July 18, 2022

[Issue Paper] Changing Political Economy of Pharmaceutical Production in Post-COVID-19 era and Civil Society Movement Strategy in South Korea

Alliance for a Better Pharmaceutical Production Regime (ABPPR) was launched by Korean Pharmacists for Democratic Society (KPDS), People’s Solidarity for Social Progress (PSSP), Health Right Network (HRN), People’s Health Institute (PHI), and IPLeft on April 10, 2018. The purpose was to diagnose changes in the political economy surrounding the pharmaceutical industry and government regulations after the “Access to Glivec, Sprycel, and Fuzeon movement” and “Anti-KORUS FTA movement” in the 2000s, and lay the knowledge base for social movements to secure access to and ‘publicness’ of medicines.

This issue paper contains an analysis of history and structure, power and interests, and ideology that can interpret and explain problems from the perspective of a changing political economy of pharmaceutical production since the 2000s and after COVID-19. Not only the ‘changing’ context like financialization and biomedicalization but also ‘classical’ contexts such as strengthening monopolization through intellectual property rights and privatization of public resources are still valid. Although it is not perfect, it contains concerns about the movement strategy of Korean civil society as of June 2022. We ask readers to join us in this concern and discussion.

We express our deep gratitude to our comrade Hee-seob Nam, who passed away on May 10, 2021. He was always there to fight for access to medicines for 20 years, from the access to Glivec and Fuzeon movement and anti-KORUS FTA movement, to access to COVID-19 technologies movement. He also shared a lot of inspiration and insights globally across the border. May he rest in peace.

< Abstract >

1. COVID-19 pandemic, (re)examination of access to medicines, and R&D, production, and supply regimes

COVID-19 pandemic provided a venue for ‘joint learning’ worldwide about access to medicines and the importance of R&D, production, and supply systems. Competition to secure treatments and vaccines, described as a “war” between countries, arose due to the lack or failure of a fair distribution mechanism based on need amid limited production and supply worldwide. Two major factors played a role in the limitation of production and supply. One was the monopoly of technology and knowledge through intellectual property rights, and the other was the insufficient and unequal use of global production capacities. The loser of the “war” was bound to be low- and middle-income countries that lacked purchasing power and technology.
There was also an alternative effort. These include the “COVID-19 Technology Access Pool (C-TAP)” to jointly manage technologies and knowledge related to COVID-19, the “Access to COVID-19 Tools Accelerator (ACT-A)” to cooperate worldwide from R&D and production to purchase and distribution of COVID-19 technologies, and its vaccine pillar, COVAX. However, the planned goals were not realized in the end. There was no ‘voluntary’ technology sharing by companies with intellectual property rights, and amid limited production and supply, only low- and middle-income countries that could not afford to purchase vaccines were left in extreme inequality while high-income countries hoarded vaccines. These were the contexts in which the governments of India and South Africa proposed a temporary waiver of certain provisions of TRIPs on COVID-19 technology at the WTO level. However, the decision passed at the 12th WTO Ministerial Council in a year and eight months was so retrograde that it could no longer be called a waiver.
Korean civil society has joined forces with global civil society to support the ‘TRIPs waiver.’ The Korean government has consistently maintained its opposition while pushing for Korea’s initiative to become a “global vaccine hub.” Public attention to the TRIPs waiver has faded, and the movement’s momentum has also been reduced. However, as high-income countries, including Korea, began to vaccinate “booster shots,” vaccine inequality has worsened again, and inequality is being reenacted in oral therapeutics.

2. Political economy of pharmaceutical production: Global context and Korean position

In the late 1980s, in the era of neoliberal financial globalization, mergers and acquisitions between pharmaceutical companies increased significantly, and patent rights were strengthened worldwide. Meanwhile, bio-venture companies emerged through the stock market, transforming the pharmaceutical production ecosystem with transnational pharmaceutical companies that have become huge through mergers and acquisitions. The result was a rise in drug prices due to the strengthened market dominance of pharmaceutical companies and a shift of drug development costs to society.
With COVID-19, the government’s role in drug production has been greatly strengthened, and ‘publicness’ issues in drug development and production have begun to draw much attention. However, this government-led drug development model had many limitations, such that the knowledge and technology produced by public funds were not widely shared and spread and especially underdeveloped countries could not even try this model.
Meanwhile, in Korea, under the influence of neoliberal financial globalization, the “knowledge-based economy” model began during the Kim Dae Jung government and was succeeded by the Moon Jae In government’s “innovative growth” policy. The innovative growth policy involves easing industrial and financial regulations to foster venture capital. However, unlike the U.S., Korea, which does not have original innovative technology, does not achieve the goal of developing innovative drugs and economic growth and only creates side effects of forming a bubble in the KOSDAQ market and releasing drugs that lack safety and effectiveness.

