Letter from Friend: Opposing Other’s Drug Policy

Last July, the US government sent a letter to Kim Won-gil, then the Minister of Health and Welfare (MHW) to pressure our government from lowering drug prices. This year again, the Bush administration sent another letter, via the official channel, to Choi Sung-Hong, Minister of Diplomacy and Commerce. In that letter, US officially notified us that they would make an issue out of our policy of lowering drug prices.

On July 17, 2002, one official at the DHW confirmed, “This letter contains almost the same content as the one of US Secretary of Donald Evans to the former Minister Kim. This time, it was directly addressed to Minister Choi.”

The source said, “Unlike the last year’s latter, this letter is considered a warning that lowering is not just a matter of profit and loss, but an issue that might spill into a commerce dispute between two countries.”

He also confirmed that the letter was delivered “somewhere between March and April, as far as I know.”

The division in charge of handling this letter refused to reveal the content since it belongs to the classified information.

The Congressional Committee monitoring the MHW also made the same request only to face the MHW’s refusal for the same reason. The MHW said, “We have no authority to reveal a classified information on our own. We have to talk with the Minister of Diplomacy and Commerce.”

Evans, US Secretary of Commerce, in his letter dated last July to then Minister Kim, warned that the policies such as the drug price guideline planned by the Korean government might discriminate US companies and, therefore, lead to severe commerce disputes.

Former Minister Kim originally planned in last April to implement the price guideline, which categorized most frequently used drugs in Korea, including the “original” 40 drugs, into 7 classes. But in last October, the MHW aborted its plan in the face of heavy opposition from US government and multinational pharmacist companies.

Lee Tae-Bok, who had pushed in earnest for the guideline as chief aide to the president with former Minister Kim, resumed the policy once he took office as Minister of Health and Welfare. But he was fired on July 11th, just 5 months into his term due to his policy.

In the meanwhile, former Minister Lee has remained “secluded” once his July 11th revelation of lobbying by the pharmacist companies caused heavy ripple effects. Ever since July 16th, he has been staying with his wife at a Catholic facility in the country.

The guideline classifies various drugs, based on the effects, into classes. Then a standard price is marked for each class, and the price functions as a cap for government’s insurance coverage. If a price goes beyond the guideline, patients have to make up for the exceeding amount. The guideline is useful in deterring the use of “original drugs,” which are not different from the copied versions in effect, but sold at higher prices due to their originality. In 1989, Germany first introduced it and many countries followed, such as Netherlands, Sweden, Denmark, New Zealand, Poland, Slovania, Spain, USA, Canada and Australia in that order.

hanscho@donga.com