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SPECIAL ACT ON FOSTERING AND SUPPORT OF PHARMACEUTICAL INDUSTRY

Act No. 10519, Mar. 30, 2011

Amended by Act No. 11690, Mar. 23, 2013

Act No. 14839, Jul. 26, 2017

Act No. 15908, Dec. 11, 2018

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to contribute to the promotion of people's health and the development of the national economy by laying a foundation for the development of the pharmaceutical industry and by creating an environment to induce investment from foreign pharmaceutical enterprises' into the Republic of Korea through the systematic fostering and support of the pharmaceutical industry, the enhancement of innovativeness of the pharmaceutical industry, and the strengthening of international cooperation in order for the pharmaceutical industry to be internationally competitive.
 Article 2 (Definitions)
The terms used in this Act shall be defined as follows: <Amended by Act No. 15908, Dec. 11, 2018>
1. The term "pharmaceutical industry" means the industry related to research, development, manufacturing, processing, storage, and distribution of drugs under subparagraph 4 of Article 2 of the Pharmaceutical Affairs Act;
2. The term "pharmaceutical enterprise" means any of the following enterprises engaged in economic activities related to the pharmaceutical industry in the Republic of Korea:
(a) An enterprise that holds a permit to manufacture drugs or a permit to manufacture and sell items or that has reported to manufacture and sell items in accordance with Article 31 of the Pharmaceutical Affairs Act;
(b) A foreign pharmaceutical enterprise that holds a permit to import items of drugs or has reported the imported items in accordance with Article 42 of the Pharmaceutical Affairs Act;
(c) An enterprise specializing in research and development of new drugs, among venture businesses under Article 2-2 of the Act on Special Measures for the Promotion of Venture Businesses;
(d) An enterprise complying with the standards prescribed by Presidential Decree in terms of organization, human resources, etc. to specialize in the research and development of new drugs, etc.;
3. The term "innovative pharmaceutical enterprise" means a pharmaceutical enterprise that falls under any of the following subparagraphs, certified by the Minister of Health and Welfare pursuant to Article 7:
(a) A pharmaceutical enterprise whose investment in the research and development of new drugs reaches or exceeds the amount specified by Presidential Decree;
(b) A foreign pharmaceutical enterprise whose record of investment in the research and development of new drugs reaches or exceeds the amount specified by Presidential Decree or that is conducting research and development of new drugs.
 Article 3 (Responsibilities of Pharmaceutical Enterprises)
(1) Pharmaceutical enterprises shall contribute to the establishment of a foundationfor the development of the pharmaceutical industry, the strengthening of its international competitiveness, and the promotion of people's health through the systematic development of the pharmaceutical industry, the enhancement of innovativeness, etc.
(2) Pharmaceutical enterprises shall comply with standards for manufacturing and quality control of drugs and actively cooperate in improving systems for upgrading the quality of drugs.
(3) Pharmaceutical enterprises shall prepare measures for eradicating frauds and corruption related to drugs and work together to raise the transparency of the pharmaceutical industry.
CHAPTER II PLANS FOR FOSTERING AND SUPPORT OF PHARMACEUTICAL INDUSTRY
 Article 4 (Comprehensive Plans for Fostering and Support of Pharmaceutical Industry)
(1) In order to facilitate the establishment of a foundation for the development of the pharmaceutical industry and the strengthening of international competitiveness, the Minister of Health and Welfare shall establish a comprehensive plan to foster and support the pharmaceutical industry every five years (hereinafter referred to as "comprehensive plan").
(2) A comprehensive plan shall include the following matters: <Amended by Act No. 15908, Dec. 11, 2018>
1. Medium and long term goals for the fostering of the pharmaceutical industry;
2. A plan for the procurement and utilization of financial resources for investment necessary for fostering the pharmaceutical industry;
3. A plan for the development and efficient utilization of human resources necessary for fostering the pharmaceutical industry;
4. A plan for assisting the pharmaceutical industry in international cooperation and expansion to overseas markets;
5. A plan for assisting in the research and development of drugs and the licensing;
6. A plan for supporting innovative pharmaceutical enterprises;
7. A plan for assisting in attracting investment from foreign pharmaceutical enterprises in relation to their research and development of new drugs;
8. A plan for supporting the development of new drugs by using artificial intelligence;
9. Other necessary matters regarding the fostering of the pharmaceutical industry.
(3) When the Minister of Health and Welfare intends to establish a comprehensive plan, he/she shall consult with the heads of related central administrative agencies thereon.
