Overview

In South Korea, product safety regulations for healthcare products vary depending on how the products are categorised. Healthcare products can essentially be categorised into medical devices, pharmaceuticals, cosmetics and food (including nutrition supplements), with each category being regulated under separate bodies of legislation. Such legislation contains requirements regarding design and manufacture, market access, sales and marketing, post-marketing surveillance and product claims for each category of healthcare product.

The Ministry of Food and Drug Safety (MFDS) is the principal regulatory body overseeing the safety and efficacy of most healthcare products, while the Ministry of Health and Welfare (MOHW) oversees the pricing and reimbursement schemes for pharmaceuticals and medical devices (see 3.1 Regulatory Authorities for other authorities).

Medical Devices

Medical devices are mainly regulated under the Medical Devices Act (MDA). There is also special legislation governing in-vitro diagnostic devices: the In-Vitro Diagnostic Devices Act, which came into effect on 1 May 2020.

Under the MDA, a medical device is defined as an instrument, machine, device, material, software or any other similar product used independently or in combination to diagnose, cure, alleviate, correct or prevent disease, injury or impairment. The definition of a medical device includes medical instruments, consumables, medical apps or software and wearable devices but excludes pharmaceuticals or quasi-pharmaceuticals, which are defined under a separate statute (see below).

In order to manufacture or import a medical device in Korea, a company must obtain the following:

• a business licence (manufacturer/importer);
• product approval for each medical device; and
• a Korean Good Manufacturing Practices (KGMP) certification (for imported goods – certification issued to manufacturer outside Korea).

A separate business licence is required for a company to distribute or sell a medical device, but a company can sell a medical device to hospitals or other medical device sellers (but not to individuals) without this licence if it holds a manufacturer or importer business licence.

Depending on the intended use and potential harm to the human body, the MFDS categorises medical devices into four classes, with Class 4 medical devices being the most invasive or posing the highest potential harm, and thus being subject to the strictest regulation.

Pharmaceuticals

Pharmaceuticals, including prescription drugs and over-the-counter (OTC) drugs, are governed by the Pharmaceuticals Affairs Law (PAL) and are defined as:

• products listed in the Korean Pharmacopoeia;
• products used for the purposes of diagnosis, alleviation, treatment or prevention of disease, excluding appliances, machinery and equipment; and
• products other than appliances, machinery or equipment that are used for the purpose of exerting pharmacological effects on the structure or functions of human beings or animals.

In order to manufacture or import a pharmaceutical product in Korea, a company must obtain the following:

• a business licence (manufacturer or importer);
• product approval for each pharmaceutical; and
• a KGMP certification (for imported goods – certification issued to manufacturer outside Korea).

According to the PAL, only an owner of a pharmacy can sell pharmaceuticals or obtain pharmaceuticals for the purpose of sale to individuals, and only a licensed pharmacist can own a pharmacy. A company that obtains a drug wholesaler business licence can also distribute or sell pharmaceuticals but not directly to individuals. The online sale of pharmaceuticals is strictly prohibited in Korea.

Quasi-Pharmaceuticals

Quasi-pharmaceuticals are also regulated under the PAL but are separately defined as any article that falls under the following categories:

• fibres, rubber products and other similar products used for the purpose of treating, alleviating or preventing human or animal disease;
• non-appliances or non-machineries that only slightly or do not directly affect the human body; or
• articles used for sterilisation, antibacterial or other similar purposes.

In Korea, there is no separate category or definition of personal protective equipment. However, products such as surgical masks, disposable facial masks, bandages or sanitary pads, which are classified as personal protective equipment in other jurisdictions, do fall under the definition of quasi-pharmaceuticals and are therefore governed by the PAL.

In order to manufacture or import quasi-pharmaceuticals, a company should obtain a product approval for each quasi-pharmaceutical as well as a business licence from the MFDS under the PAL. No separate business licence or approval is required for sales of quasi-pharmaceuticals in Korea.

Blood Products

In Korea, blood products are strictly regulated under the Blood Management Act (BMA), according to which blood products come exclusively from blood donations, which are strictly managed and controlled under the BMA. Blood donations can only be undertaken through a blood centre approved by the MOHW under the BMA. Transactions of blood products are strictly prohibited.

Cosmetics

The MFDS regulates cosmetics under the Cosmetics Act (CA), which defines cosmetics as any product intended to be used by means of spreading, rubbing, spraying on or otherwise applying to the human body for cleansing, beautifying, promoting attractiveness or brightening the appearance, or maintaining or improving the health of skin and hair, which have minimal effects on the human body.

In order to manufacture or sell cosmetics in Korea, a company should be registered as a manufacturer or responsible seller with the MFDS under the CA. A separate product approval for each cosmetic product is generally not required but, in order to sell functional cosmetics, the CA requires a manufacturer or responsible seller to obtain a separate product approval for each functional cosmetic. Functional cosmetics are separately defined under the CA, and mainly include cosmetics that:

• help whiten skin;
• lesson or improve wrinkles;
• help tan skin or protect skin from ultraviolet rays;
• have the function of changing hair colour;
• help alleviate hair loss; or
• alleviate acne or dryness due to atopic skin.

Biocides

If biocidal products are used for medical purposes, they may be classified and regulated as pharmaceuticals, quasi-pharmaceuticals or medical devices under the PAL or the MDA. For example, mosquito repellents applied directly to the human body are regulated as quasi-pharmaceuticals under the PAL.

Biocidal products not intended for medical purposes are regulated under a separate statute (the Act on the Safety Management of Household Chemical Products and Biocides) and by a separate government body (the Ministry of Environment).

