Distribution and marketing of drugs in South Korea: overview

A Q&A guide to distribution and marketing of drugs law in South Korea.

The Q&A gives a high level overview of distribution and marketing of drugs law, including pre-conditions for distribution; licensing; wholesale distribution; marketing to consumers; marketing to professionals and engagement with patient organisations.

To compare answers across multiple jurisdictions, vist the Distribution and Marketing of Drugs Country Q&A Tool.

This Q&A is part of the global guide to Distribution and Marketing of Drugs.

Contents

Distribution

Pre-conditions for distribution

1. What are the legal pre-conditions for a drug to be distributed within the jurisdiction?

Authorisation

Under the Pharmaceutical Affairs Act (PAA) a product approval (that is, market authorisation) must be obtained from the Ministry of Food and Drug Safety (MFDS) to manufacture, import or market a medicinal product within South Korea.

For pharmaceutical products, an application with supporting documents (including clinical trial data and a good manufacturing practice (GMP) certificate) must be submitted to the MFDS for approval. However, some products are exempt from the MFDS approval procedure (for example, products set out under the South Korean Pharmacopoeia, an official book of medicinal products recognised by the MFDS). In exemption cases, a report must be submitted to the MFDS before the manufacture, importing or marketing of the products. The MFDS will review the report to ensure that the exemption requirements are satisfied.

Exceptions

Certain orphan drugs (that is, pharmaceutical agents developed specifically to treat a rare medical condition) and drugs requested by the Ministry of Defence for military use can be imported and distributed prior to obtaining a market authorisation under the PAA.

 
2. Do any types of named patient and/or compassionate use programmes operate? If so, what are the requirements for pre-launch access?

The named patient programme/compassionate programme has not been officially introduced in South Korea. However, certain products (for example, orphan drugs and drugs requested by the Defence Minister for military use) can be imported and distributed prior to obtaining a market authorisation under the PAA (see Question 1).

Licensing

3. What is the procedural structure regarding licensing a drug for distribution?

Structure

An import business licence is not currently required for licensing a drug for distribution. However, a registration as an import business with the local branch of the Ministry of Food and Drug Safety (MFDS) is required in practice. In any case, from 29 September 2015, an entity wanting to import drugs as part of its business will be required to file an import business notification to the MFDS in addition to obtaining a product approval (see Question 1).

A wholesaler is required to obtain a wholesale licence from the local municipal government. A pharmacy is established and operated by a licensed pharmacist only upon making a filing with the local municipal government.

Regulatory authority

See above.

 
4. Is there a simplified licence proceeding, or relaxed licensing conditions, for drugs which have already been licensed for distribution in another jurisdiction?

In principle, a simplified licence proceeding and relaxed licensing conditions are not recognised under the Pharmaceutical Affairs Act.

 
5. Is virtual drug distribution possible from your jurisdiction?

Virtual drug distribution is not possible from South Korea.

 
6. What is the procedure to appeal (legal remedy) a licensing decision?

The procedure to legal remedy a licensing decision is either to:

  • File an administrative appeal with the Administrative Tribunal under the Administrative Appeals Act.

  • File an administrative litigation with the courts under the Administrative Litigation Act.

 
7. What are the costs of obtaining licensing?

The costs of obtaining licensing are as follows:

  • Fees for product approval:

    • for a new drug up to KRW3.726 million (online application) and KRW4.140 million (in-person application);

    • for an orphan drug up to KRW1.863 million (online application) and KRW1.260 million (in-person application);

    • for other drugs up to KRW1.134 million (online application) and KRW1.26 million (in-person application).

  • Import licence filing fee. Not yet determined.

  • Wholesaler licence filing fee. KRW20,000.

Distribution to consumers

8. What are the different categories of drugs for distribution?

The different categories of drugs for distribution are as follows:

  • Prescription drugs. These are sold at pharmacies with a physician's prescription.

  • Over-the-counter drugs. These are sold at pharmacies without a physician's prescription.

  • Safe and readily available drugs. These can be sold at 24-hour convenience stores without a physician's prescription.

 
9. Who is authorised to distribute prescription drugs and over-the-counter drugs to consumers?

Prescription drugs

A licensed wholesaler can distribute prescription drugs to pharmacies. A pharmacy established and operated by a licensed pharmacist can sell prescription drugs to patients with a physician's prescription.

