The American pharmaceutical industry urged the U.S. government to leverage current trade negotiations to demand improvements in South Korea's drug pricing policy. This follows allegations that South Korea artificially lowers the prices of American pharmaceuticals, causing damage.
On the 27th (local time), the Pharmaceutical Research and Manufacturers of America (PhRMA) submitted a statement to the Office of the United States Trade Representative (USTR) identifying South Korea, Australia, Canada, France, Germany, Italy, Japan, Spain, the United Kingdom, and the European Union (EU) as governments maintaining unfair policies and practices, urging for corrections in trade negotiations.
According to PhRMA, South Korea is imposing stringent reviews on pharmaceutical companies under the sanctions of health insurance authorities, creating an unfavorable environment for market entry, making improvements necessary.
It also pointed out that, because health insurance authorities are suppressing drug prices below appropriate market values, the proportion of the pharmaceutical budget allocated to innovative drugs is lower than that in other high-income countries of the Organization for Economic Cooperation and Development (OECD).
This statement reflects stakeholders' opinions collected during USTR's investigation into foreign governments' unfair drug pricing policies, and as of the 30th (local time), 58 statements have been received on the USTR website.
Previously, Trump argued, "U.S. pharmaceutical companies bear enormous research and development expenses during the new drug development process, but because they sell their products cheaply abroad, they ultimately end up subsidizing drug prices in other countries."
On May 12th, an executive order directed the USTR and the Department of Commerce to ensure that other countries do not deliberately set their domestic drug prices below market value to prevent price hikes in the U.S.
The American Chamber of Commerce, the largest business organization in the U.S., claimed that South Korea sets drug prices significantly lower than other developed countries, failing to adequately compensate U.S. pharmaceutical and biotechnology firms for newly developed drugs.
The organization recommended that the U.S. government consult with the South Korean government to reduce the time required for health insurance coverage and benefit review processes and to update drug pricing standards.
The National Association of Manufacturers (NAM) argued that other countries should adopt fair policies and protect U.S. corporations' intellectual property rights using the ongoing trade negotiations as leverage, while the Biotechnology Innovation Organization (BIO) criticized South Korea's drug pricing system for undermining the competitiveness and sustainability of U.S. manufacturers.
In contrast, PhRMA expressed opposition to the implementation of 'Most Favored Nation' (MFN) pricing, which would apply the lowest foreign price for drugs sold in the U.S. to reduce the burden of drug prices on Americans, citing concerns about investment and new drug development being stifled.