Food and Nutrition Supplements

The MFDS also regulates foods in Korea. Foods are categorised as either general foods or health functional foods (HFFs). A food product is considered an HFF product if it contains a certain threshold amount of health functional ingredients and makes claims on its functionality. All other products are considered general foods.

There are some differences in the regulatory requirements for marketing general foods versus HFFs, which are regulated under different statutes – the Food Sanitation Act (FSA) and the Health Functional Food Act (HFFA), respectively. Depending on the categorisation as a general food or an HFF, separate requirements apply regarding classification, labelling, ingredients and business licence registration.

The main obligations regarding the importation of general foods and HFFs into Korea are identical. Such importation is regulated under the Special Act on Imported Food Safety Management, which states that:

• all importers of food products must meet certain facility requirements, register their import business with the MFDS and undergo training on sanitation matters;
• all overseas manufacturers from which food products (whether general foods or HFFs) will be imported must be registered with the MFDS; and
• a report must be filed with the MFDS for every shipment of imported food products.

Overview of Korean Regulatory Landscape for Digital Health

Korea is an attractive market for digital health due to its advanced medical technology, sophisticated IT structure and a large volume of medical data, but the regulatory environment is quite restrictive. For example, there are complex licensing and review policies and pricing and reimbursement systems, telemedicine is prohibited and other data-related regulations are in force. To address this problem, the relevant government authorities are attempting to revise relevant regulations and to issue guidelines, handbooks and authoritative interpretations to better explain vague policies.

In an effort to encourage the development of new technology and industries, the Ministry of Science and ICT and the Ministry of Trade, Industry and Energy have adopted a “Regulatory Sandbox” system, which allows a market-first, evaluation-later approach under certain conditions. Please see 5.1 Policy Development for further details.

Mobile Medical Applications

Given the increasing installation of medical device features (eg, heart rate monitors) in consumer electronic goods, the MFDS issued guidelines in an effort to draw a clear line between medical devices and non-medical devices. Although it is not always clear, if a mobile application is designed for and claims to have medical purposes, it will be classified as a medical device and regulated under the MDA. If a mobile application falls under the category of wellness products, it is not deemed to be a medical device that is subject to the MDA (see 1.4 Borderline Products).

The Guidelines for Safety Management of Mobile Medical Applications updated by the MFDS on 21 February 2020 define a “mobile medical application” as software installed or transmitted on a web-basis and running on a mobile platform, the intended use of which falls under the definition of a medical device under the MDA. Examples of mobile medical applications include those that:

• wirelessly control medical devices;
• receive, display and analyse data measured from medical devices for disease diagnosis or patient monitoring;
• use electrodes or probes connected to or sensors built into mobile platforms (eg, mobile phones, tablets or other portable computing platforms) to operate as medical devices; or
• analyse patient data and provide diagnosis or treatment of disease.

Generally speaking, the same regulations that apply to medical devices under the MDA apply to mobile medical applications. However, under the Guidelines, the MFDS allows certain exceptions to these regulations. For example, companies selling self-diagnosis mobile medical applications do not need a business licence to distribute or sell medical devices.

Wearables

Wearables designed for and claiming medical purposes are also classified as medical devices under the MDA. However, if wearables fall under the category of wellness products, they are not deemed to be medical devices subject to the MDA (see 1.4 Borderline Products).

Telemedicine

In principle, telemedicine is not allowed in Korea. However, due to the COVID-19 pandemic, the government has temporarily allowed certain exceptions to this prohibition.

Telemedicine is defined under the Medical Services Act (MSA) as providing medical knowledge or technology by using information communication technology such as computers or visual communication systems. Although the MSA does not have an explicit provision prohibiting telemedicine, it is generally understood that telemedicine is not allowed in Korea, based on the following regulations.

• The MSA provides that the use of telemedicine between a medical professional and another medical professional in a remote area is allowed. For the purpose of this provision, "medical professional" is limited to medical doctors, dentists and doctors of Korean medicine. In other words, under the MSA a medical professional is not allowed to engage in telemedicine with a non-medical professional (ie, a patient).
• The MSA also requires medical professionals to perform medical services physically within their registered medical institution.

Notably, in light of the COVID-19 pandemic situation, the Korean government has temporarily allowed telemedicine to be used in Korea to the extent it can be conducted via phone (eg, consultation and/or prescription of medicines via telephonic counselling). This temporary allowance commenced on 23 February 2020 and will remain in effect until the government specifies a termination date. There has not yet been any such announcement from the government.

While the main purpose of this temporary measure was to limit in-person contact and prevent the spread of COVID-19, there have been recent legislative movements to relax the telemedicine prohibition, and a series of proposed bills have increased the possibility of permitting telemedicine permanently. However, no specific amendments have been made to the MSA to date.

Overview

As discussed throughout 1. Applicable Product Safety Regulatory Regimes, the determination of which regulatory regime applies to a certain product is fundamental in understanding which legal and regulatory obligations companies within the supply chain must comply with.

In most cases, the relevant laws and regulations provide clear guidance on which regulatory regime should apply to a certain product. Generally speaking, it depends on the product’s mode of action, intended use and primary functions, as well as product claims. However, it is not always clear which regulatory scheme should apply. These types of borderline products require case-by-case analysis, with expert input and close communication with the relevant government authorities. This is because, in some cases, the MFDS determines the classification of certain products based on the political need to regulate such products.

For example, the MFDS regulates non-ophthalmic lenses and breast implants used for beauty as medical devices. By definition, these products do not fall under the definition of medical devices under the MDA because they are not used for medical purposes. However, the MFDS decided that these products should be regulated as medical devices because they posed high potential risks of causing harm to the human body.

