Ministry of Health and Welfare Operates 'Illegal Rebate Intensive Reporting Period'
Reporters Granted 'Responsibility Exemption' Even If Involvement Confirmed
The government has launched a campaign to eradicate illegal rebates in pharmaceuticals and medical devices. This move comes in response to ongoing concerns, including recent allegations of pharmaceutical company employees mobilizing doctors for gatherings, indicating that illegal rebates continue to be an issue.
The Ministry of Health and Welfare announced that from the 21st until May 20th, a two-month intensive reporting period for illegal rebates in pharmaceuticals and medical devices will be in operation. The plan is to detect illegal rebates by encouraging voluntary reporting during this focused period. Reports can be made not only by visits but also via mail and the internet. Additionally, consultations for reporting can be conducted through the government’s main civil complaint hotline or the corruption and public interest reporting hotline.
The focus of this intensive reporting period includes acts by pharmaceutical companies, wholesalers, or medical device manufacturers, importers, and sellers who provide monetary benefits, goods, conveniences, labor, entertainment, or other economic benefits beyond the permitted economic incentives for sales promotion, as well as acts of medical personnel receiving such benefits. The Ministry of Health and Welfare cited key examples such as pharmaceutical companies providing cash to hospitals and clinics that newly prescribe their drugs under the name of drug adoption fees (landing fees), offering advance payments to hospitals and clinics that promise prescriptions, providing cash to doctors under the guise of market research fees, or pharmaceutical company employees performing benefits and labor acts such as substitute driving for local business trips, attending and assisting family events, attending medical association gatherings, proxy attendance at academic conferences or reserve forces meetings, food delivery, warehouse organization, and errands.
Reports received will be verified and then referred to investigative agencies such as the National Police Agency and the Fair Trade Commission for investigation and prosecution, handled in cooperation with related agencies. Given the nature of illegal rebates, it is expected that many reports will come from insiders, so from the reporting stage, strict confidentiality, identity protection, prevention of disadvantages, and personal security measures will be implemented to ensure that whistleblowers do not suffer any harm.
Furthermore, even if the reporter is found to have participated in illegal activities, the government will actively apply leniency measures to reduce penalties. When it is judged that the reporter has contributed to the public interest, such as by recovering unfair profits, a reward of up to 3 billion KRW or a prize of up to 500 million KRW will be provided.
The government stated, “Illegal rebates are serious violations that cause misuse of pharmaceuticals and threaten public health,” and added, “Since detection is difficult without internal reporting, we will actively work to strengthen protection and rewards for whistleblowers.”
Meanwhile, the Ministry of Food and Drug Safety detected on the 19th that Hanmi Pharmaceutical provided economic benefits to medical institutions and has suspended sales of seven ophthalmic drug items, including the artificial tears Hyalumini, for three months starting from the 22nd. For one item, Paracaine Eye Drops, instead of a sales suspension, a fine of 4.05 million KRW was imposed. This action follows confirmation that around November 2018, Hanmi Pharmaceutical provided economic benefits worth approximately 1.5 million KRW to medical institutions to induce adoption and prescription of these eight items. Unlike other drugs with alternative medicines, Paracaine Eye Drops is the only product containing the relevant ingredient distributed domestically, so a fine was imposed in lieu of a sales suspension.
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