(4) A comprehensive plan shall be finalized through deliberation by the Committee on the Fostering and Support of the Pharmaceutical Industry under Article 6. The same shall also apply to any intended revision of the comprehensive plan.
(5) The Minister of Health and Welfare shall notify the heads of related central administrative agencies of the finalized or revised comprehensive plan.
(6) If the Minister of Health and Welfare deems it necessary for establishing a comprehensive plan, he/she may demand the head of a related agency to submit data necessary for the establishment of the comprehensive plan.
 Article 5 (Implementation Plans for Fostering and Support of Pharmaceutical Industry)
(1) To execute a comprehensive plan, the Minister of Health and Welfare shall establish and execute an implementation plan for the fostering and support of the pharmaceutical industry for each year (hereinafter referred to as "implementation plan") through consultation with the heads of related central administrative agencies. In such cases, the Minister of Health and Welfare shall notify the heads of related central administrative agencies of the established implementation plan.
(2) The Minister of Health and Welfare and the head of each related central administrative agency shall execute matters under his/her jurisdiction in an implementation plan and shall endeavor to secure financial resources necessary therefor.
(3) Other matters necessary for the establishment and implementation of implementation plans shall be prescribed by Ordinance of the Ministry of Health and Welfare.
 Article 6 (Committee on Fostering and Support of Pharmaceutical Industry)
(1) The Minister of Health and Welfare shall establish a Committee on the Fostering and Support of the Pharmaceutical industry (hereinafter referred to as the "Committee") to deliberate on the following matters: <Amended by Act No. 15908, Dec. 11, 2018>
1. Matters regarding the establishment and implementation of comprehensive plans and implementation plans;
2. Matters regarding the certification of innovative pharmaceutical enterprises, revocation of certification, and succession to status;
3. Other matters specified by Presidential Decree in regard to the fostering and support of the pharmaceutical industry.
(2) The Committee shall be comprised of not less than 15 members, including one chairperson, and the Minister of Health and Welfare shall serve as the committee chairperson, while committee members shall be commissioned by the Minister of Health and Welfare from among Vice Ministers or equivalent public officials commissioned by the heads of related central administrative agencies, including the Ministry of Economy and Finance, the Ministry of Science and ICT, and the Ministry of Trade, Industry and Energy, and persons who work in industrial fields, academic circles, research institutes, etc. with sound expertise and experience in the fostering of the pharmaceutical industry. In such cases, a majority of the committee members shall not be public officials. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017; Act No. 15908, Dec. 11, 2018>
(3) The Committee may establish a working committee for the fostering and support of the pharmaceutical industry (hereinafter referred to as "working committee") to efficiently carry out its business affairs. In such cases, the person in charge of policies on the public health industry in the Ministry of Strategy and Finance shall serve as the chairperson of the working committee.
(4) Except as otherwise provided in paragraphs (1) through (3), matters necessary for the composition, operation, etc. of the Committee and the working committee shall be prescribed by Presidential Decree.
CHAPTER III CERTIFICATION, ETC. OF INNOVATIVE PHARMACEUTICAL ENTERPRISES
 Article 7 (Certification of Innovative Pharmaceutical Industry)
(1) A pharmaceutical enterprise that intends to be certified as an innovative pharmaceutical enterprise shall file an application with the Minister of Health and Welfare for the certification of an innovative pharmaceutical enterprise, as prescribed by Ordinance of the Ministry of Health and Welfare.
(2) In receipt of an application under Article (1), the Minister of Health and Welfare may certify the applicant as an innovative pharmaceutical enterprise through deliberation by the Committee. In such cases, standards necessary for the certification shall be prescribed by Presidential Decree.
(3) Matters necessary for methods and procedures for certification, and the public notification of such certification shall be prescribed by Ordinance of the Ministry of Health and Welfare.
 Article 7-2 (Certificates and Certification Marks)
(1) The Minister of Health and Welfare may deliver certificates to enterprises certified as innovative pharmaceutical enterprises and manufacture a mark indicating certification (hereinafter referred to as "certification mark") so as to have the innovative pharmaceutical enterprises use such mark.
