The government and the ruling party are pushing to amend the Pharmaceutical Affairs Act so that pharmaceutical companies caught colluding twice will face business suspension. Concerns are rising that a business suspension is essentially equivalent to "market exit," and that the resulting damage will be passed on to patients.

In 2023, some pharmaceutical companies were fined by the Fair Trade Commission (FTC) for vaccine collusion. In 2022, some multinational pharmaceutical companies were caught by the FTC for colluding in the anticancer drug market, highlighting recurring issues with collusion.

According to political and pharmaceutical circles on the 5th, the Democratic Party of Korea recently held a party-government consultative meeting at the National Assembly to discuss "legislative promotion plans to eradicate repetitive collusion."

During the meeting, the party and the government decided to jointly promote five legislative tasks as a package to: ▲ strengthen collusion deterrence, ▲ raise the collusion detection rate, and ▲ enhance the effectiveness of corrective measures.

The measures target a total of 17 industries through consultations with relevant ministries in livelihood-sensitive sectors where collusion cases have frequently occurred. Amendments to the Fair Trade Act and 17 individual laws are being pursued so that businesses that repeatedly collude "twice or more within 5 years" can be subject to registration cancellation or business suspension under individual laws.

The pharmaceutical industry, which falls under the category of manufacturing and importing pharmaceuticals, is classified as a "safety and life sector" and could face business suspension under the amended Pharmaceutical Affairs Act.

Under the plan, if the Fair Trade Commission detects repeat colluders based on the Fair Trade Act and requests relevant ministries to cancel registrations or suspend business, the requested ministries can take such actions against the repeat colluders pursuant to individual laws.

In addition, through the package legislation, the party and the government are pushing to extend the statute of limitations for collusion dispositions under the Fair Trade Act from the current 12 years to a maximum of 15 years.

To effectively correct market price distortions caused by collusion, the type of corrective measure under the Fair Trade Act will be explicitly codified as a "price redetermination order to the level of restoring pre-collusion competition."

Furthermore, while maintaining current fine and criminal accusation reduction benefits for voluntary collusion reporters under the Fair Trade Act, the parties agreed to push for an amendment to exclude corrective measure reduction benefits for them.

The pharmaceutical industry maintains that business suspension deals a blow similar to actual market exit and that a cautious approach is required.

In particular, even now, when collusion is detected, multiple penalties are already imposed, including surcharges of up to 20% of sales, criminal indictments, claims for damages, and restrictions on public bidding eligibility. There is particular concern that disrupted drug supplies from pharmaceutical companies could directly harm patients.

An industry insider pointed out, "Unlike general consumer markets, the pharmaceutical industry is a representative essential public good directly linked to people's lives and health. The damage from pharmaceutical business suspension could be passed on to patients."

The insider added, "Due to the characteristics of the pharmaceutical industry, a business suspension could mean market exit. While the intention is good, more discussion is needed before implementation."

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