Korea's drug pricing system on US tariff on pharmaceuticals

"Korea's innovative pharmaceutical company certification policy has raised concerns about discrimination against foreign innovative firms"

"Korea's drug pricing system requires significant reductions in drug prices…leading to decreased predictability"

The United States Trade Representative (USTR)

As the Trump administration's tariff against the world will go into effect immediately, a report has been released alleging that Korea's drug pricing and innovative pharmaceutical company certification policies are being unfairly imposed in the United States.

 

According to the KoreaBIO on the 1st, the United States Trade Representative (USTR) issued a report on trade barriers affecting 59 major exporting countries on March 31.

 

A notable section of the report focuses on Korea's policies for pharmaceuticals and medical devices, arguing that Korea's drug pricing, reimbursement, and innovative pharmaceutical company certification policies function as trade barriers in the U.S.

 

The report criticized "Korea's drug pricing and reimbursement policies lack transparency.

 

Stakeholders do not get sufficient opportunity to offer substantive input during policy changes." Regarding the innovative pharmaceutical company certification policy, the report said, "While certain companies receive benefits such as tax credits, R&D support, and preferential pricing, no explanations are provided to companies denied certification," adding, "The United States calls on South Korea to enhance transparency and ensure that stakeholders have opportunities to express their views." These criticisms are similar to those raised earlier this year by the U.S.

 

pharmaceutical industry association PhRMA.

 

PhRMA said, "The value of innovative American drugs is not adequately recognized in Korea.

 

Korean pricing agencies often rely on outdated cost-effectiveness thresholds, and the evaluation process suffers from limited transparency and predictability." These criticisms are similar to those raised earlier this year by the U.S.

 

pharmaceutical industry association PhRMA.

 

PhRMA said, "The value of innovative American drugs is not adequately recognized in Korea.

 

Korean pricing agencies often rely on outdated cost-effectiveness thresholds, and the evaluation process suffers from limited transparency and predictability." Further stating, "It violates both the obligation for fair treatment of domestic industries and the spirit of the Korea-US FTA." On April 2 (local time), the Trump administration announced that it would officially announce reciprocal tariffs on major trading partners, including South Korea.

 

President Donald Trump announced, "The results could be revealed as early as the evening of the 1st or 2nd." South Korea's pharmaceutical and biotech industries are closely monitoring this development.

 

Korea’s pharmaceutical and biotech industry is recording a trade deficit against the United States.

 

However, concerns are mounting that companies exporting pharmaceuticals to the U.S.

 

could face significant setbacks if tariffs above a certain threshold are imposed.

 

Moreover, reciprocal tariffs are imposed due to perceptions that Korea's innovative pharmaceutical company certification, pricing, and reimbursement policies are unfair.

 

There will likely be increased pressure to reform these systems.

 

In response, the Ministry of Health and Welfare (MOHW) has recently revised the certification criteria for innovative pharmaceutical companies, introducing separate certification categories for global pharmaceutical companies.

 

The MOHW plans to make these improvements by September.