(2) No person who is not an innovative pharmaceutical enterprise shall manufacture and use certificates or the certification mark nor impersonate an innovative pharmaceutical enterprise by other methods.
(3) Matters necessary for the design, method of indication, etc. of the certification mark shall be prescribed by Ordinance of the Ministry of Health and Welfare.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
 Article 7-3 (Succession to Status)
(1) Any enterprise which intends to succeed to the status of an innovative pharmaceutical enterprise shall file an application for the succession to the status with the Minister of Health and Welfare. In such cases, the methods, procedures, etc. of filing an application for the succession to the status shall be prescribed by Ordinance of the Ministry of Health and Welfare.
(2) Where the Minister of Health and Welfare receives an application prescribed in paragraph (1), he/she may determine whether to approve the succession to the status in consideration of the matters prescribed by Ordinance of the Ministry of Health and Welfare, following deliberation by the Committee and: Provided, That where an enterprise eligible to file an application prescribed in paragraph (1) falls under any of the following cases, he/she may determine whether to approve the succession to the status without deliberation by the Committee:
1. Where an innovative pharmaceutical enterprise is divided (including division and merger with innovative pharmaceutical enterprises), the corporation continuing or succeeding to the entire business falling into the pharmaceutical industry prescribed in subparagraph 1 of Article 2;
2. A pharmaceutical enterprise which is likely to achieve the objectives of certification, such as compliance with the requirements for certification prescribed in Article 7, and meets the requirements prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
 Article 8 (Effective Period of Certification)
(1) The effective period of certification under Article 7 (2) shall be three years from the date of certification.
(2) The effective period of certification may be extended through re-evaluation for every three years from the initial certification.
(3) Matters necessary for an application for the extension of certification under paragraph (2) shall be prescribed by Ordinance of the Ministry for Health and Welfare.
 Article 9 (Revocation of Certification)
(1) If an enterprise certified as an innovative pharmaceutical enterprise under Article 7 (2) falls under any of the following subparagraphs, the Minister of Health and Welfare may revoke the certification, as prescribed by Ordinance of the Ministry for Health and Welfare: Provided, That the certification shall be revoked if such enterprise falls under subparagraph 1:
1. If an enterprise obtains certification by fraud or other improper means;
2. If an enterprise fails to meet a certification standard.
(2) The Minister of Health and Welfare shall not certify a pharmaceutical enterprise whose certification is revoked under paragraph (1) 1, unless and until three years have passed since the date of revocation.
(3) The Government may revoke various privileges granted under Articles 13 through 17 and 17-2 to a pharmaceutical enterprise whose certification is revoked under paragraph (1). <Amended by Act No. 15908, Dec. 11, 2018>
 Article 10 (Provision of Data)
(1) Where the Minister of Health and Welfare demands an enterprise that files an application for certification of an innovative pharmaceutical enterprise under Article 7 or an innovative pharmaceutical enterprise to provide data necessary for certification, revocation of certification, or other affairs, such enterprise shall comply with such demand.
(2) Necessary matters regarding the extent of data to be demanded and the procedure for making such demand under paragraph (1) shall be prescribed by Ordinance of the Ministry of Health and Welfare.
 Article 11 (Hearings)
If the Minister of Health and Welfare intends to revoke certification under Article 9 (1), he/she shall hold a hearing.
 Article 12 (Categorization of Innovative Pharmaceutical Enterprises)
(1) Categories of innovative pharmaceutical enterprises shall be prescribed by Presidential Decree within limits defined under subparagraph 3 of Article 2.
(2) The Government may vary the method and scale of support to each category of innovative pharmaceutical enterprises under paragraph (1), as prescribed by Ordinance of the Ministry for Health and Welfare.
 Article 13 (Assistance to Innovative Pharmaceutical Enterprises)
To foster the pharmaceutical industry, the Government may assist innovative pharmaceutical enterprises in the research and development of new drugs and the improvement of facilities for the research and manufacturing of new drugs as necessary.
CHAPTER IV SUPPORT OF INNOVATIVE PHARMACEUTICAL ENTERPRISES
 Article 14 (Preferential Treatment to National Research and Development Projects, etc.)
(1) The State or a local government may authorize innovative pharmaceutical enterprises to preferentially participate in national research and development projects, etc. in connection with the research and development of new drugs.
(2) Matters necessary for methods, procedures, etc. for preferential participation under paragraph (1) shall be prescribed by Ordinance of the Ministry for Health and Welfare.