Pharmaceuticals and Medical Devices

Pharmaceuticals may be used in combination with a medical device. These products are called combination products. In order to provide clearer guidance on the determination of product classification for combination products, the MFDS issued the Guideline for Review and Approval of Combination Products in November 2021 and the Casebook on Domestic and Overseas Classification of Combination Products in April 2022.

According to these documents, decisions about whether a certain combination product is a pharmaceutical or a medical device are based on the intended use, mode of action, method of use or dosage of the product. Notably, at the product approval stage, combination products should undergo review by both the department responsible for pharmaceutical product approval and the department responsible for medical device product approval.

Examples of combination products include a pre-filled syringe and progestin-releasing IUD, which are regulated as pharmaceuticals by the MFDS, and drug-eluting stent and implantable pacemaker electrodes coated with steroids, which are regulated as medical devices by the MFDS.

Wellness Products and Medical Devices

In its Standards for Medical Devices and Personal Health Care (Wellness) Products, the MFDS defines a “wellness product” as an instrument, machine, device, material, software, application or any other similar product that is used, alone or in combination, on human beings for the purpose of maintaining or improving general health or healthy activity or reducing or maintaining the risk or effect of a chronic disease or its condition by fostering a healthy lifestyle and habits. According to the MFDS, these wellness products are not medical devices. Therefore, if mobile applications and wearables can be categorised as wellness products, such products do not have to comply with requirements under the MDA and can be imported without product approval or business licence.

Examples of wellness products include wearable products or mobile applications that are intended to monitor a user’s heart rate during exercise or hiking, to monitor and record meal consumption, to manage dietary activities for weight control or sugar intake or to manage the exercise habits of patients with chronic hypertension.

Pharmaceuticals and Functional Cosmetics

These product categories can generally be distinguished mainly on the basis of the product claims made. If a certain product uses medical claims, such product will be regulated as a pharmaceutical product. Claims about a functional cosmetic that can mislead consumers into thinking it is a pharmaceutical product are prohibited.

However, the distinction between a functional cosmetic and a pharmaceutical is not always clear. For example, as discussed in 1.2 Healthcare Products, functional cosmetics include cosmetics that help to alleviate acne or dryness due to atopic skin, whereas any products claiming remedy, alleviation, treatment or prevention of skin-related diseases such as atopy, psoriasis, detoxification or anti-allergy should be approved as pharmaceuticals. Also, a product claiming to alleviate hair loss is classified as a functional cosmetic under the CA, whereas a product claiming to assist hair growth is regulated as a pharmaceutical under the PAL.

Cannabidiol (CBD)

The Narcotics Control Act (NCA) classifies CBD products as hemp and strictly prohibits them from being imported into or sold in Korea; violation of this prohibition is punishable by imprisonment of up to an indefinite term. Exceptions apply to handling narcotics in performing public duties, academic research, or medical purposes for which approval from the MFDS has been obtained.

Medicinal use of hemp is very narrowly permitted under the NCA, requiring the product to meet the following conditions:

• importation and distribution is only of products containing cannabis that have been approved in foreign countries as pharmaceuticals (Foreign Approved Cannabis Medicine) and must be intended for private use by the patient-applicant;
• patients must seek the Korean government’s approval for the importation of Foreign Approved Cannabis Medicine by submitting a doctor’s diagnosis, medical records and a doctor’s written statement that no alternative medicine is available in Korea; and
• all Foreign Approved Cannabis Medicine approved for importation must be imported exclusively through the Korea Orphan & Essential Drug Centre, which is a public agency.

All patients are required to undergo this process for every prescription of a Foreign Approved Cannabis Medicine they require and the fact that a specific drug has been approved for importation for one patient will not automatically permit the importation of the same drug for other patients.

Meanwhile, the definition of hemp under the NCA excludes the seeds, roots and mature stalks of the hemp plant, and the products manufactured using them. Therefore, hemp seeds and their derived products (eg, hemp seed oil) are exempt from the NCA and are instead classified as foods governed by the FSA.

As outlined in 1. Applicable Product Safety Regulatory Regimes, healthcare products in Korea are generally categorised and regulated under the following five categories:

• medical devices (including mobile applications or wearables intended for medical purpose);
• pharmaceuticals;
• quasi-pharmaceuticals (including certain biocides directly applied to the human body and intended for human health);
• cosmetics; and
• foods.

Notably, in order to hold a business licence for these healthcare products, a company should have a physical presence in Korea. Therefore, foreign companies that intend to manufacture or import healthcare products for sale in Korea must either establish a subsidiary in Korea or appoint a third-party domestic entity to obtain a business licence.

There are certain regulatory obligations for the design and manufacture of these healthcare products. Such obligations are specific to each product classification, and the requirements for manufacturing entities prior to and after the marketing of each of these products are provided below.

Medical Devices

The MDA does not specifically define “manufacturing” but the Standard for Korea Good Manufacturing Practices for Medical Devices defines “manufacturing process” broadly as all activities related to the design and development of medical devices, procurement of raw materials, warehousing inspection, production, process inspection, inspection of finished goods, packaging, labelling, shipment, storage and distribution.

As briefly mentioned in 1.1 Medical Devices, a company seeking to manufacture medical devices must obtain:

• a manufacturing business licence;
• product approval for each medical device; and
• a KGMP certification, which should be renewed every three years.

Overseas manufacturers are also subject to KGMP review, which is a pre-condition for medical device importers obtaining product approval. Standards used for KGMP certification are based on the ISO 13485 standard and relate to quality management, recourse management, product realisation, measurement, analysis and improvement. Since 12 June 2019, the MFDS can conduct onsite audits of overseas manufacturing sites if it deems such audits to be necessary to prevent hazards or confirm safety/efficacy information. Refusal to allow such audits without justifiable cause may lead to a suspension on the import of products manufactured at such sites.

