Possible Ways to Address Roche's Refusal to Sell Fuzeon in Korea

Sean Flynn
October 6, 2008

The recent declaration of Roche that it will refuse to supply the South Korean market with Fuzeon is the second major threat of this kind.  Last year, Abbott refused to continue registration applications for several new drugs in response to a compulsory license issued by Thailand on Kaletra.

1.  Competition Law

Thai activists countered Abbott's move with a complaint to the Thai competition commission. Although the complaint was ultimately unsuccessful in the commission and is now under appeal, it demonstrated one possible response to acts of this kind.

Korean competition law has provisions that may be able to be used to punish Roche if it goes through on a threat to refuse to supply a needed drug to the Korean market.

Article 3-2 (Prohibition on the Abuse of Market Dominance)of the Korean competition law states that "no market-dominating enterpriser" (which Roche is in the sale of fusion inhibitors, there being only one) shall commit any of the following acts:
  1. Act of determining, maintaining, or changing the price of commodities or services unreasonably (hereinafter referred to as "price")
  2. Act of unreasonably controlling the sale of commodities or provision of services
The Presidential decree describing competition offenses explains that "Unreasonable control of the sale of goods or provision of services" includes:
  1. Significantly decreasing the supply of goods or services without justifiable reason and considering the recent trends
  2. Decreasing the supply of goods or services despite a supply shortage in distribution without justifiable reason
Obviously any case would turn on whether the price being offered by Korean health authorities for Fuzeon is "reasonable," a question competition authorities are often loathe to engage.

2.  Other strategies

There may be other strategies not yet tried by activists.  One might seek to capitalize on Roche's home base in Switzerland by filing a complaint in the EU human rights commission. The special raporteur on the right to health has been working on a statement on the human rights duties of pharmaceutical companies. This may be the perfect case to test the horizontal application of EU human rights norms to pharmaceutical companies.

Fuzeon was created with U.S, government funding and therefore U.S. health authorities have "march in" rights to grant compulsory licenses if the drug is not made available on reasonable terms. A campaign may seek to force the U.S. to further define this standard. The past effort to use the norm to force Abbott to roll back its price increases of Norvir was not ultimately successful, although it did help raise the profile of the dispute with treatment activists, including in a large all-day public hearing attended by many reporters and health advocates.

Finally, although perhaps the most direct option, Korea could issue a compulsory license for the drug based either on a failure to work (assuming it has been three years since its grant) or for non-commercial use. 

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