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KOREAN MEDICINE AND PHARMACEUTICS PROMOTION ACT

(hereinafter referred to as "this Act")

[Enacted on August 6, 2003 as Law No. 6965]

[Revised on February 29, 2008 as Law No. 8852]

§ 1 General

Article 1 (Purpose)

The purpose of this Act is to set forth the matters required to lay the groundwork and basic directions for the promotion of Korean Medicine and Pharmaceutics technology and to implement R&D related to the field to contribute to the promotion of people's health and the development of the national economy.

Article 2 (Definition)

For the purpose of this Act, the following terms specified in this Act shall have the meaning ascribed to them herein:

1. "Korean Medicine and Pharmaceutics" shall mean any medical treatment services based on Korean Medicine as traditionally handed down from the nation's ancestors ("Korean Medical services"), and Korean Medicine pharmacists;

2. "Korean Medicine pharmacist" shall mean a person who is engaged in the production (growing), processing, manufacturing, dispensing, importing, selling, appraising and storing of herbal medicines or matters related to traditional Korean pharmacy technology;

3. "Korean Medicine and Pharmaceutics technology" shall mean Korean medical practices and pharmaceutical dispensing as well as those technology related to the relevant goods and services, including finished herbal products (which refers to remedies manufactured in accordance with the relevant Korean Medicine the same applies to the term stated in the following Article 5)­ and the growing (including the development of good-quality species), manufacturing, distribution and storage of herbal preparations used for Korean Medicine and Pharmaceutics as stipulated by the relevant Presidential decree;

4. Herbal medicines are largely made from botanical extracts, but sometimes also from animal-derived extracts or minerals. They are natural medicines, in unprocessed form, whereby natural ingredients are simply dried and cut, or at times ground into a powder and rolled into a pill;

5. "Herbal preparations" shall mean a raw material that is used to make a herbal medicine or a finished herbal product.

Article 3 (Duties of Government)

1. The Government shall establish and implement comprehensive policies for the development of Korean Medicine and Pharmaceutics technology.

2. Local administrative units shall establish and implement policies for the development of Korean Medicine and Pharmaceutics technology in consideration of the central government's relevant policies and of the prevailing local situations.

Article 4 (Development of Korean Medicine and Pharmaceutics technology through Scientific Operation Based on Information Technology)

1. Both the central Government and local administrative units shall establish and implement policies for the development of Korean Medicine and Pharmaceutics technology through scientific operation based on information technology.

2. Both the central Government and local administrative units shall ensure that a sufficient number of private experts and organizations take part in the process of policy development and implementation in order to enhance the transparency and rationality of the policies related to Korean Medicine and Pharmaceutics technology.

§ 2 Establishment of Basic Policy for the Development of Korean Medicine & Pharmaceutics

Article 5 (Basic Directions for the Development of Korean Medicine and Pharmaceutics)

Both the central Government and local administrative units shall establish, manage and operate policies for the development of Korean Medicine and Pharmaceutics based on the following basic directions:

1. Ensure the protection and development of its unique characteristics;

2. Lay the necessary foundations for its development;

3. Pursue the information-based development of its technology;

4. Implement systematic management and standardization based on international standards;

5. Undertake the necessary groundwork for the stable production of herbal preparations;

6. Reinforce the international competitiveness of the relevant industries and promote international cooperation;

7. Provide support for the herbal medicine market. Article 6 (Comprehensive Plan to Foster Korean Medicine and Pharmaceutics)

1. The Minister of Health and Welfare shall establish a comprehensive plan for the development of Korean Medicine and Pharmaceutics ("comprehensive plan") every five years and have it reviewed by the Korean Medicine and Pharmaceutics Development Deliberation Committee in accordance with the following 3.

2. The comprehensive plan shall include the following: 1) The basic objectives and directions necessary for its development; 2) A system for the provision of support related to the formation of the groundwork for relevant research;

3) The training of relevant manpower and instructions on how to use them; 4) The enhancement of relevant technology and how to provide support for them;

5) How to globalize the Korean Medicine and Pharmaceutics; 6) The promotion of exchange and cooperation with North Korea; 7) Other items pertaining to its development.

3. The Korean Medicine and Pharmaceutics Development Deliberation Committee shall be established under the control of the Minister of Health and Welfare for the review of the comprehensive plan. Matters concerning its composition and operation shall be fixed in accordance with the relevant Presidential decree.

4. The Minister of Health and Welfare shall consult with the head of the relevant central Government office prior to setting up the comprehensive plan, if he/she judges that one or more items stated in the foregoing 2 is/are related to the business of such a central Government office. Article 7 (Establishment and Implementation of Methods of Promotion of Major Policies)

Once the comprehensive plan is established, Minister of Health and Welfare and the heads of other related government agencies shall establish and implement a rolling annual plan, drawn up every year, based on the comprehensive plan. Article 8 (Establishment and Implementation of Regional Plan of Korean Medicine and Pharmaceutics Development)

1. Once a long-term policy plan is established, heads of local governments shall establish and implement a regional plan of Korean Medicine and Pharmaceutics development (hereinafter "regional plan"), in accordance with relevant laws and in consideration of local situations.

2. Heads of local governments may designate relevant institutions or organizations for the implementation of the regional plan. Article 9 (Cooperation in Plan Establishment)

1. The Minister of Health and Welfare, the head of the relevant central Government office and the heads of local administrative units may ask for the cooperation of the relevant institutions or organizations when and if required for the establishment and implementation of the comprehensive plan, and the methods required to promote major measures and regional plans.

