Who answers for a stem cell transplant done without approval, and what must be explained first? Supreme Court Decision 2007Da3162 on drugs, clinical trials and the duty to explain

Question

The former Pharmaceutical Affairs Act, as the decision cites it, gave the head of the Korea Food and Drug Administration power to approve clinical trial plans and to license manufacturing items, and defined drugs in its Article 2. Where cells separated from the human body are administered to treat disease, the question is whether they fall within that definition, whether transplanting them into humans is a 'clinical trial' requiring approval, and what follows in tort law if a doctor performs the procedure without that approval.

Decision 2007Da3162 raises these questions in a case brought by patients with advanced cirrhosis and with multiple sclerosis who bought cord blood stem cells and received the transplantation. As the parties are designated, the defendants were appellants and respondents, Plaintiff 6 was a plaintiff, respondent and appellant, and Plaintiffs 1 to 5 and 7 to 10 were plaintiffs and respondents: the defendants appealed on the establishment of tort liability and the scope of damages, and Plaintiff 6, Defendant 2 and the defendant medical corporation appealed on the reduction of liability.

Material to check

The statutes are the former Pharmaceutical Affairs Act (before the whole amendment by Act No. 8365 of 11 April 2007) and its Enforcement Rule (before the amendment by Ministry of Health and Welfare Ordinance No. 291 of 28 July 2004), which the decision cites and construes; their content is left aside here because only their former versions are cited. The decision notes that the counterparts of the cited provisions are the present Article 2(4), Article 31, Article 34(1) and Enforcement Rule Article 22(1). Also cited are Civil Act Article 2 on good faith, Article 750 on liability for tort, and Article 760, under which those who jointly cause damage to another are liable jointly and severally.

The decisions are Decision 2007Da3162 and the precedents it relies on: Decision 2001Da27449 (11 January 2002), that practising medicine without a licence is not itself a breach of the duty of care in medical treatment; Decision 94Da3421 (20 January 1995), on a doctor's duty to explain before an invasive procedure; Decision 93Da62645 (28 March 1995), that a seller of pesticides must explain their performance and method of use accurately and must not give instructions or recommendations without knowing them; and Decision 2005Da5812, 5829, 5836, whose text could not be opened.

Possible readings

Whether a substance is regulated as a drug turns on the Act's own definition, because, as the decision puts it, the Act conferred approval and licensing powers on the head of the Korea Food and Drug Administration but contained no provision delegating the concrete scope of drugs to lower enactments. Cells separated from the human body are drugs when they are used in cell units rather than as human tissue to treat human disease. Mesenchymal stem cells, selected from the leukocytes (mononuclear cells) of stored cord blood apart from haematopoietic stem cells and the like, proliferated and cultured in vitro with growth factors added, and then administered to humans in cell units to treat disease, fall within that rule.

The decision reads the approval provision of the former Act as covering a 'clinical trial', meaning research on humans whose safety and efficacy are not sufficiently verified by the knowledge and experience available at the time of the research. Transplanting mesenchymal stem cells into humans was such a procedure, so performing it without the head of the Korea Food and Drug Administration's approval violated the Act, and a health insurance fee schedule for haematopoietic stem cell transplantation, which is similar in nature, does not change that. A regulatory violation of that kind is not itself a breach of the duty of care in medical treatment, so no tort liability follows unless a specific breach of that duty is found, following Decision 2001Da27449.

A doctor must, before a medical procedure, explain to the patient or the legal representative the symptoms of the disease, the content and necessity of the treatment, the expected risks and other matters regarded as reasonable at the level of medicine then current, so the patient can weigh necessity against risk and choose; where the procedure is at the clinical trial stage, the doctor must explain its safety and efficacy (therapeutic effect) by comparison with the general and standard medical practice then carried out clinically. A supplier of drugs at the clinical trial stage owes the purchaser, as a duty in good faith under Civil Act Article 2, notice of important circumstances bearing on the decision to buy, such as safety and efficacy.

