurance-covered prices, we need to understand parts of the U.S. request."
South Korea and the U.S. launched free trade agreement talks in Washington in early June, hoping to sign the deal within a year. A second round of talks was held in Seoul last month and a third round is scheduled in Seattle on September 6-9.