 Article 15 (Special Cases in Taxation)
(1) If the State or a local government finds it necessary to support and foster the pharmaceutical industry, it may fully or partially exempt innovative pharmaceutical enterprises from taxes, such as corporate tax, income tax, acquisition tax, registration and license tax, and property tax, as provided by the Restriction of Special Taxation Act, the Restriction of Special Local Taxation Act, and other Acts relevant to taxation.
(2) Where an innovative pharmaceutical enterprise receives consideration for technology that it has developed and transferred to someone else, the State or a local government may fully or partially exempt it from corporate tax and resident tax, as provided by the Corporate Tax Act and the Restriction of Special Local Taxation Act.
(3) When a merger, division, or division and merger in which an innovative pharmaceutical enterprise participates as a party takes place, the State or a local government may fully or partially exempt it from the registration tax on the registration of real estate, etc., the corporate tax on gains on the liquidation of the pharmaceutical enterprise disappearing as a consequence of the merger, and the income tax, corporate tax, or other taxes on constructive dividends to shareholders of the pharmaceutical enterprise disappearing as a consequence of the merger, as provided by the Restriction of Special Taxation Act and other Acts relevant to taxation.
 Article 16 (Special Cases in Construction of Research Facilities)
(1) An innovative pharmaceutical enterprise may build research facilities (including facilities recognized as those for ancillary purposes specified by Presidential Decree, such as facilities for the production of trial products) in an area publicly notified by the Minister of Health and Welfare among the areas provided for in Article 36 of the National Land Planning and Utilization Act (excluding areas specified by Presidential Decree, such as conserved green belts and green belts for production).
(2) Matters necessary for procedures for public notification under paragraph (1) shall be prescribed by Presidential Decree.
[This Article shall be effective and enforceable until March 30, 2022 under Article 2 of the Addenda to Act No. 10519 (Mar. 30, 2011)]
 Article 17 (Exemption from Various Charges and Costs)
Research facilities of an innovative pharmaceutical enterprise may be fully or partially exempted from the following charges and costs:
2. Charges for causing traffic congestion under Article 36 of the Urban Traffic Improvement Promotion Act;
3. Expenses for forest replacement resource creation under Article 19 of the Mountainous Districts Management Act;
4. Costs of the development of substitute grassland under Article 23 of the Grassland Act.
[This Article shall be effective until March 30, 2022 pursuant to Article 2 of the Addenda to Act No. 10519 promulgated on Mar. 30, 2011.]
 Article 17-2 (Preferential Treatment including Addition to Upper Limit Amounts of Medicines)
As to medicines innovative pharmaceutical enterprises manufacture, the Minister of Health and Welfare may offer preferential treatment prescribed by Presidential Decree, such as addition to upper limit amounts of health care benefits prescribed by the National Health Insurance Act.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
CHAPTER V RESEARCH AND DEVELOPMENT OF PHARMACEUTICAL ENTERPRISES
 Article 18 (Expansion of Investment in Research and Development)
The State and each local government shall actively endeavor to expand investment in research and development by innovative pharmaceutical enterprises and to attract investment in the Republic of Korea in connection with the research and development of new drugs by foreign pharmaceutical enterprises.
 Article 18-2 (Establishment and Operation of Clinical Trial Support Center)
(1) To create foundations for clinical trials of medicines and attract investments in Korea and from foreign countries, the Minister of Health and Welfare may establish and operate clinical trial support centers to conduct the following duties:
1. Assistance business related to clinical trials inside and outside Korea, such as building foundations for clinical trials;
2. Research and survey on systems to facilitate clinical trials;
3. Cultivation and certification of and support for professional human resources related to clinical trials;
4. Collection, analysis and provision of information related to clinical trials;
5. Other business the Minister of Health and Welfare deems necessary.
(2) To effectively perform business of clinical trial support centers, the Minister of Health and Welfare may request the heads of the relevant central administrative agencies, the heads of local governments, or the heads of public institutions prescribed in Article 4 of the Act on the Management of Public Institutions to provide relevant materials. In such cases, the head of any institution requested to provide materials shall render cooperation unless there is good cause.