3. The Korean government’s policy to foster bio and pharmaceutical industries

The Korean government expanded financial support to foster the bio and pharmaceutical industries in each administration, and also promoted deregulation policies that lower drug approval standards, for industrial purposes. These deregulation measures led to indiscriminate drug approvals, and the use of unverified drugs threatened safety for many people. Despite repeated poor approvals, the government has continued to push for industrial development policies rather than efforts to improve them and is stepping up support and deregulation with the opportunity of COVID-19. Meanwhile, the global community is paying attention to Korea in the wake of COVID-19, not because of bio-new drugs, but because of its ability to produce biosimilars and vaccines.
In the COVID-19 situation, the monopoly problem of bio-new drugs such as vaccines was strongly exerted despite the public health crisis. In the end, low- and middle-income countries had a lot of difficulties accessing them. The latest biopharmaceuticals require complex production processes and advanced production facilities completely different from conventional chemical drugs or traditional vaccines. In addition, third-phase clinical trials are required to confirm the equivalence of generic drugs (biosimilars) due to their complex shape and structure and vulnerability to external environments. As such, barriers to biosimilar production, which are different from conventional generics (of chemical drugs), are giving many countries additional difficulties in using biopharmaceuticals, in addition to the monopoly based on the intellectual property rights of new drugs. For this reason, several countries are starting discussions to solve the high entry barriers to biosimilar production.
Korea has the world’s second-largest bio-production facility and has been entrusted by AstraZeneca, Novavax, Sputnik, and Moderna to produce their COVID-19 vaccines. In addition, Korea is becoming a major producer of biosimilars as four of the top 10 biosimilar sales in 2020 are from domestic companies. While the Korean government is implementing policies to foster bio and pharmaceutical industries to ‘catch up’ major high-income countries and transnational pharmaceutical companies, the global community expects the Korean government and companies to provide affordable biopharmaceuticals to all countries. Considering that the government’s biosimilar policy for industrial development has not led to a reduction in domestic drug expenditure, let alone ensuring affordability of low- and middle-income countries, watching and checking the government and companies to meet their changed status and expectations has become a new task for Korean civil society.

4. The ‘access to medicines’ movement for high-priced medicines: Global context and Korean position

Korean patients had difficulty using the leukemia drug Glivec in 2001 because of the high price and the pharmaceutical company’s refusal of supply to stick to the high price of the drug. However, health and medical CSOs joined the patient movement to launch an access movement which later led to the access to Sprycel and Fuzeon movement in 2007. These movements went beyond the expansion of the health insurance coverage of the drugs, argued for the necessity of patient participation in the decision-making process of drug development, production, and supply, and criticized the intellectual property system strengthened with the launch of the WTO.
The issue of access to expensive new drugs such as Glivec was not limited to Korea. This was because transnational pharmaceutical companies pursued a profit maximization strategy that set the maximum price of the drug in the United States and Europe and then forced the price on other countries.
In the early 2000s, discussions from the perspective of ‘access to medicines is a human right’ began at the United Nations. Activists worldwide have considered drug production and supply at the global level, witnessing, on the one hand, the Brazilian public laboratories and Indian generic pharmaceutical companies proving the feasibility of access to affordable medicines, and on the other hand, India introducing material patents due to the implementation of TRIPs with revision of their patent law in 2005. The access to the Glivec movement, which started in Korea and passed through Thailand to India, and the global pandemic of infectious diseases such as Swine Flu and COVID-19, as well as the call for compulsory licensing and TRIPs waiver for access to therapeutics and vaccines, showed that a global strategy is needed.
Korea has an important status in this global solidarity movement. This is because the access issues were revealed ahead of developing countries, and compulsory licensing in countries such as Korea, which is well equipped with drug production facilities, can have a greater impact.

5. Challenges of Korean civil society movements for ‘publicness of pharmaceutical production’ beyond ‘access to medicines’ in the post-COVID-19 era

Guerbet’s refusal to supply liver cancer contrast agent Lipiodol in 2018 and Gore’s supply suspension of artificial blood vessels for pediatric heart surgery in 2019 suggested that the monopolistic pharmaceutical company’s ‘refusal to supply drugs’ strategy is still valid, and that there are a variety of pharma monopolies even if not patent rights; but that the structure and mechanism of the problem are the same – the monopolistic production and supply by for-profit pharma.
After the “Access to Glivec, Sprycel, and Fuzeon movement” and “Anti-KORUS FTA movement” in the 2000s, Korean society has rapidly become neo-liberalized through compressive growth under compressive globalization. And now, in the era of ‘shareholderization of the entire nation,’ the ‘intellectual property rights dogmatism,’ in which the majority of the public, with the identity of ‘shareholders’ of bio-pharmaceutical companies, supports intellectual property rights, is now dominating the entire society. For Korean civil society, the space of the popular movement has been reduced more than ever.
It may sound paradoxical, hope can be found in that the access issues surrounding ultra-high-priced new bio drugs or ‘orphanization’ of ‘old drugs’ can be found in other high-income countries such as Europe and the United States. The fact that the public anger over the tyranny of monopolistic pharmaceutical companies and the political community’s awareness of the ‘system failure’ is higher than ever globally could be an opportunity for change.
The Korean civil society believes that the ‘access to medicines’ movement is still valid even in the post-COVID-19 era, and believes that the ‘publicness of global pharmaceutical production’ should be asserted beyond the ‘access to medicines for Koreans.’ The civil society movement should raise such tasks socially and lead public discourse beyond the limitations of perspectives of patients or nation-states. Even considering the social determinants of health and the socioeconomic nature of medicines, the people’s movement for ‘publicness’ of pharmaceutical production has been and should continue to be associated with various social movements, including human rights movements, patient movements, and access to knowledge movements.

Issue Paper Download link

Share this: