Determination as to whether the place where a pharmacy is to be established falls under “the facility or premises of a medical institution” prohibited under Article 20(5)2 and 3 of the Pharmaceutical Affairs Act or “the place where part of the facility or site of a medical institution is divided, altered, or repaired” or “the place where part of the facility or site of a medical institution is divided, altered, or repaired” as well as the method of determining whether the place where a pharmacy is to be established falls under “the facility or premises of a medical institution” or “the place where part of the facility or site of a medical institution

In determining whether a pharmacy is “a facility or premises of a medical institution” or “a place where part of a facility or site of a medical institution is divided, altered, or repaired,” which is prohibited under Article 20(5)2 and 3 of the Pharmaceutical Affairs Act, the legislative purport of the above legal provision, which intends to place a pharmacy in a separate and functional place from a medical institution, should be taken into account in addition to the literal meaning of the language and text in order to impose an obligation to provide out-of-the-counter drugs for outpatients of a medical institution in accordance with the principles of pharmaceutical distribution business.

In light of the fact that the primary purpose of the pharmaceutical industry is to prevent a pharmacy from being dependent on a medical institution or from combining with a pharmacy by sufficiently and functionally separating a pharmacy from a medical institution, and that it is not for a medical institution to independently establish a pharmacy by itself, the place where a pharmacy is intended to establish a pharmacy shall be determined by whether a pharmacy is located within the facility of a medical institution (Article 20 (5) 2 of the Pharmaceutical Affairs Act) or within the “place where part of the facility or site of a medical institution is divided, altered or repaired (Article 20 (5) 3 of the Pharmaceutical Affairs Act)” or “place where part of the facility or site of a medical institution is divided, altered or repaired (Article 20 (5) 2 of the same Act)” based on the specific individual medical institution.

Article 20 (5) 2 and 3 of the Pharmaceutical Affairs Act

Supreme Court Decision 2002Du10995 Decided December 12, 2003 (Gong2004Sang, 169), Supreme Court Decision 2003Du12004 Decided July 22, 2004, Supreme Court Decision 2014Du44311 Decided July 22, 2016

Plaintiff (Law Firm Woo, Attorneys Kim Byung-jin, Counsel for the plaintiff-appellant)

Chang Gun

Busan High Court (Chowon) Decision 2013Nu744 decided December 12, 2013

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. Article 20 (2) of the Pharmaceutical Affairs Act provides that a person who intends to establish a pharmacy shall file for registration of establishment with the head of the competent Si/Gun/Gu, as prescribed by Ordinance of the Ministry of Health and Welfare. Meanwhile, Article 20 (5) of the same Act provides that “where a pharmacy is to be established in a place which is located within the facilities or premises of a medical institution (Article 20 (2))” or “where a pharmacy is established by dividing, altering or repairing part of the facilities or sites of a medical institution (Article 3)

In determining whether a pharmacy is “a facility or premises of a medical institution,” which is prohibited under Article 20(5)2 and 3 of the Pharmaceutical Affairs Act, or “a place where part of a facility or site of a medical institution is divided, altered, or repaired,” the legislative intent of the above provision of the Act should be taken into consideration in addition to the literal meaning of the provision of the Act, in order to impose an obligation to provide out-of-the-counter drugs for outpatients of a medical institution in accordance with the principles of pharmaceutical distribution business, in order to ensure that a pharmacy is placed independently and functionally independent from a medical institution (see Supreme Court Decisions 2003Du1204, Jul. 22, 2004; 2014Du4311, Jul. 22, 2016, etc.).

In light of the fact that the primary purpose of the pharmaceutical industry is to prevent a pharmacy from being dependent on a medical institution or from combining with a pharmacy by sufficiently and functionally separating a pharmacy from a medical institution, and that it is not for a medical institution to independently establish a pharmacy by itself, the place where a pharmacy is intended to establish a pharmacy shall be determined by whether a pharmacy is located within the facility of a medical institution (Article 20 (5) 2 of the Pharmaceutical Affairs Act) or within the “place where part of the facility or site of a medical institution is divided, altered or repaired (Article 20 (5) 3 of the Pharmaceutical Affairs Act)” or “place where part of the facility or site of a medical institution is divided, altered or repaired (Article 20 (5) 2 of the same Act)” based on the specific individual medical institution.

2. According to the reasoning of the judgment below, the court below acknowledged that the Plaintiff applied for registration of establishment to establish a pharmacy on the 4-story building with a total floor area of approximately 1,000 square meters (hereinafter “the 4-story building of this case”) located in the same fence (hereinafter “the 4-story building of this case”). However, the court below determined that the Defendant’s above rejection of registration was lawful on the grounds that the establishment of a pharmacy in this case constitutes a case where the place where the Plaintiff intended to establish a pharmacy falls under the facility or premises of a medical institution (Article 20(5)2 of the Pharmaceutical Affairs Act) or a case where a pharmacy is established by dividing, altering or repairing part of the facility or site of a medical institution (Article 20(5)3 of the same Act).

① The instant cross-story building is on the same site as the instant 4th floor building, and there is room to regard it as the attached building to the instant 4th floor building. At the entrance of the instant 4th floor building, the instant 4th floor building may immediately enter the instant 4th floor building.

② In light of the fact that the instant 4th floor building and the instant 4th floor building are closely related to spatial and functionally, as a third party, the instant 4th floor building and the instant 4th floor building are likely to be independently in relation to the instant 4th floor building and the spatial and functional relationship between the instant 4th floor building and the instant 4th floor building and the same person’s ownership, the instant 4th floor building cannot be deemed independent.

3. However, it is difficult to accept the above determination by the court below for the following reasons.

A. The instant fourth floor building is only one building with multiple medical institutions, and cannot be deemed as a single medical institution. However, solely on the grounds for the Defendant’s disposition and facts acknowledged by the lower court, it cannot be specified that a pharmacy to be established by the Plaintiff is located in the “facility or premises of a medical institution” or “place where part of facility or site is partitioned, altered or repaired” among the multiple medical institutions located in the instant fourth floor building.

B. Furthermore, there is also no special circumstance to deem that the purpose of pharmaceutical medicine business is damaged as the place where a number of medical institutions located in the instant fourth floor building is practically a single medical institution, or the place where the Plaintiff intends to establish a pharmacy is not sufficiently and functionally independent from all of the above medical institutions.

C. Ultimately, it is difficult to readily conclude that the place where the Plaintiff intends to establish a pharmacy falls under the facility or premises of a medical institution prohibited by the Pharmaceutical Affairs Act, and there is also insufficient materials to view that the Plaintiff’s establishment of a pharmacy by dividing, altering or repairing part of the facility or site of a medical institution

4. Nevertheless, the lower court determined that the Plaintiff’s establishment of a pharmacy constituted Article 20(5)2(b)3 of the Pharmaceutical Affairs Act, the grounds for refusal of registration, on the ground that the instant 4th floor building where multiple medical institutions are located and its spatial and functionally independent. In so determining, the lower court erred by misapprehending the legal doctrine on the above statutory provisions, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

5. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)