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 In February 2006, the United States and the Republic of Korea (Korea) announced their intent to launch FTA negotiations. The Administration has had a longstanding dialogue with Korea on pharmaceutical issues and, as a result, has seen considerable improvement over the past decade in U.S. pharmaceutical companies' access to the Korean market. In 2005, for example, Korea's Health Insurance Reimbursement Agency began providing written justifications for new drug pricing and listing decisions. The United States Government will seek additional progress on priority issues, including ensuring competition, supporting innovation, and addressing market access and transparency issues, in the FTA negotiations, which the Administration is seeking to conclude by the end of the year.

The United States also is seeking to establish or continue dialogues with OECD and other countries to address concerns and encourage a common understanding between developed countries on questions related to innovation in the pharmaceutical sector. The United States already has had such dialogues with Japan and Germany, and is seeking to establish ones with other countries. It also has established a dialogue on pharmaceutical issues with China.

With respect to Japan, pharmaceutical and medical device issues are an integral part of the Administration's regulatory reform work. The United States has made steady progress in improving transparency in this sector, ensuring that foreign pharmaceutical and medical device manufacturers have meaningful opportunities to provide input into important regulatory matters, and facilitating the introduction of innovative new pharmaceuticals and medical devices into Japan's market.

The United States also has established a constructive dialogue with Germany on policy goals and concerns related to health care. During these discussions, the two sides have exchanged views on how best to deal with challenges of balancing health care spending with other priorities and of providing affordable health care today with supporting the innovation that assures improved health care is available in the future. The United States also raised specific concerns related to Germany's reference pricing system for determining product reimbursement and the transparency of the German Government's decision-making process regarding pharmaceutical pricing. The two governments plan to continue this dialogue as the German Government considers future healthcare reform.

The United States continues to urge China to price drugs in a manner that appropriately values innovations and to add new drugs to its national formulary, which controls access to medicines for China. The Administration also is pressing China to address the production and export of counterfeit pharmaceuticals, which endanger lives.

During the coming year, the U.S. Government is seeking to establish similar dialogues with Poland, Italy, France, Canada, and other countries. The United States shares policy goals and concerns related to health care with these countries, including aging populations and rising health care costs. The United States also shares the objective of continued improvement in the health and quality of life of its citizens and delivering care in the most efficient and responsive way possible. The United States hopes these dialogues will help address specific concerns related to price controls, and regulatory and transparency issues as well as develop a constructive dialogue with these countries on health policy issues of mutual concern.