(3) The Minister of Health and Welfare may entrust the establishment and operation of clinical trial support centers to corporations or organizations with professional human resources and facilities needed for the business. In such cases, the head of any corporation or organization entrusted with the establishment and operation of clinical trial support centers may request the provision of materials or information prescribed in paragraph (2), as prescribed by Ordinance of the Ministry of Health and Welfare.
(4) The Minister of Health and Welfare may provide subsides to corporations or organizations entrusted with the establishment and operation of clinical trial support centers pursuant to paragraph (3) to help them cover all or some of the expenses incurred thereby.
(5) Matters necessary for the establishment and operation of clinical trial support centers, and entrustment thereof, etc. prescribed in paragraph (3) shall be prescribed by Ordinance of the Ministry of Health and Welfare.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
 Article 19 (Collection and Diffusion of Information about Research and Development)
(1) To efficiently facilitate research and development by the pharmaceutical industry, the Minister of Health and Welfare shall collect and investigate information domestically and overseas, about the research and development of new drugs including trends of research and development in Korea and foreign countries, trends of technology related to new drug development, such as artificial intelligence and market trends and shall manage and diffuse such information systematically and comprehensively. <Amended by Act No. 15908, Dec. 11, 2018>
(2) The Minister of Health and Welfare may designate an institution specializing in the management of information about the research and development of new drugs to authorize it to perform the work under paragraph (1).
(3) Necessary matters regarding requirements and procedure for the designation of an institution specializing in the management of information about the research and development of new drugs under paragraph (2) shall be prescribed by Ordinance of the Ministry for Health and Welfare.
 Article 20 (Awards for Improvement of Productivity of Research and Development)
(1) The Minister of Health and Welfare may select and award pharmaceutical enterprises that have contributed to the promotion of public health and the development of the pharmaceutical industry by developing and distributing good drugs, and may render assistance to them as necessary.
(2) Necessary matters regarding awards and assistance under paragraph (1) shall be prescribed by Ordinance of the Ministry of Health and Welfare.
 Article 21 (Assistance to Pharmaceutical Industry in Activities for International Cooperation)
When a pharmaceutical enterprise or a related organization conducts activities for industrial cooperation with a foreign institution or organization, the Minister of Health and Welfare may assist it by collecting and providing relevant information as necessary.
 Article 22 (Entrustment of Authority)
The Minister of Health and Welfare may entrust an relevant specialized institution with part of the affairs under this Act, as prescribed by Presidential Decree.
CHAPTER VI PENALTY PROVISIONS
 Article 23 (Penalty Provisions)
Any person who manufactures or uses a certificate or the certification mark without obtaining certification or illegally uses certification by other methods in violation of Article 7-2 (2) shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding 10 million won.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
 Article 24 (Joint Penalty Provision)
Where the representative of a corporation or an agent or employee of, or any other person employed by, the corporation or an individual commits any offense prescribed in Article 23 in connection with the business of the corporation or the individual, not only shall the offender be punished, but also the corporation or the individual shall be punished by a fine prescribed in the relevant Article: Provided, That the same shall not apply if the corporation or the individual has paid due attention to and diligently supervised the relevant business to prevent the offense.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
 Article 25 (Administrative Fines)
(1) Any person who fails to submit materials under Article 10 (1) without good reason or submits such materials falsely shall be punished by an administrative fine not exceeding three million won.
(2) The Minister of Health and Welfare shall impose and collect administrative fines prescribed in paragraph (1), as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 15908, Dec. 11, 2018]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Article 2 (Effective Period)
Articles 16 and 17 shall be effective and enforceable for ten years after this Act enters into force.
Article 3 (Special Exception to Expiration of Effective Period)
(1) As to cases where a building permit is granted or a building report is filed under Article 16 before the effective period under Article 16 ends, Article 16 shall remain effective and enforceable even after the effective period under Article 16 expires.
(2) As to research facilities eligible for exemption from charges under Article 17 when the effective period under Article 17 expires, Article 17 shall remain effective and enforceable even after the effective period under Article 17 expires.
ADDENDA <Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on the date of its promulgation.
(2) Omitted.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of the Acts, which were promulgated before this Act enters into force, but the date on which they are to enter into force, has not arrived yet, among the Acts amended pursuant to Article 5 of the Addenda, shall enter into force on the enforcement dates of such Acts, respectively.
Articles 2 through 6 Omitted.
ADDENDUM <Act No. 15908, Dec. 11, 2018>
This Act shall enter into force six months after the date of its promulgation.