Depending on the class of the product, pre-requirements for manufacturing medical devices differ under the MDA. For example, for Class 1 medical devices, only pre-registration of the product (not approval) is required and KGMP certification is exempted. Under the recently amended MDA, which took effect on 21 July 2022, medical device manufacturers that manufacture implantable medical devices that are implanted in the human body for 30 or more days consecutively (categorised as Class 3 or Class 4 medical devices) must subscribe to liability insurance with minimum coverage as required under the MDA.

The MDA strictly prohibits the sale of medical devices in a manner that differs from the details of their product approval, such as by opening the packaging to sell medical devices in smaller units or repackaging them.

Pharmaceuticals

The PAL also does not specifically define “manufacturing” but the MFDS generally deems any activity that may result in the corruption or deterioration of pharmaceuticals as “manufacturing”. For example, purchasing or importing pharmaceutical products in bulk and subdividing them into smaller packaging units is generally interpreted as manufacturing activities by the MFDS.

Requirements for pharmaceutical manufacturers are similar to those for medical devices, as described above. A company seeking to manufacture a pharmaceutical in Korea for sale must:

• be licensed as a pharmaceutical manufacturer;
• obtain product approval from the MFDS for each pharmaceutical; and
• obtain a KGMP certification for their manufacturing facilities.

A new drug application procedure for product approval must be undertaken for patented pharmaceuticals, whereas entities seeking product approval for generic pharmaceuticals can follow an abbreviated procedure that requires fewer documents to be submitted for product approval. For example, the abbreviated procedure does not require the submission of clinical data. On a related note, as a result of the Korea-US Free Trade Agreement, an entity holding product approval for patented pharmaceuticals is entitled to a certain period of market exclusivity for patents listed on the Green List prepared and notified by the MFDS, and can prevent generic pharmaceuticals from entering the market prior to the expiration of the patent.

Quasi-Pharmaceuticals

Similar to pharmaceuticals, companies that intend to manufacture or import quasi-pharmaceuticals should obtain product approval for each specific quasi-pharmaceutical, as well as a business licence from the MFDS. Unlike pharmaceuticals, KGMP certification is generally not required for quasi-pharmaceutical manufacturing facilities (certain exceptions exist, such as for oral solids or oral liquids).

Cosmetics

A company seeking to manufacture cosmetics in Korea must be registered as a cosmetics manufacturer with the MFDS under the CA. Unlike pharmaceuticals or medical devices, separate product approval for each cosmetic product is generally not required (except for functional cosmetics).

However, the MFDS regulates the ingredients used in cosmetics by operating a so-called “negative list” designating certain ingredients that cannot be used (or used in restricted circumstances) when manufacturing cosmetics. Ingredients (such as preservatives and colourants) must be used in strict accordance with the standards of use notified by the MFDS. Moreover, highly hazardous substances (inflammable liquids, etc) are subject to regulations under a separate statute: the Safety Control of Dangerous Substances Act (the "Dangerous Substances Act"). For example, fragrances may be considered an inflammable liquid subject to the Dangerous Substances Act, depending on the alcohol content, flash point, combustion point, etc.

Therefore, before importing cosmetics into Korea, the importer must ensure that the ingredients, or the combination thereof, are permitted by the MFDS.

Foods

A company seeking to manufacture or process food products in Korea must be registered as a manufacturer with the MFDS under the FSA; see 1.2 Healthcare Products. On top of such requirements, all food products sold in Korea must comply with the specifications set forth under the Korea Food Code and the Food Additives Code, which set forth requirements regarding various food products’ ingredients and production method, among others, and all imported foods are subject to inspection by the MFDS before customs clearance. If a company wishes to manufacture or import a food for which the specifications have not been stipulated in the Food Code or the Food Additives Code, the company must request the MFDS to amend the relevant Code(s), and the MFDS may permit the company to provisionally manufacture or import the relevant product even before the amendments go into effect.

HFFs must comply with the standards set forth under the Health Functional Food Code (the "HFF Code"), including containing functional ingredients enumerated therein. Individual approval must be received from the MFDS in order to manufacture or import HFFs for which the specifications have not been stipulated in the HFF Code or functional ingredients that are not listed in the HFF Code. If a product does not meet the HFF Code standards and no separate approval has been obtained, the product must be imported as a general food. Also, in order to ensure the safety and functionality of HFFs, the MFDS conducts annual re-evaluation of the functional ingredients of HFFs in the market and, depending on the outcome of such re-evaluation, revises the HFF Code accordingly.

The MFDS has the authority to conduct on-site audits of overseas manufacturing facilities if it deems such an audit to be necessary to prevent harm from imported products or to confirm safety information regarding the relevant products. If the relevant overseas manufacturer refuses to undergo the audit or if the audit reveals safety concerns, the MFDS may suspend products manufactured by that overseas manufacturer from being imported into Korea.

Importers and overseas manufacturers may apply for MFDS designation as an “excellent” importer or overseas manufacturer, which will be awarded based on the MFDS’s sanitation inspection of the overseas manufacturing facility. Such designations are effective for three years. The benefits of receiving the designation include a shorter pre-customs clearance inspection period or even exemption from inspection.

