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Same Floor, Separate Doors: Court Rules Hospital and Pharmacy Can Coexist on the Same Level Without Violating Separation Rules

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A Korean appellate court has confirmed that a pharmacy and a medical clinic located on the same floor of the same building do not violate the Pharmaceutical Affairs Act’s separation requirements — as long as they have no direct connecting door and function as genuinely independent units. Here are the key points.

Issue

Does a pharmacy located on the same floor as a medical clinic in the same building qualify as an impermissible “attached pharmacy” under the Pharmaceutical Affairs Act, entitling a competing nearby pharmacy to have its registration cancelled?

Facts

  • From March 2023, an ophthalmology clinic began operating in Unit 101 on the first floor of Building C in Gwangjin-gu, Seoul, under a five-year lease.
  • In October 2023, Pharmacist B signed a five-year lease for Unit 102 on the same floor and registered a new pharmacy with the Gwangjin-gu Health Center in January 2024.
  • The two units are separated by a wall, have separate entrances, and carry separate signage. There is no direct door connecting them.
  • Building C also contains other medical institutions, academies, and officetel units — it is not a single-purpose medical facility.
  • Pharmacist A, who operates a competing pharmacy roughly 20 meters away across the street, filed suit to cancel Pharmacist B’s registration, arguing it violated Article 20(5) of the Pharmaceutical Affairs Act, which prohibits registering a pharmacy carved out of a medical institution’s facilities.

Rule

  • Article 20(5) of the Pharmaceutical Affairs Act prohibits pharmacy registration where the pharmacy is located within or on the premises of a medical institution, or where a medical facility has been subdivided to create a pharmacy space.
  • The underlying purpose of Korea’s separation of prescribing and dispensing system is to prevent pharmacies from becoming functionally subordinate to — or colluding with — specific medical institutions. It is not intended to bar pharmacies from operating in the same building as a clinic.
  • Because the restriction limits constitutionally protected freedoms of occupation and property, it must be interpreted according to its plain meaning and cannot be expanded beyond what the text requires.

Court Decision

  • The Seoul High Court (Administrative Division 4-3, Presiding Judge Moon Gwang-seop) upheld the first instance ruling on April 15, 2026, dismissing Pharmacist A’s challenge.
  • The court found that the pharmacy and the clinic are spatially and functionally independent: they occupy separately registered condominium units, have their own entrances and signage, and share no direct internal access.
  • There was no evidence of any special relationship, subordination, or collusion between the pharmacy and the clinic.
  • The first floor of Building C was not originally medical space that was subsequently subdivided — it was a commercial space divided into Units 101 and 102 before either the clinic or the pharmacy moved in. Article 20(5)(3) therefore does not apply.
  • The presence of multiple other tenants in the building reinforced the conclusion that Building C cannot be characterized as a single medical institution.

Key Takeaways

  • Being on the same floor as a medical clinic does not automatically disqualify a pharmacy from registration. What matters is whether the pharmacy is spatially and functionally independent — assessed by whether the units have separate walls, entrances, and signage, and whether there is any direct internal connection.
  • The anti-collusion rationale of the pharmacy separation rules targets functional subordination, not mere physical proximity. Shared geography alone is not enough to establish a prohibited relationship.
  • Article 20(5)(3) applies only where a medical facility’s existing space has been subdivided to create a pharmacy — not where a commercial space is simply divided and separately leased to different tenants.
  • Competing pharmacies have standing to challenge nearby registrations, but must demonstrate actual regulatory violations — business competition alone does not make a registration unlawful.

Why This Matters

Following a 2025 Supreme Court decision that confirmed nearby pharmacy operators have standing to challenge new pharmacy registrations, courts have seen a surge in such third-party cancellation suits. This ruling serves as an important counterweight, making clear that proximity and commercial rivalry are not sufficient grounds for cancellation. For pharmacists, clinic operators, and real estate developers planning mixed-use medical buildings, the decision provides practical guidance: structural independence — separate units, separate doors, no internal passage — is the operative legal standard, and meeting it should insulate a pharmacy registration from challenge by neighboring competitors.

Article: https://www.lawtimes.co.kr/news/articleView.html?idxno=219691

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