What the decisions held

Decision 2007Da3162 dismissed all appeals and left each appellant to bear its own appeal costs, affirming the judgment of the Seoul High Court of 14 December 2006 (2006Na15474). The court below had held that transplanting the stem cells without approval violated the Pharmaceutical Affairs Act and had also reasoned that the unapproved medical procedure by itself constituted a tort. The Supreme Court held that latter reasoning wrong, but the error did not affect the outcome, because liability on the ground of breach of the duty to explain was established.

Defendant 2, the director of the hospital, injected stem cells supplied by the defendant company into the abdomen of Non-party 2 on 3 September 2003 and Non-party 3 on 8 October 2003, and on 4 November 2003 held a joint press conference with Defendant 4, the company's chief executive officer, announcing marked improvement in two cirrhosis patients. The defendant medical corporation posted on the hospital website that the technique was the world's first clinical success and that one patient had recovered to the point of climbing Mount Halla; the company posted similar claims on a bank's website, listing many diseases as treatable or possibly treatable. The two patients in fact showed only slight changes in some test values, and Non-party 2 died around May 2004. Asked about therapeutic effect, Defendant 2 and the nurse said no statistics could be given but did not say the reported recovery had not happened, and played up the procedure's advantages over liver transplantation; the company's employee said a diabetic acquaintance's diabetes and baldness had improved. The plaintiffs received the transplantation between December 2003 and March 2004, paying 30 million won to 33 million won each (Plaintiff 6: 20 million won) for the cells and about 2 million to 3 million won each in medical costs, without their diseases improving.

On those facts the decision held that Defendant 2, in performing a procedure at the clinical trial stage, and Defendant 4, in selling cells at that stage, each failed to make any effort to verify the therapeutic effect objectively and gave false information through the press conference, website advertising and counselling, so Defendant 2 breached his duty to explain to the patients and Defendant 4 his duty to explain and to notify the buyers; given the course of the press conference, the relatedness of the website content and the circumstances of the purchases and the surgery, their torts were objectively related and formed a joint tort under Civil Act Article 760. Where a company's representative director causes damage in the course of his duties, the company and the director are jointly and severally liable, so the company's liability did not free Defendant 4 of personal liability. The decision accepted the court below's finding of an adequate causal link between the false information and the payments and, on reduction of damages, held that such reduction depends on the fault, the treatment, its outcome, the disease and the patient, and belongs to the court below unless manifestly unreasonable, as it was not here.

Points left open

The holding that separated cells are drugs is expressly limited to cells used in cell units rather than as human tissue to treat human disease. What the decision says about cells or materials used as tissue, or for other purposes, is not decided, and the classification of other cell-based products is left to later cases.

The decision holds only that the absence of approval does not by itself create tort liability, not what role the violation may play as evidence of fault or in other claims, and it does not set out what a sufficient explanation at the clinical trial stage would look like in a given case, having found only that the information given here was false and unverified. The appeals on reduction of damages were rejected as within the court below's discretion, so the boundary of that discretion is likewise unfixed.

When to reconsider

We revisit this brief if the Pharmaceutical Affairs Act provisions the decision construes are further amended or replaced, if a later Supreme Court decision rules on cells used as tissue or on the content of the duty to explain at the clinical trial stage, or if the text of Decision 2005Da5812, 5829, 5836 becomes available and changes the account of the supplier's duty to notify.

Statutes referred to

• 구 약사법 제2조, 제26조, 제26조의4
• 구 약사법 시행규칙 제21조의2
• 민법 제750조, 제2조, 제760조

Decisions referred to

• 대법원 2010. 10. 14. 선고 2007다3162 판결 · Decision ledger
• 대법원 2002. 1. 11. 선고 2001다27449 판결
• 대법원 1995. 1. 20. 선고 94다3421 판결
• 대법원 1995. 3. 28. 선고 93다62645 판결

Verification status

The texts read for this brief were the decision in its published holdings, summary and reasons, the current text of Civil Act Articles 2, 750 and 760, and the published holdings and summaries of Decisions 2001Da27449, 94Da3421 and 93Da62645, all at the National Law Information Center (law.go.kr) on 24 October 2026. The text of Decision 2005Da5812, 5829, 5836 could not be opened, so only its numbers are given.