Korea has implemented the Extended Producer Responsibility (ESR) system under the Act on the Promotion of Saving and Recycling of Resources (PSR), which mandates manufacturers, importers and vendors of certain products or packaging materials meeting size standards (ie, annual sales or import amount, or release or import quantity) that fall under the ESR requirements to recycle waste generated from products or packaging materials. Products subject to the ESR requirements include food, cosmetics, pharmaceuticals and biocidal products using certain packaging materials, including metal cans, paper packs and synthetic resin packaging materials. Violation of such obligations may trigger recycling charges.

On a related note, the increase in use of disposable food packages during the COVID-19 pandemic led to a surge in plastic waste. As a result, a number of amendments to the PSR have been proposed to address the environmental impact of the use of disposable packages, all of which are pending review by the National Assembly.

Lastly, the influence of environment, social and governance (ESG) considerations continues to expand in Korea. Companies are obliged or encouraged to voluntarily disclose their ESG goals and achievements, and an increasing number of institutional investors are actively adopting more ESG policies.

Overview

The Fair Labelling and Advertising Act (FLAA) provides general guidance on labelling and advertisements and applies to all types of products, including healthcare products. The FLAA broadly prohibits the following:

• false or exaggerated labels or advertisements;
• deceptive or misleading labels or advertisements;
• labels or advertisements that unfairly compare products without clearly stating the basis for comparison or not based on facts; and
• labels or advertisements that disparage or slander other products.

Given the importance of providing accurate information about healthcare products, there are special laws that regulate the advertisement of healthcare products in Korea, on top of the general requirements under the FLAA. Some notable requirements applicable to the labelling and advertisement of each healthcare product are provided below.

Medical Devices

The MDA and attendant regulations regulate the labelling and advertising of medical devices. The MDA permits the advertising of medical devices through the mass media (newspapers, registered magazines, television, radio or internet media) only after prior review has been obtained from the designated private review agencies. Currently, the Korea Medical Device Industry Association and the Korea Medical Device Industrial Cooperative are designated by the MFDS to conduct prior review of medical device advertisements.

Also, when advertising medical devices, only on-label advertising is permitted. The following types of advertising are generally prohibited:

• claims that healthcare professionals endorse or recommend the medical device;
• advertisements that use patient testimonials or statements;
• advertisements that disparage competing products; and
• advertisements using lewd documents or pictures.

Pharmaceuticals

The PAL and attendant regulations provide specific guidance on the labelling and advertisement of pharmaceuticals. They are generally similar to the regulations for the advertising of medical devices under the MDA, with certain differences, as elaborated below.

The PAL prohibits direct-to-consumer (DTC) advertisement of prescription pharmaceuticals through mass media with only limited exceptions, such as if:

• the advertisement is placed on professional and academic media communicating expert content to healthcare professionals, such as medical journals; or
• the advertisement is for certain drugs that prevent designated infectious diseases.

In the case of OTC pharmaceuticals, DTC advertisement is generally permitted but subject to prior review and approval by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association.

Notably, prohibited DTC advertisements include advertisements that indirectly allude to prescription pharmaceuticals through means such as reference to the relevant disease. In the past, the MFDS applied this rule strictly, even in connection with disease awareness campaigns; for example, it took the position that a disease awareness campaign where the name of the sponsoring pharmaceutical company was indicated was in violation of such prohibition against indirect DTC advertisement. However, the recently amended Guideline on Pharmaceutical Advertising and Provision of Information on Prescription Drugs issued by the MFDS in February 2019 explicitly allows pharmaceutical companies to undertake disease awareness-raising activities (ie, providing disease information to the general public to improve social awareness of a certain disease that may impact national or public health), under certain requirements.

Similar to medical devices, only on-label advertising is permitted under the PAL. Comparative advertising concerning a patient’s condition before and after use of certain pharmaceuticals or comparing one’s own product to a competitor’s product is generally prohibited under the PAL, even though such comparison is based on actual facts. For example, an advertisement suggesting that other products are inferior is prohibited as comparative advertisement, regardless of the truth of the matter. Furthermore, the use of superlatives such as “best” or “top class” is generally prohibited in advertising pharmaceuticals.

Quasi-Pharmaceuticals

The advertisement of quasi-pharmaceuticals is also regulated under the PAL and attendant regulations. There are various restrictions on the content of quasi-pharmaceutical advertisements, including a prohibition against false or exaggerated advertisements concerning the product’s name, manufacturing method, effects or functions, and against advertisements that could mislead consumers into thinking that the product is a pharmaceutical or medical device or that the product’s effect or function was guaranteed by healthcare professionals.

Cosmetics

The CA and attendant regulations regulate the advertisement of cosmetic products. On top of general regulations under the FLAA, the following advertising claims are prohibited under the CA:

• claims that mislead consumers to believe that the cosmetic products have medical efficacy or effects;
• claims that exceed the scope of safety and effectiveness of functional cosmetics; and
• claims that mislead consumers to consider general cosmetics to be functional cosmetics.

Food

The Act on Food Labelling and Advertising (AFLA) came into effect on 14 March 2019 and integrated various labelling and advertising provisions that had previously been dispersed across the FSA and HFFA.

On top of general regulations under the FLAA, the advertisement of food products (both general foods and HFFs) including the following claims is prohibited under the AFLA:

• claims that mislead consumers to believe that the foods have medical efficacy or effects;
• claims that mislead consumers to consider general foods to be HFFs or to consider foods to be pharmaceuticals; and
• claims stating that an ingredient or food additive that is prohibited from being used in the relevant food under the Food Code, Food Additives Code or HFF Code is not included or not used.

There is also a separate body of legislation that specifically regulates the advertising of high-calorie, low-nutrient food or certain high-caffeine food to children in Korea. For example, advertising such products through broadcast media or the internet by offering a free gift that may lure children to purchase the food product is generally prohibited.

