[Seungso-ui Seolgae] Overturning Precedent with "Scientific Logic"... Gwangjang Wins Unjust Enrichment Lawsuit for Pharmaceutical Industry

Identifying the possibility of contamination outside the manufacturing process
Protecting industrial predictability and the supply chain

"The key issue was to distinguish this case from the precedent in the 'Valsartan' case, which could be viewed as a similar matter."

Attorney Park Hyunsoo of Gwangjang Law Firm (33rd class of the Judicial Research and Training Institute) made this remark after recently winning a lawsuit filed by pharmaceutical companies against the health authorities, seeking the return of unjust enrichment related to pharmaceutical impurities. Unlike in previous precedents in similar cases, where the court had recognized the liability of pharmaceutical companies, the Seoul Central District Court accepted Gwangjang's arguments and upheld the claim brought by the drug manufacturers.

Jeong Daju, Park Hyunsoo, and Kim Ilkwon (from left in photo), attorneys at Gwangjang Law Firm, are being interviewed by The Asia Business Daily at the Gwangjang office on Namdaemun-ro in Jung-gu, Seoul. Reporter Cho Yongjun

The case began after the announcement of a test method for detecting an impurity called N-nitrosodimethylamine (NDMA), when NDMA was found in three active ingredients including metformin. The health authorities ordered pharmaceutical companies to bear the costs of re-prescription and re-dispensing. In response, the companies filed an unjust enrichment lawsuit against the National Health Insurance Service in July 2022, arguing that it was unfair to impose such costs on them even though they had complied with the applicable standards at the time of manufacture. However, the outlook was bleak, because in a previous lawsuit involving Valsartan-based medicines, which was similar to this case, the court had ruled in favor of the health authorities.

◆Emphasizing that NDMA was not present in the active pharmaceutical ingredient

Attorney Kim Ilkwon (6th bar exam), a member of Gwangjang's healthcare team who majored in life sciences, focused on metformin, which accounted for 78% of the medicines in which impurities were detected. Attorney Kim stressed, "In the case of Valsartan, the impurity level in the active pharmaceutical ingredient itself exceeded the standard by more than 100 times, but for metformin, no impurity was detected at all in the active ingredient."

He also pointed out that NDMA was detected in only some of the finished products. According to Gwangjang, among the finished metformin products tested by the Ministry of Food and Drug Safety, only 10.7% showed trace amounts of impurities. This led the team to identify the possibility that the issue arose not from the manufacturing process, but from factors such as distribution and storage, which lie "outside the manufacturer's sphere of control."

◆Highlighting the different degrees of exceeding the provisional control limit

The fact that NDMA was not detected in the active pharmaceutical ingredient of metformin also played a crucial role. In the case of Valsartan, NDMA detected in the active ingredient exceeded the provisional control limit by more than 100 ppm. Even in the subset of finished metformin products where NDMA was detected, the levels did not exceed the provisional control limit by more than 1 ppm.

The risk level was also low under the guidelines of the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH). The additional carcinogenic risk from metformin was only 0.21 cases per 100,000 people, which the team demonstrated falls under an "insignificant level" at which risk is not recognized under international standards. By contrast, the additional risk from Valsartan reached 8.5 cases per 100,000 people, and was recognized as hazardous even under international standards.

During this process, Attorney Jung Dajoo (31st class of the Judicial Research and Training Institute) devoted considerable effort to translating the scientific facts into "the language of the court." Attorney Jung said, "We used the analogy that even processed meat and coffee can be harmful if one is excessively exposed, but their sale is not deemed illegal," adding, "About 80% of what the litigation team did was translation work to help the bench understand the scientific facts."

◆Enhancing predictability for the pharmaceutical industry

The ruling in favor of the plaintiffs is being assessed as setting a precedent that, if an issue newly identified due to technological advances is not at a serious level, it is not reasonable to hold product suppliers liable.

Attorney Park commented, "The government can set conservative standards for safety, but if it always passes the resulting costs on to the private sector, what company would develop new drugs?" He added, "This victory is meaningful in that it enhances predictability in the pharmaceutical industry and has safeguarded a stable supply chain for medicines."