Pharmaceutical industry officials are continuing to complain about the financial regulator’s tightening rules on public disclosure of drugmakers and biotech firms.
The Financial Supervisory Service (FSS) recently decided that pharmaceuticals and biotech companies should elaborate details about industry-specific investment risks in their annual reports. FSS officials said that they should apply stricter rules on drug companies because minority investors find it difficult to learn details about drugs and clinical trials.
Also, recent disclosures on new drug development or licensing-out deals excessively drove up stock price hikes, which was why pharmaceuticals needed more regulation, the FSS said.
Under the new rules, pharmaceutical and biotech firms must announce not only the start of a trial but a failure or discontinuation of the study through public disclosure.
However, industry officials said the regulator’s measure ignored the unique characteristics of the pharmaceutical industry.
If a generic drugmaker wins a patent lawsuit against an original drug manufacturer, the authorities allow the company to sell the generic exclusively for nine months, under the patent approval linkage system in Korea.
However, enhanced rules on public disclosure will make it difficult for a generic drug manufacturer to keep exclusive information about a new generic drug development to itself. Thus, the exclusive sales rights will become meaningless, officials said.
The patent approval linkage system gives generic drugmakers two weeks for filing a patent lawsuit, after the first patent suit. If a pharmaceutical firm initially files a patent suit and dozens of other firms follow suit with the same patent litigation, and they win the lawsuit together, all of the generic drugmakers will receive the exclusive sales rights to the involved drug.
Stricter disclosure rules could also discourage pharmaceuticals to give up on developing new medicines, observers said.
“To develop a new drug, a company keeps every step of development as classified information because indications or content of trials could be leaked to rival firms,” a pharmaceutical source said. “Disclosing the steps of new drug development could undermine companies’ commitment to developing innovative medicines.”
The Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) expressed a similar view.
The group said it could understand the FSS’ intention to protect investors but pharmaceuticals needed some tools to protect their information.
“The FSS’ measure could become a stumbling block for every stage of drug development. We are collecting opinions from our member companies,” said an official at KPBMA. “We agree with the FSS’ intention to protect investors, but we need a more cautious approach, considering the industry’s distinct characteristics. We will gather industry opinions and pass them on to the government.”
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