2. The relevant institutions or organizations stated in the foregoing 1 shall comply with such a request for cooperation, unless there is a special reason for not doing so.

§ 3 Promotion of Projects for the Development of Korean Medicine and Pharmaceutics Technology

Article 10 (Promotion of R&D Projects for Korean Medicine and Pharmaceutics)

1. Both the central Government and local administrative units shall do their best to encourage R&D in health & industrial technology, using Korean Medical services and herbal medicines, and provide support measures designed to commercialize Korean Medicine and Pharmaceutics technology and products and reinforce international competitiveness in the field.

2. To efficiently promote research in Korean Medicine and Pharmaceutics of related technologies, both national and local government agencies must encourage and facilitate joint or collaborative research between the industry and academia.

3. Both the central Government and local administrative units shall establish a system of clinical trials and verification for Korean Medical services and Korean Medicine products.

4. Both the central Government and local administrative units may designate relevant institutions or organizations for the implementation of R&D, if so required for its efficient promotion as stated in the foregoing 1.

5. Both the central Government and local administrative units may provide financial support to the relevant institutions or organizations that implement R&D as stated in the foregoing 4.

Article 11 (Establishment of a Korean Medicine and Pharmaceutics Clinical Center)

1. The Minister of Health and Welfare may establish a Korean Medicine and Pharmaceutics Clinical Center to carry out clinical trials related to Korean Medical services and Korean Medicine products as stated in Article 10, Paragraph 3.

2. The Minister of Health and Welfare may designate a Korean Medical service institution or a similar entity as a Korean Medicine and Pharmaceutics Clinical Center, if so required for the efficient operation of such a center as stated in the foregoing 1.

§ 4 Undertaking the Groundwork for Korean Medicine Industry Article 12 (Formation of a Korean Medicine industrial complex)

1. Both the central Government and local administrative units may implement the necessary measures for the formation of an industrial complex and the provision of the relevant infrastructure for Korean Medicine, or provide administrative and financial support to private businesses intending to form such a complex.

2. The Korean Medicine and Pharmaceutics Development Council may be established within the Ministry of Health and Welfare for the efficient formation of an Korean Medicine and Pharmaceutics industrial complex.

3. The formation of an industrial complex and the provision of the relevant infrastructure for Korean Medicine is in accordance with the Article 6, the Article 7, the Paragraph 4 of the Article 7, from the Article 10 to the Article 13, the Paragraph 2 and 3 of the Article 13, the Article16, the Article 17, the Article 18, the Paragraph 2 of the Article 19, the Article 20, the Paragraph 2 of the Article 20, the Article 21, the Article 26, the Article 28, the Article 37, the Article 38, and the Paragraph 2 and 3 of the Article 386 in the Act on Industrial Sites and its Developments.

4. Matters pertaining to the support of a Korean Medicine and Pharmaceutics industrial complex and the composition and operation of the Korean Medicine and Pharmaceutics Development Council as stated in the foregoing 1 and 2 shall be fixed in accordance with the relevant Presidential decree. Article 13 (Herbal Medicines Promotion Foundation)

1. The Minister of Health and Welfare may establish a Herbal Medicine Promotion Foundation to provide efficient support for the development of Korean Medicine pharmacists' skills.

2. The foundation stated in the foregoing 1 shall be a corporation.

3. Matters pertaining to the establishment and operation of the foundation stated in the foregoing 1 shall be fixed in accordance with the relevant Presidential decree.

§5 Improvement of the Quality of Herbal Medicines Article 14 (Criteria for Good Quality Herbal Medicines)

1. The Minister of Health and Welfare may establish the criteria for the growing of good-quality of herbal preparations, and the distribution, production and management of herbal medicines ("in accordance with good-quality herbal medicine management criteria"), if such is required for the proper control of their quality.

2. The Minister of Health and Welfare may make it obligatory for pharmacies and Korean Medicine service institutions to use only those herbal preparaions and herbal medicines that satisfy the good-quality herbal medicine management criteria stated in the foregoing 1.

Article 15 (Improvement of the Quality of Herbal Medicines and Adoption of an Advanced Method of Distribution)

1. The Minister of Health and Welfare must design policies to help improve the quality of herbal medicines, touching different stages of their production, from the cultivation of medicinal herb crops to the manufacturing and distribution of herbal medicines, in accordance with related Health and Welfare Ministry decrees.

2. The Minister of Health and Welfare must, furthermore, commission research to assess the current status of the herbal medicine industry and develop policies and programs for improving product quality and the efficiency of warehousing and distribution systems. The scope of research must also include policies for promoting international trade and cooperation in the area. §6 Supplementary Rules

Article 16 (Governmental Support for Expenses)

The Government may provide financial support to local administrative units for a part or all of the expenses incurred by them for the implementation of the regional plan stated in Article 8, provided that the said expenses are within the limits of the Government's budget.

Article 17 (Entrustment of Rights)

The Minister of Health and Welfare may entrust part or all of the rights endowed to him/her under this Act to the head of the relevant institution or organization in accordance with the relevant Presidential decree. Article 18 (Relations with Other Laws)

With the exception of those matters stipulated in this Act, matters pertaining to R&D in the field of Korean Medicine and Pharmaceutics techonology shall be conducted in accordance with Health and Medical Service Technology Promotion Act.

Additional Rules

This Act shall take effect after the elapse of one year from its promulgation.