454. Korea would first like to thank China, India and South Africa for their proposal (IP/C/W/643) to discuss how to promote public health through competition law and policy in the Council. As mentioned by the delegates from the US and the EU, Korea is also of the view that the TRIPS Agreement and competition law can co-exist in a mutually supportive manner. Misapplication of competition law in the name of public health could run the risk of unduly hindering the IPR and forestalling the invention of new, innovative medicines and health technologies.
455. However, we also think that there exist some explicit anti-competitive behaviours in the pharmaceutical industry and that proper implementation" of competition policies can serve as an effective tool to tackle those behaviours and achieve public health by regulating abusive exercise of IPRs.
456. Without prejudice to Korea's position on the elements in document IP/C/W/643, I would like to share Korea's experience of tackling abusive exercise of IPRs through the implementation of competition policy.
457. The case I would like to mention is similar to the first of the two cases presented by the EU. Although the EU delegate used a different terminology, the essence is the same- i.e. reverse payment, a common form of collusive behaviour in the pharmaceutical industry. Unlike the usual practice where a patent owner of a new drug receives licensing fees from a generic manufacturer, a patent owner provides the latter with economic benefits, what is known as "reverse payment", to deter the entry of generic drugs into the market. Reverse payment settlement has a significant anticompetitive effect: a patent holder maintains a monopoly status in the market even after the expiration of the patent rights by forestalling the selling of generic drugs, while consumers pay higher prices than they would otherwise.
458. The Korean Government has been exerting tremendous efforts to eradicate such anticompetitive practices in the pharmaceutical industry. In 2011, the Korea Fair Trade Commission, the government agency responsible for the enforcement of competition law, took remedial actions with regard to reverse payment. The FTC issued an injunction and fined a patent holder of a drug, a multinational pharmaceutical company who engaged in the practice of reverse payment in return for the exit of a generic drug manufacturer from the market. This marks the first case in which reverse payment was regulated by a government agency in Korea.
459. The Korean Government will even further strengthen its efforts to promote public health by ensuring a fair and competitive market environment in the pharmaceutical industry, in a manner that is consistent with the TRIPS Agreement and does not hamper the necessary innovation in the health sector.