Marketing Authorisations

Certain healthcare products require product approvals from the MFDS prior to their marketing in Korea, such as medical devices, pharmaceuticals, quasi-pharmaceuticals and functional cosmetics. Holders of such product approvals are manufacturers or importers of such products (or responsible sellers in the case of cosmetics). Please see 1.1 Medical Devices, 1.2 Healthcare Products and 2.1 Design and Manufacture for further detail.

Requirements for Sale and Distribution of Healthcare Products

Only an individual or entity holding a sales business licence for the relevant healthcare product can distribute or sell such products under the relevant statutes, and is subject to good supply practice requirements. In the case of pharmaceuticals, only an owner of a pharmacy may sell pharmaceuticals to individuals or obtain pharmaceuticals for the purpose of sale to individuals, and only a licensed pharmacist can own a pharmacy.

Reimbursement and Pricing

Korea has a “positive listing system” for pharmaceuticals, under which only drugs with proven clinical usefulness and cost-effectiveness are eligible for reimbursement under the National Health Insurance (NHI) scheme, which is a single-payer system operated by the National Health Insurance Service (NHIS).

Once a pharmaceutical product is approved, companies may apply to the Health Insurance Review and Assessment Service (HIRA) and other affiliated institutions to have their product reviewed for reimbursement eligibility, to determine the maximum reimbursement price (MRP), and to have the product listed for reimbursement under NHI.

Medical devices can be categorised into those not covered by NHI and those covered by NHI. For the former, the final seller (medical institutions) independently decides the price based on market dynamics. For reimbursed products, the price can be included in medical service fees (mostly medical equipment) or calculated separately and reimbursed by NHI (mostly consumables). For devices covered by NHI, HIRA determines the reimbursability as well as the MRP.

Interactions with Healthcare Professionals

A company is prohibited from inducing healthcare professionals or medical institutions to prescribe or use its pharmaceuticals or medical devices under the PAL, the MDA and the Monopoly Regulation and Fair Trade Law (FTL) as well as industry association codes endorsed by the Korea Fair Trade Commission (KFTC).

Both the PAL and the MDA prohibit companies from providing economic benefits to healthcare professionals for the purpose of promoting sales or prescriptions of pharmaceuticals or medical devices, with certain exceptions (safe harbours).

The FTL prohibits unfair consumer solicitation and also provides that industry associations may establish their own self-regulatory codes to prevent unfair consumer solicitation. The Fair Competition Codes issued by the Korea Research-based Pharmaceutical Industry Association and the Korea Pharmaceutical and Bio-Pharma Manufacturers Association each provide broader safe harbours than the PAL and the MDA. Conduct that falls under these safe harbours is generally regarded by relevant government authorities as being permitted not only under the FTL but also under the PAL and the MDA.

The MFDS has exerted much effort towards achieving international regulatory harmonisation, including adopting or revising various regulatory guidelines to harmonise them with ISO standards (eg, KGMP standards have been revised to harmonise with ISO 13485 standards). The MFDS has become a member of various international bodies established to co-ordinate regulations on healthcare products, such as:

• the Codex Alimentarius Commission (CODEX) since 1971;
• the International Coalition of Medicines Regulatory Authorities (ICMRA) since 2012;
• the International Counsel for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) since 2016; and
• the International Medical Device Regulators Forum (IMDRF) since 2017.

The MFDS was also the first affiliated member of the Medical Device Single Audit Program (MDSAP), which is designed to allow a single regulatory audit of manufacturing sites among member countries. Although affiliate members are not the same as participating members, they are given access to a certain level of information about the manufacturers and are also invited to attend sessions to discuss GMP-related regulations within the MDSAP.

Post-Marketing Surveillance

There are various legislative and administrative schemes to ensure and control the efficacy and safety of approved pharmaceuticals, quasi-pharmaceuticals and medical devices. Both the MDA and the PAL similarly require post-marketing surveillance, mainly under the following three schemes.

• Re-examination: this applies to new pharmaceuticals, certain generic prescription pharmaceuticals designated by the MFDS, and certain Class 3 and Class 4 medical devices. Companies holding product approvals for such products must conduct post-marketing surveillance studies within four or six years from the product approvals and submit the reports for the MFDS’s review.
• Re-evaluation: the MFDS has discretion to select certain products and re-evaluate their efficacy and safety based on the necessity to do so.
• Safety Information Reporting Obligations: companies must notify the MFDS within a specified timeframe upon becoming aware of any serious adverse events. Serious adverse events include situations where compulsory recalls of certain products are initiated in foreign countries.

Supply Chain Management

Companies within the supply chain of pharmaceuticals and medical devices (ie, manufacturers, importers, wholesalers and distributors) should make monthly supply reports including dates, product names, quantities, buyers, supply prices and other details of product supply to the MFDS. This obligation was only recently introduced for medical devices (see 5.2 Legislative Reform for details).

Recalls

Although specifics may vary depending on the category of products, all healthcare products are subject to voluntary recalls as well as compulsory recalls mandated by government authorities pursuant to the relevant statutes.

• A voluntary recall obligation is triggered if a company becomes aware of certain events affecting the efficacy and/or safety of healthcare products. Despite the term “voluntary”, it is a legal obligation for a company to submit a safety report and its recall plan to the MFDS within a specified timeframe upon becoming aware of a triggering event. A company in violation of the voluntary recall obligation may be subject to administrative and/or criminal sanctions.
• A compulsory recall may be ordered by the relevant government authorities under certain specified circumstances (eg, if the government authorities learn that such products are harmful or may cause harm to public health), under which a company is mandated to recall or destroy certain healthcare products pursuant to instructions from the authorities. Violation of a compulsory recall will also trigger administrative and/or criminal sanctions.