Over-the-counter drugs

A licensed wholesaler can distribute over-the-counter drugs to pharmacies. A pharmacy established and operated by a licensed pharmacist can sell over-the-counter drugs to consumers without a physician's prescription. Certain over-the-counter drugs are designated by the Ministry of Food and Drug Safety as "safe and readily available drugs" which can be sold at 24-hour convenience stores without a physician's prescription.

 
10. What drugs can an attending physician distribute and under what circumstances?

In principle, a physician is not allowed to directly dispense drugs to patients except in the following cases:

  • Where he dispenses drugs in an area where no pharmacy exists.

  • Where he dispenses drugs for the purpose of disaster relief because pharmacies become virtually non-existent due to a natural disaster.

  • Where he dispenses drugs for an emergency patient or a patient suffering from mental illness, for example schizophrenia and manic-depressive insanity, and who is feared to harm himself or a third party.

  • Where he dispenses drugs to the following:

    • in-patients;

    • patients suffering from a Type 1 infectious disease under the Infectious Disease Control and Prevention Act; or

    • a person admitted to a social welfare facility under the Social Welfare Services Act (where a person does not board and lodge in the social welfare facility, it will be limited only to the dispensing of drugs during the period for which he utilises the facility).

  • Where he gives injections.

  • Where he administers medication, including vaccines to prevent infectious diseases, drugs for medical examinations, and other drugs prescribed by the Ordinance of the Ministry of Health and Welfare (MOHW).

  • Where he dispenses drugs for patients while serving in a public health centre or its branch office under the Regional Public Health Act (excluding ambulatory care services for residents within the jurisdiction of a public health centre and a public health branch office designated by the MOHW).

  • Where he dispenses drugs for:

    • veterans with disability ratings (from 1 to 3) under the Act on the Honorable Treatment and Support of Persons of Distinguished Services to the State and its Enforcement Decree;

    • persons with disability ratings (from 1 to 4) among those wounded in the 18 May democratisation movement under the Act on the Honorable Treatment of Persons of Distinguished Service to the 18 May Democratisation Movement;

    • persons with severe disabilities under the Act on Assistance to Patients from Actual or Potential Aftereffects of Defoliants and its Enforcement Decree;

    • persons with disability ratings (1 and 2) under the Act on Welfare of Persons with Disabilities and its Enforcement Decree; or

    • patients suffering from Parkinson's disease or Hansen's disease.

  • Where he dispenses drugs for the treatment of persons having undergone surgery involving an internal organ transplant and for the treatment of patients suffering from AIDS.

  • Where he dispenses drugs for:

    • active service persons in the course of discharging a military duty;

    • riot police officers;

    • security guards of any correctional institution; or

    • other persons who are held in correctional institutions under the Administration and Treatment of Correctional Institution Inmates Act and the Act on the Execution of Criminal Penalties in the Armed Forces and the Treatment of Military Prison Inmates, protected juvenile accommodation facilities under the Act on the Treatment of Protected Juveniles and internment facilities under the Immigration Control Act.

  • Where he administers drugs for the treatment of tuberculosis under the Tuberculosis Prevention Act (limited to public health centres, public health branches and subsidiary hospitals of the Korean National Tuberculosis Association).

  • Where he dispenses drugs for community service activities.

  • Where he is prohibited from disclosing prescriptions for the confidentiality of information related to national security.

  • Other cases prescribed by the Presidential Enforcement Decree of the Pharmaceutical Affairs Act.

 
11. Who is authorised to prescribe prescription drugs to consumers?

Licensed physicians are authorised to prescribe prescription drugs to consumers.

 
12. Is direct mailing/distance selling of drugs permitted in your jurisdiction?

Direct mailing/distance selling is not allowed in principle. However, in practice a patient may be allowed to import a small amount of drugs (other than narcotics drugs) for his own personal use (that is, not for resale or distribution).

 
13. What regulatory authority is responsible for supervising distribution activities?

The main regulatory authority is the Ministry of Food and Drug Safety (MFDS). The MFDS monitors drug distribution activities and is allowed to conduct on-site inspections and impose certain administrative sanctions under the Pharmaceutical Affairs Act.

 
14. What is the procedure to appeal (legal remedy) a distribution decision?
 
15. What are the legal consequences of non-compliance with consumer distribution laws?

Administrative sanctions can be imposed on a wholesaler or pharmacist who has violated the Pharmaceutical Affairs Act in distributing drugs. Sanctions include the suspension of sales activities or revocation of the distribution licence.

