Under the agreement, U.S. drug makers will be able to secure longer exclusive sales periods for their products in Korea. They will also have more control when determining the price of their products in the Korean market.

Washington agreed to set up a cooperative body to mutually recognize Korea`s standard on pharmaceutical products and allow sales in the United States of Korean generic drugs without additional approval by U.S. authorities.

The cooperative body will also work on concluding mutual recognition of business qualifications for doctors, nurses, pharmacists and physical therapists. Oriental medicine doctors are excluded from measure.

The Korea Pharmaceutical Manufacturers Association criticized the agreement as a "major threat" to the nation`s drug sector.

"We are deeply disappointed with the result of the agreement, which will hinder the domestic pharmaceutical sector`s development toward advanced countries` standards," the association said through a news release.

"By excessively protecting the U.S. drug companies` intellectual property rights, the agreement has become an obstacle that will block local firms from developing generic and advanced pharmaceutics."

Following a newly agreed upon patent system - which will lengthen the licensing period of exclusive pharmaceuticals and similar products in Korea - domestic drug makers will be banned from selling products similar to U.S.-made pharmaceuticals until end of the licensing period.

During this period, U.S. companies will be able to exclusively sell their drugs, with potentially massive profits during the period.

Citizens will inevitably face higher medical fees, as they will have to purchase expensive foreign drugs, while cheaper Korean products are put on hold.

Drug makers in Korea and many other countries have been producing so-called generic drugs. These drugs have similar effects to the original, more expensive, medicines that are produced in advanced countries.

U.S. firms will also be guaranteed an "independent objection process" in Korea`s pricing policy of pharmaceutics, making sure that their opinion is sufficiently reflected in determining prices in the Korean market.

Some are raising concerns that such a process may cause turmoil in Korea`s pharmaceutical pricing system.

Beginning this year, Seoul introduced a new public health insurance regulation to stop new drugs from automatically being placed on the list of products reimbursed by the government.

Under the new policy, new drugs undergo much stricter screening, conducted by the Health and Welfare Ministry, to determine whether or not they should be placed on the list of health insurance guaranteed products. The price of the product is concluded in negotiations between the company and the National Health Insurance Corporation.

U.S. negotiators have been raising concerns that that the policy would threaten the price competitiveness of its drug companies.

The Health Ministry asserted that the agreement will help enhance the competitive power of local drug makers and inspire them to develop more exclusive pharmaceuticals in the future.

"We have preserved what we had to preserve," said Jeon Man-bok, director of the ministry`s FTA department. "I am sure that in the long run, small losses will lead Korean medical firms to seek a larger market share."

But asserting that the agreement will pose a danger to local drug makers, the pharmaceutical association demanded the government take sufficient measures such as tax reductions and government-loans.

Ending nearly 10 months of tough negotiations, Seoul and Washington reached a major free trade agreement yesterday.

The drug sector had been one of the three most sensitive issues on the negotiating table - along with the agriculture and automotive sectors.