As discussed throughout 1. Applicable Product Safety Regulatory Regimes, the principal regulator of healthcare products is the MFDS, which is responsible for overseeing the manufacture, import, labelling and advertising, entry and exit inspection, recall and destruction of most healthcare products, including pharmaceuticals, medical devices, cosmetics and food products.

Other key government authorities overseeing healthcare products include the following.

• The MOHW has overall responsibility for setting healthcare policy in Korea. The MOHW and its subsidiary organisations, namely HIRA and the NHIS (see below), oversee the pricing and reimbursement schemes of pharmaceuticals and medical devices under the National Health Insurance Act. It is also in charge of regulating illegal kickbacks and other marketing practices of pharmaceutical and medical device companies and overseeing medical institutions, pharmacies and licensed healthcare professionals.
• The NHIS operates under the supervision of the MOHW, and evaluates the eligibility of the insured under the NHI scheme, imposes and collects contributions, and pays medical expenses.
• HIRA reviews medical care benefits claimed by medical institutions and assesses the reasonableness of those benefits.
• The KFTC is the Korean competition authority and regulates healthcare product companies in terms of matters such as unfair trade practices (illegal kickbacks and abuse of superior bargaining position against distributors) and improper advertisements.

The regulators noted in 3.1 Regulatory Authorities hold their own proceedings to impose administrative sanctions for violations of relevant statutes (eg, revocation or suspension of business or product licence, suspension or delisting from reimbursement) or to impose various corrective measures to prevent harm to public safety (eg, order to test, cease to sell or distribute, recall, destruction, or to make a public announcement to cease using relevant products). The health authorities may decide to impose an administrative fine in lieu of administrative sanctions under certain conditions if the suspension of a product licence could have detrimental effects on public health. The health authorities may also refer the matter to the prosecutor’s office for a criminal investigation if the relevant statutes provide for criminal sanctions.

Various product safety offences for each healthcare product category exist under the relevant bodies of legislation described throughout 1. Applicable Product Safety Regulatory Regimes. Such offences include:

• manufacturing, importing or supplying healthcare products that are not approved by the MFDS, that do not comply with the applicable standards, or that are contaminated or may be harmful to public health;
• labelling or advertising such products for indications that are not approved or making a false or misleading statement;
• violation of recall obligations; and
• violation of safety management obligations imposed on manufacturers, importers and distributors.

Penalties include imprisonment of the individualsresponsible , criminal fines and/or administrative sanctions (suspension of business, revocation of product approval or business licence, etc), which vary depending on the seriousness of the offences.

The primary causes of action that can be used for product liability claims with respect to healthcare products are prescribed in the Product Liability Act (PLA), which has been in effect in Korea since 1 July 2002. Prior to the PLA, product liability was deemed a type of tort under the Civil Code, so an injured party had to prove a manufacturer’s intent or negligence in order to establish a product liability claim. To alleviate this burden, the PLA introduced the concept of “strict liability”, freeing the injured party from having to prove intent or negligence on the part of the manufacturer. However, the Civil Code continues to apply for matters that are not specifically covered by the PLA.

Under the PLA, it is assumed that the product was defective at the time of supply, and that the defect caused the damages, if a claimant is able to prove that:

• damages were sustained while the product was being used normally as intended;
• the damages occurred from a cause that originated within the boundaries controlled by the manufacturer; and
• the damages would not normally occur in the absence of a “defect”.

A “defect” is a requisite to invoke a product liability claim under the PLA, and is defined as the lack of safety that may be reasonably expected for the product. A defect and can constitute a manufacturing defect, a design defect or a labelling defect, which are specifically defined under the PLA.

While the manufacturer is the primary party liable under the PLA, the following individuals or entities are also deemed manufacturers under the PLA:

• those that engage in the business of importing the product;
• those that indicate on the product that the person/entity engages in the business of manufacturing, processing or importing that product; and those that make misleading representations that the person/entity engages in the business of manufacturing the product.

In addition, the PLA provides that sellers and lessors who supply the product for profit may be held liable under certain circumstances.

On a related note, the Serious Accidents Punishment Act (SAPA) came into force on 27 January 2022. Its main purpose is to address growing concerns about numerous deaths related to industrial accidents and to prevent public disasters that affect the lives of the general public. As the SAPA imposes various enhanced obligations on businesses with 50 or more employees without exception, companies involved in the manufacturing, importing or distributing of healthcare products meeting the size standard are also subject to such obligations. Notably, the SAPA imposes criminal penalties on the responsible management personnel of a company if a serious industrial accident or serious public accident is caused by a violation of the requirements under the SAPA. By definition, claims of injury or death from taking or using healthcare products are, of course, subject to the current product liability regime but may also be brought under the SAPA as a serious public accident.

Korean courts generally have jurisdiction over claims that are made against corporations with a business office, branch or a person in charge within Korea, and that have sufficient nexus with Korea. However, as the basic principles of determining jurisdiction are fairness, appropriateness and efficiency, the courts may not exercise jurisdiction if they consider that allowing the claims to proceed in Korea could render the proceedings grossly unfair.

The general cost rule that applies to civil litigation also applies to product liability claims. In principle, litigation costs are borne by the losing party, pursuant to the Civil Procedure Act. However, full reimbursement of litigation costs actually incurred by the prevailing party is usually not available.

Administrative Actions by Regulatory Authorities

Please see 2.6 Post-marketing Obligations, Including Corrective Actions and Recalls and 3.2 Regulatory Enforcement Mechanisms.