A criminal penalty can also be imposed if an importer, a wholesaler or a pharmacist distributes or sells a drug without the requisite licence.

Wholesale distribution

16. What is the legal regime regarding wholesale distribution of drugs?

The standard pharmaceutical wholesale licence covers medicinal products as a whole, and does not provide for limitations on specific classes of drugs (provided that Article 53 of the Pharmaceutical Affairs Act (PAA) is complied with). Article 53 provides that in order to sell state-authorised drugs such as vaccines, anti-venom, and plasma derivatives, a review and inspection of materials on the manufacturing and quality control processes by and subsequent sales approval of the Ministry of Food and Drug Safety is required.

A wholesaler must maintain an office and storage area of at least a certain area size. The storage facility must have:

  • Refrigeration and protection from light.

  • Preventative measures against vermin.

  • Temperature and humidity control to prevent degradation of medicinal products.

  • Designated storage facilities for biopharmaceutical products (including containers for transportation).

  • Storage instructions (if necessary).

The PAA requires a certain amount of capital for wholesalers of pharmaceutical products (paid-in capital or equity capital of KRW500 million or more).

 
17. What regulatory authority is responsible for supervising wholesale distribution activities?

Under the Pharmaceutical Affairs Act (PAA), the Ministry of Food and Drug Safety has the general authority to supervise wholesalers and ensure that they comply with the regulations provided in the PAA. Certain supervisory rights are delegated to municipal governments.

The regulatory authority is allowed to conduct on-site inspections and to ask a wholesaler to submit certain documents and information relating to its activities.

Certain administrative sanctions can be imposed if a wholesaler fails to comply with regulations, which can be challenged by the wholesaler (see Question 6).

 
18. What are the legal consequences of non-compliance with wholesale distribution laws?

Non-compliance with wholesale distribution laws can result in:

  • Administrative sanctions (for example, suspension of business and/or revocation of the wholesaler licence).

  • Criminal sanctions in certain cases (for example, distribution of drugs without a licence and provision of undue economic values to healthcare professionals for the promotion of drugs).

 

Marketing

Promotion

19. What is the general legal regime for the marketing of drugs?

Drug marketing is regulated by the Pharmaceutical Affairs Act (PAA) and supervised by the Ministry of Food and Drug Safety (MFDS). In addition, the Fair Labelling and Advertising Act that governs advertising activities in general and is supervised by the Korea Fair Trade Commission may also apply (in theory).

The general limitations under the PAA are as follows:

  • Advertising is only allowed for MFDS-approved products.

  • Advertising must comply with the MFDS's approved indications, efficacies and other conditions.

  • False, deceitful, exaggerating or slanderous advertising is prohibited.

  • Absolute expressions such as "the best" cannot be used.

  • A gift cannot be provided to consumers purchasing drugs.

  • Individual healthcare professionals cannot be recommended.

  • Direct-to-consumer advertising must be reviewed in advance by the MFDS or its designated body (the authority to review is delegated to the Korea Pharmaceutical Manufacturers Association under the PAA).

  • Direct-to-consumer advertising for prescription drugs is not allowed.

In addition, the PAA prohibits pharmaceutical companies and wholesalers from providing undue economic values to healthcare professionals for the purpose of promoting drugs (that is, the prohibition of kickbacks).

 
20. Are there other codes of conduct for the marketing of drugs (for example, by professional or industrial organisations)?

There are two industry codes in Korea:

  • Korea Pharmaceutical Manufacturers Association (KPMA) Fair Competition Code.

  • Korea Research-based Pharmaceutical Industry Association (KRPIA) Fair Competition Code.

The KPMA is an industry association and most members are local pharmaceutical companies, whereas the KRPIA consists of multinational pharmaceutical companies doing business in Korea.

The KPMA Code and the KRPIA Code are generally seen as voluntary industry codes without statutory enforcement. However, both codes have been reviewed and endorsed by the Korea Fair Trade Commission under Article 23 of the Monopoly Regulation and Fair Trade Act. It is generally recognised that both codes act as quasi-statutory regulations. The main purpose of the codes is to prevent pharmaceutical companies from providing undue economic values to healthcare professionals for the purpose of promoting their products.

Marketing to consumers

21. What is the legal regime for marketing to consumers?

Drug marketing is regulated by the Pharmaceutical Affairs Act (PAA) and supervised by the Ministry of Food and Drug Safety (MFDS). In addition, the Fair Labelling and Advertising Act which governs advertising activities in general and is supervised by the Korea Fair Trade Commission may also apply (in theory).

