EUKoreaFTA

The EU-Korea Free Trade Agreement

Pharmaceuticals and Medical DevicesImproved transparency

and regulatory cooperation

Fernando PERREAU DE PINNINCKHead of Unit

Industrial Tariff and Non-Tariff Negotiations, DG Trade European Commission

EUKoreaFTA

Content

Background

EU – Korea FTA sector benefits:- Tariffs- Non-tariff barriers

In a nutshell: Annex on pharmaceuticals and medical devices

EUKoreaFTA

Background

EUKoreaFTA

Economic Meaning

Pharmaceuticals and medical devices are two of the EU’s best performing industries

EUKoreaFTA

Background- EU Pharmaceuticals Industry

*2010

EU Pharmaceuticals

Industry

Strong R&D focus

5th largest EU industry (~93

bn. € exports in 2010)

+ 600,000 jobs

Large overall trade surplus

(48 bn. €)

EU exports to Korea 12 times

higher than imports (1.3 bn. €; i.e. over half

of Korean imports)

UK, France, Germany,

Belgium and Italy largest

Member States exporters to

Korea

EUKoreaFTA

Background – EU Medical Devices Industry

EU Pharmaceuticals

Industry

~73 bn. € sales (i.e. about one third of world market), 2nd

after US

40 bn. € exports in

2009

+ 530 000 jobs

Large overall trade surplus

(~10 bn. €)

SMEs constitute 80% of the sector &

Strong R&D focus

EU exports to Korea 3 times higher than imports (475

mn. € i.e. ~35% Korean imports)

Germany by far largest exporter,

followed by Netherlands,

UK, France and Italy

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Benefits to the pharmaceuticals and

medical devices sectors

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EU-Korea FTA sector benefits

Primary obstacles for EU exports:

A) Tariffs EU duties on pharmaceuticals

& medical devices: 0%0% Korea average duty is 6.2%6.2%

(pharmaceuticals) and 5%5%(medical devices)

Korea will eliminate duties on EU products over 5 years for medical devices and 3 years for pharmaceuticals

Tariff line liberalisation

(in %)Medical devices

Pharma-ceuticals

Year of entry into force 74,3 % 90,5 %

Year 3 89,7 % 100 %

Year 5 97,8 %

Year 7 100 %

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EU-Korea FTA sector benefits

Primary obstacles for EU exports:

B) Non-tariff barriers (NTBs) associated, to a large extent,with registration, certification, and pricing & reimbursement requirements, etc.

Pharmaceuticals & medical devices sector annex, to tackle most important NTBsand enhance cooperation between the two parties.

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In a nutshell: the pharmaceuticals and medical devices annex(Annex 2-D)

EUKoreaFTA

The annex in a nutshell

International standards:- EU and Korea will take into account international standards,

practices and guidelines (e.g. WHO, OECD, ICH, GHTF and PIC/S) when developing legislation

Regulatory cooperation:- Possibility to accept conformity assessment results of the

other Party in accordance with international GLP and GMP standards

- Establishment of a Working Group on pharmaceuticals and medical devices, to promote further cooperation

Definitions:- One common definition of pharmaceuticals / medical devices

applicable between the Parties more clarity

EUKoreaFTA

The annex in a nutshell

Transparency: The Parties should ensure that all rules governing the two sectors are published or otherwise made available at an early stage, to enable economic operators to become acquainted with them. The Parties will, insofar as possible:

• Make available such rules in advance;• Provide reasonable opportunities for comment;• Address important issues raised in the comments received, in

writing;• Allow a reasonable interval between publication and their entry

into force.

EUKoreaFTA

The annex in a nutshell

Pricing, listing and reimbursement procedures:Basic principles on pricing and reimbursement to recognise the value

of the patented products and the efficacy, quality and benefits of the product The Parties will ensure that:- “The procedures, rules, criteria and implementing guidelines (…) are

fair, transparent, reasonable and non-discriminatory”- There is no obligation by the Parties to reimburse at any given price

nor prejudge the outcome of price negotiations, but criteria for decision need to be objective and clear, so as to understand the basis of the decision (Art. 2.(a) and footnote 2)

- All rules (« laws, regulations, procedures, administrative rulings and implementing guidelines of general application ») need to be made publicly available

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The annex in a nutshell

Pricing, listing and reimbursement procedures (continued) The Parties will ensure that:

- All criteria for decision are disclosed to applicants- All decisions on applications for pricing or approval are promptly

adopted and communicated to the applicant;- Applicants have opportunities to comment at relevant points in the

decision process;- In cases of rejection, the applicant receives a well-substantiated

statement of reasons, including the criteria applied, and can appeal the decision under an independent review process

- Decision-making bodies are open to stakeholders- Access is granted to national pricing and reimbursement

arrangements

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Monitoring and implementation

The Working Group on Pharmaceutical Products and Medical Devices will meet regularly to address any implementation issues

WG will offer the opportunity to clarify policies insofar as necessary