Appeal of Regulatory Authority Decision

If a company believes that an administrative order has been wrongfully imposed by regulatory authorities, it can appeal such order by seeking:

• reconsideration with the regulatory authorities;
• review by the Administrative Appeals Commission (a separate government body consisting of attorneys, professors, former government officials and other relevant experts); or
• review by the courts (judges) for relief.

Such appeal should be made within the timeframe specified under the relevant statutes.

When appealing to the Administrative Appeals Commission or the court, a company may also consider seeking a temporary suspension order staying the administrative order until the final decision.

Class Actions/Representative Actions

In 2020, the Korean Ministry of Justice introduced a bill to establish a strong class action system in Korea (ie, a class action system that covers all damage claims). However, no progress has yet been made with the bill, so Korea does not have any legal mechanism that allows class actions other than securities-related class actions.

Co-ordinated Proceedings

Claimants with the same cause of action based on the same factual or legal grounds can file a claim as co-claimants. For instance, if the claimants are victims of the same tortuous act and are claiming liability against the same tortfeasor, they can apply to join co-ordinated proceedings. However, the outcome of the case may not be uniformly concluded among the claimants, as the purpose of allowing co-ordinated proceedings is to enhance procedural efficiency.

In civil lawsuits, a number of ADR mechanisms are available within the court system in Korea, such as:

• court-administered mediation;
• mediation administrated by district mediation centres established by the courts; and
• court-recommended reconciliation.

There are also various ADR mechanisms outside the court system. For example, the Framework Act on Consumers provides for “group dispute mediation” procedures for issues that affect multiple consumers.

Violation of legal requirements may help claimants prove the negligence of the manufacturer or product defect. For example, deviation from KGMP requirements during the manufacture of a pharmaceutical or medical device can be used as evidence of negligence or a manufacturing defect. Therefore, claimants often rely on findings from government investigations or sanctions relating to non-compliance with regulations to establish liability. Product recalls often result in subsequent civil lawsuits or requests for compensation, and may sometimes lead to criminal investigations.

On the other hand, compliance with legal requirements can be used as a defence to product liability claims by demonstrating that the manufacturer took reasonable steps to prevent safety issues. For example, if an alleged injury was listed as a side effect in the label of a product approved by the MFDS, this would be a basis for the defence that there was no negligence or labelling defect. However, such defence is not absolute and can be rebutted by claimants (see 4.2 Product Liability regarding how the burden of proof of claimants is alleviated under the PLA).

As mentioned in 1.4 Borderline Products, the digital health industry is attracting attention as a key growth driver for the future economy, but the current regulatory system does not reflect the unique characteristics of the digital health industry and is not keeping pace with technological changes.

As a result, one of the recent key political and legislative initiatives in the health industry in Korea is to foster and support the growth of digital health. As part of this initiative, since January 2019, the Ministry of Science and ICT and the Ministry of Trade, Industry and Energy have adopted a “Regulatory Sandbox” system.

Under the Regulatory Sandbox system, a company is allowed to offer services that were previously prohibited due to strict regulations by applying for one of the following:

• relaxation of a restrictive regulation under specific conditions of scope, scale and duration;
• adoption of a market first and evaluate later approach; or
• relaxation of the interpretation of existing regulations.

In addition, if such an approved service passes re-evaluation after two years, the temporarily approved service can be offered in Korea with no further restrictive conditions. For the past three years, various companies in the digital health sector have applied for and utilised this Regulatory Sandbox system to test the market and to overcome restrictive regulations.

On a related note, health authorities and policymakers have been attempting to establish a legal basis to support and promote the research, development and commercialisation of innovative health products. For example, the Act on Nurturing the Medical Device Industry and Support for Innovative Medical Device Products (Innovative Device Act) came into effect on 1 May 2020, introducing a system under which a company can be certified as an “innovative medical device company” and enjoy benefits such as preferential status for participating in various government projects and tax incentives. Products can also be certified as innovative medical devices and enjoy a simplified review and approval process.

A proposed bill on fostering and supporting the digital healthcare industry is also pending review before the National Assembly. The proposed bill imposes an obligation on the Ministry of Trade, Industry and Energy to develop plans to support the digital health industry in Korea, and establishes grounds for certifying and supporting outstanding digital health companies.

Please see 1.4 Borderline Products and 5.1 Policy Development regarding legislative advancements to foster digital health in Korea.

Another notable legislative trend in recent years in Korea is to tighten safety regulations for healthcare products in general.

For example, the recently amended PAL, which will take effect in December 2022, explicitly provides legal grounds for the MFDS to revoke KGMP certification if the certification is based on false information or documents, and to appoint a standing inspector to investigate and evaluate pharmaceutical companies’ compliance with manufacturing and quality management standards.

The recently amended MDA requires manufacturers and importers of medical devices to attach Unique Device Identification (UDI) in the form of a barcode or RFID on the surface of medical devices or their packaging, and to register the new UDI on the MFDS’s Medical Device Database. In addition, all businesses within the supply chain of medical devices must submit a report to the MFDS detailing medical devices sold to sellers and lessors by the last day of the month following the month in which the supply occurred. This obligation applies to all classes of medical devices, but with different effective dates; for example, Class 2 medical devices are subject to this obligation as of July 2022, while Class 1 devices will be covered from July 2023.

Notably, the revenues of pharmaceutical and medical device companies did not fall during the pandemic. In particular, in-vitro diagnostic device companies that supply and manufacture COVID-19 testing kits have grown exponentially.

While the side effects of COVID-19 vaccines have been a big social issue, COVID-19 does not seem to have significantly impacted the general product safety and liability matters with respect to healthcare products.