The general limitations under the PAA are as follows:

  • Advertising is only allowed for MFDS-approved products.

  • Advertising must comply with the MFDS's approved indications, efficacies and other conditions.

  • False, deceitful, exaggerating or slanderous advertising is prohibited.

  • Absolute expressions such as "the best" cannot be used.

  • A gift cannot be provided to consumers purchasing drugs.

  • Individual healthcare professionals cannot be recommended.

  • Direct-to-consumer advertising must be reviewed in advance by the MFDS or its designated body (the authority to review is delegated to the Korea Pharmaceutical Manufacturers Association under the PAA).

  • Direct-to-consumer advertising for prescription drugs is not allowed.

 
22. What kinds of marketing activities are permitted in relation to consumers and the products which may be advertised to them?

For over-the-counter products, direct-to-consumer advertising is allowed under the Pharmaceutical Affairs Act (see Question 21).

Direct-to-consumer advertising for prescription drugs is not allowed, although a pharmaceutical company can post information about a prescription drug on its website. A website dedicated to a specific prescription drug is not allowed unless access to the website is limited to healthcare professionals.

 
23. Is it permitted to provide consumers with free samples? Are there particular restrictions on special offers (for example, "buy-one-get-one-free")?

A pharmaceutical company can provide a sample in the minimum packaging unit to healthcare professionals under the Pharmaceutical Affairs Act. However, no sample or special offer can be provided to general consumers (patients).

 
24. Are there particular rules of practice on the use of the internet/social media regarding drugs and their advertising?

The Pharmaceutical Affairs Act applies in general, but no specific statutory regulation has been established yet.

 
25. What regulatory authority is responsible for supervising marketing activities to consumers?

The Ministry of Food and Drug Safety has the general authority to supervise marketing activities to consumers.

See Question 6 for rights of appeal.

 
26. What are the legal consequences of non-compliance with consumer marketing laws?

If a pharmaceutical company fails to comply with the regulations, the following can be imposed:

  • Administrative sanctions, such as the suspension of advertising activities of the relevant drug and revocation of the market approval of the relevant drug.

  • Criminal sanctions (up to one year's imprisonment or a fine of up to KRW10 million).

Marketing to professionals

27. What kinds of marketing activities are permitted in relation to professionals?

The following are examples of the kind of marketing activities that are allowed:

  • Provision of samples.

  • Detailing (marketing technique used by pharmaceutical companies, for example, sales calls).

  • Product presentation.

 
28. Are there any restrictions on marketing to professionals?

Marketing activities

The following marketing restrictions apply:

  • Provision of medical journals or medical books is not allowed, but article reprints are allowed.

  • Provision of gifts or educational items is not allowed in principle.

  • Sponsorship of non-interventional studies is allowed, but only on the condition that there is a legitimate business need (that is, not for promotional purposes).

Frequency

The provision of:

  • Samples is generally once in the lifetime of the drug.

  • Detailing (marketing technique used by pharmaceutical companies) is up to four times a month, if meals or drinks are provided.

Provision of hospitality

The provision of hospitality is prohibited unless the Pharmaceutical Affairs Act and the industry codes (that is, the Korea Pharmaceutical Manufacturers Association (KPMA) and the Korea Research-based Pharmaceutical Industry Association Code (KRPIA)) specifically allow otherwise:

  • For a multi-centre product presentation, meals (up to KRW100,000 per meal), travel expenses (economy class), lodging and souvenirs (up to KRW50,000) can be provided or supported with the prior approval of the KPMA or the KRPIA.

  • Provision of hospitality at an academic conference can be provided with the prior approval of the KPMA or the KRPIA.

  • A gift whose value does not exceed KRW10,000 can be provided to healthcare professionals at detailing.

 
29. What information is it legally required to include in advertising to professionals?

For the provision of samples, the word "sample" must be marked. There are no other statutory requirements.

 
30. Are there rules on comparisons with other products that are particularly applicable to drugs?

Under the Fair Labelling and Advertising Act, comparison advertising must be fair, factual and substantiated by objective evidence.

 
31. What other items, funding or services are permitted to be provided to professionals?

Discounts

Early payment discounts are allowed if the requirements provided in the Pharmaceutical Affairs Act (PAA) are satisfied. In addition, a volume discount made within the ordinary course of business is allowed.

Free samples

See Question 28.

