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Korea FTA negotiations on medicines will harm us too

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Tens of thousands of persons are demonstrating in Korea today against a proposed trade agreement that no one in the United States knows about. One of the explicit objectives of the trade agreement is to raise the prices of medicines in Korea, and to create international norms that would make it difficult for governments to refuse to reimburse costly new medicines, negotiate lower prices, or override patents.

The negotiations on a new US Korea "Free Trade Agreement" (FTA) is only partly about lowering tariffs and other trade liberalization measures. The main things the US wants is for Koreans to pay high prices for medicines.

(Stories and pictures of demonstrations against US/Korea FTA here,
here, and here)

The current US/Korea/FTA negotiation follows an earlier and somewhat secret 1999 agreement with Korea that obligated Korea to pay at least the average price of 7 industrialized countries for innovative medicines. Because of this agreement, Korea now pays more than the US for some drugs for cancer and other severe illnesses. The US government followed the 1999 Korea agreement with provisions in trade agreements with Australia and Singapore that were designed to weaken national efforts to control drug prices, and make it much harder for governments to override strong patent protection.

This week the United States Trade Representative has sent a number of fairly young trade officials to Korea to demand huge changes in the Korea system for reimbursing medicines. In one July 11, 2006 report, Wendy Cutler, the head of the U.S. team at free trade talks with Korea,

"criticized Korean plans to adopt an approved list for drugs available under Korea's national health insurance system. Saying she understood the challenges Korea faces in devising a health care policy as its population ages, she continued, "But we don't believe this proposed change in the Korean system toward a 'positive list' will achieve the objective that Korea has stated for itself. We believe the proposed system would end up discriminating against and limiting the access of Korean patients and doctors to most innovative drugs in the world."

The message that Cutler is delivering, under our flag, is that the US wants Korean taxpayers to pay whatever prices pharmaceutical companies want. She is following up on earlier threats by US government officials, such as this February 7, 2001 US Commerce Secretary Don Evans letter , which quite famously said " The United States has considerable expertise and experience in health care financing matters," while complaining about efforts to link patient co-payments in any way to the prices or patent status of medicines.

These position are now aggressively pushed by the Bush Administration, but they have wide support in the US Congress, even among democrats -- and the 1999 US/Korea agreement was negotiated by Bill Clinton. Only a small number of US Congressman have bothered to look into these agreements.

But within the Bush Administration, there has been some questioning of these policies. (obtained via a CPTech FOIA request). In an October 16, 2003 note, Robert Armstrong, then Trade Officer for Japan, Korea and Oceania at the US Department of State, wrote "FDA and HSS have been involved in analyzing the PhRMA proposals and have found a number of their suggestions to be problematic from the standpoint of U.S. Domestic practice."

Earlier two other Department officials had raised similar points. On September 8, 2003, Bryant Trick had written his colleagues to note that: "once Congress passes a Medicare prescription drug benefit, you will have price controls and reimbursement guidelines for that. . . HMOs are also very active in this (one reason for their unpopularity), but since they are private, it is less of an issue." And Thomas Jung wrote a September 9, 2003 response reminding State officials that US States "are taking the same approach the ROKG is taking: containing costs by scrutinizing prescription drugs, particularly brand name drugs."

We are about to reap a bitter fruit from the Korea/FTA negotiations. Not only will we harm Koreans, but we will are building global norms that will make it impossible for the US to protect us from high drug prices.