150 Times, Rebates Worth 280 Million Won Given Through Sales Representatives
Kyungbo Pharmaceutical, which distributed rebates worth a total of 280 million KRW to hospitals, has been fined a penalty of 300 million KRW.
The Korea Fair Trade Commission (KFTC) announced on the 11th that it imposed a corrective order and a fine of 300 million KRW on Kyungbo Pharmaceutical for unfair customer inducement practices.
According to the KFTC, from August 2015 to July 2020, Kyungbo Pharmaceutical paid a total of 280 million KRW in cash through sales representatives on 150 occasions to 13 hospitals, clinics, and pharmacies mainly in the Jeonbuk region in exchange for prescribing its pharmaceutical products.
During this time, Kyungbo Pharmaceutical maintained strict confidentiality to prevent the illegal cash payments to hospitals and clinics from being exposed, using code words such as ‘Ssak-kol’ (advance rebate) and ‘Pla-top’ (post rebate).
Kyungbo Pharmaceutical issued branch operation funds, a type of promotional expense, monthly by check to each branch, which were then given to sales representatives. The sales representatives cashed these checks and delivered the funds as rebates to hospitals, clinics, and pharmacies. The rebate payments were systematically managed based on prescription evidence from the hospitals and clinics.
The KFTC stated, "It is significant that we thoroughly investigated and detected the covert illegal rebate activities, which even used code words, and strictly sanctioned them, thereby contributing to the establishment of fair trade order in the pharmaceutical market."
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