Sponsorship of professionals

All academic grants must be made through the Korea Pharmaceutical Manufacturers Association or the Korea Research-based Pharmaceutical Industry Association with their prior review and approval. The same principle applies to the sponsorship of physicians' attendance at academic congresses.

Other items, funding or services

Any other indirect incentives for the purpose of promoting drugs are, in principle, not permitted under the PAA.

 
32. What regulatory authority is responsible for supervising marketing activities regarding professionals?

The Ministry of Health and Welfare has the general authority under the Pharmaceutical Affairs Act. However, the Korea Fair Trade Commission can investigate pharmaceutical companies and healthcare professionals under Article 23 of the Monopoly Regulation and Fair Trade Act which prohibits unfair inducement of customers (that is, kickbacks). In addition, given that certain criminal sanctions can be imposed, the Prosecutors' Office can also conduct an investigation.

If a pharmaceutical company provides undue economic values to healthcare professionals the following can be imposed:

  • Administrative sanctions (for example, the suspension of sales of the relevant drug and revocation of product approval of the relevant drug).

  • Criminal sanctions (for example, imprisonment of up to two years or a fine of up to KRW30 million).

See Question 6 for rights of appeals.

 
33. What are the legal consequences in case of non-compliance with professional marketing laws?
 

Engagement with patient organisations

34. What kinds of activities are permitted in relation to engagement with patient organisations? What are the restrictions that are imposed on relationship with patient organisations?

No statutory regulation has been established yet. However, the general principles are that:

  • Interactions with patient organisations are only for the well-being of patients, and not for the company's pursuit of profits.

  • No advertising for prescription drugs is allowed.

  • A sponsorship to patient organisations must not be used as a mechanism to disguise the provision of undue benefits to healthcare professionals.

 

Reform

35. Are there any plans to reform the law on the distribution and promotion of drugs in your jurisdiction?

The government has not announced any specific plans for reform.

 

Contributor profiles

Hyeong Gun Lee, Partner

Lee & Ko

T +82 2 772 4379
F +82 2 772 4001
E hyeonggun.lee@leeko.com
W www.leeko.com

Professional qualifications. South Korea, 1994

Areas of practice. Healthcare law; M&A; general corporate law.

Non-professional qualifications. LLB, Seoul National University College of Law; LLM, Columbia Law School

Recent transactions

  • Representing GE Healthcare, Bard and other multinational medical devices clients in matters relating to the import licence of medical devices, business contracts and other issues.
  • Representing LG Healthcare in acquiring Haitai Beverage Company.
  • Advising Bayer Korea and other multinational pharmaceutical clients on potential patent infringement, compliance and other various legal and regulatory issues.
  • Advising Mars and other food industry clients on various legal and regulatory issues.

Languages. Korean, English

Professional associations/memberships. Korean Bar Association

Publications

  • Appraisal Rights of Dissenting Shareholders, BFL (vol. 38), Center for Financial Law at Seoul National University, 2009.
  • Korean Regulations on Business Combination involving Foreign Entities, Asialaw Corporate Finance Review, January 2008.
  • Life Sciences in South Korea Overview: Multi-Jurisdictional Guide, Practical Law Company, 2012 – 2014.

Jin Hwan Chung, Partner

Lee & Ko

T +82 2 772 4711
F +82 2 772 4001
E jinhwan.chung@leeko.com
W www.leeko.com

Professional qualifications. South Korea, 2000; New York State, US, 2009

Areas of practice. Healthcare law; anti-trust; general corporate law.

Non-professional qualifications. LLB, Seoul National University College of Law; LLM, Georgetown University Law Center

Recent transactions

  • Advising AstraZeneca, Bayer, Berna Biotec (Crucell), Daiichi-Sankyo, GE Healthcare, Janssen, Johnson & Johnson Medical, Merck & Co., Inc., Novo Nordisk and UCB on matters regarding compliance (including FCPA), regulation and business contracts.
  • Representing multinational and domestic healthcare companies and medical institutions in connection with investigations by the Korea Fair Trade Commission.
  • Representing Johnson & Johnson Korea in acquiring the household healthcare business from Pfizer Korea.

Languages. Korean, English

Professional associations/memberships. Korean Bar Association; New York State Bar; American Bar Association.

Publications.

  • The International Comparative Legal Guide to: Pharmaceutical Advertising – Korea Part, Global Legal Group, 2009.
  • Life Sciences in South Korea Overview: Multi-Jurisdictional Guide, Practical Law Company, 2012 – 2014.

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