Amendment to the Pharmaceutical Affairs Act passes NA

Local governments gain authority to request documents, reject registrations...Higher barriers for warehouse-style, illegally operated pharmacies

MFDS adds intermediate sanction of up to ‘6-month suspension’ in place of uniform GMP certification revocation

An amendment to the Pharmaceutical Affairs Act strengthening the investigative and rejection authority of local governments over pharmacy registrations passed the National Assembly plenary session on the 1st, tightening regulations on controversial warehouse-style pharmacies and illegally operated pharmacies involving license lending.

The amendment also introduces an intermediate sanction allowing GMP certification to be ‘suspended for up to 6 months,’ as part of efforts to improve the current one-strike system under which GMP violations can result in revocation regardless of their severity.

The National Assembly held a plenary session and passed the amendment that was consolidated and coordinated by the Health and Welfare Committee. The revised law will take effect 6 months after promulgation.

Under the supplementary provisions, however, the new rules governing registration of illegal pharmacies will apply only to pharmacy registration applications submitted to local governments after the law takes effect. Regarding the provision on plans to provide rare disease drugs free of charge, products already being supplied following review by the MFDS commissioner will be deemed approved without additional procedures after the revised law takes effect.

Local governments gain authority to ‘request documents, reject pharmacy registrations’… bars entry of warehouse-style, illegally operated pharmacies

The amendment strengthens pre-registration scrutiny by giving municipal and district authorities statutory authority to request documents needed to determine whether a proposed pharmacy operation would violate the law.

Under the current Pharmaceutical Affairs Act, local governments have had difficulty refusing registration when an application formally satisfies registration requirements, even when they need to determine in advance whether the pharmacy involves license lending, collusion with a medical institution, or violations of location restrictions.

As a result, authorities have lacked the power to demand detailed supporting documents when applications are filed for warehouse-style pharmacies modeled after large retail stores or logistics warehouses, or for pharmacies effectively owned by non-pharmacists through license-lending arrangements, leaving them unable to reject such applications on those grounds.

Under the amended law, mayors, county heads and district heads may, before accepting a pharmacy registration, require the applicant pharmacist to submit documents prescribed by Ministry of Health and Welfare regulations to verify whether the pharmacy ▲violates restrictions on establishment (including operation within the premises or facilities of a medical institution); ▲involves the lending of a pharmacist license; or ▲violates the principle that one pharmacist may establish and operate only one pharmacy.

The law also explicitly allows local authorities to reject a registration application if the applicant fails, without legitimate reason, to supplement or submit the requested documents. The same document-request and rejection provisions will apply when a change in ownership of an existing pharmacy requires notification of succession to the status of the pharmacy operator.

Up to ‘6-month GMP suspension ’ introduced...sanctions made more proportionate

The GMP certification sanctions system, which garnered major attention from the pharmaceutical industry, has also been revised with the introduction of intermediate penalties.

Under the current law, repeated false or incorrect preparation of manufacturing and quality-control records after obtaining GMP certification can result in mandatory revocation of the certification under the ‘one-strike out’ system. The system has faced criticism for imposing potentially severe consequences on businesses and threatening the supply of essential medicines regardless of the seriousness of the violation.

Critics have pointed out that manufacturing and quality-control records are extensive and varied, yet violations have been subject to the same uniform revocation penalty without regard to their severity.

The amended law introduces intermediate sanctions allowing the MFDS commissioner, depending on the nature of the violation, to suspend the validity of GMP certification for ‘up to 6 months’ or issue a corrective order.

For serious violations, however, the amended law retains the strict principle of mandatory revocation, while clearly defining which types of violations warrant mandatory revocation and which are subject to other sanctions.

Mandatory revocation applies to cases where GMP certification was obtained through false or other improper means (Item 1), and where a manufacturer repeatedly failed to prepare or retain batch-specific manufacturing and quality-control records and sold the drugs concerned (Item 2).

Cases subject to suspension, revocation or corrective orders include manufacturing a drug differently from its approved or notified specifications while falsifying records to make it appear that the drug was manufactured in compliance with those specifications (Item 3), as well as other repeated falsification or erroneous preparation of manufacturing and quality-control records (Item 4).

The amendment also includes a safeguard for drug supply. Even when a product’s GMP certification has been suspended, the MFDS commissioner may temporarily permit its manufacture and sale for a specified period if the drug is essential for patient treatment and no alternative is available.

Free supply of rare disease drugs legalized...Korea Orphan & Essential Drug Center to oversee programs

Expanded access programs (EAPs) providing rare disease drugs free of charge will also be formally brought within the legal framework.

Until now, multinational pharmaceutical companies seeking to provide rare disease drugs to patients free of charge on compassionate grounds before reimbursement listing have faced regulatory limitations because such supply could potentially fall under the Pharmaceutical Affairs Act’s prohibition on providing economic benefits (rebates) to medical institutions.

The amendment explicitly recognizes the free supply of rare disease drugs by pharmaceutical companies to medical institutions as a permitted economic benefit (exception to the rebate prohibition provision).

A pharmaceutical company seeking to provide a rare disease drug free of charge as part of a patient support program must first obtain approval of the plan from the MFDS commissioner, while the Korea Orphan & Essential Drug Center will oversee distribution. After obtaining the patient’s consent, a medical institution will submit an application to the center. The center will then verify whether the request complies with the approved free-supply plan before authorizing the pharmaceutical company to provide the drug. Transitional provisions also stipulate that free-supply programs already underway upon MFDS review before promulgation of the amendment will be deemed to have received approval under the revised law.