Issuance of Administrative Order and Imposition of 300 Million KRW Fine
Jeil Pharmaceutical will face sanctions from the Fair Trade Commission for engaging in unfair customer inducement practices such as providing golf and meal entertainment to hospitals and clinics to promote the sales of its own pharmaceutical products.
On the 13th, the Fair Trade Commission announced that it had decided to impose corrective orders and a fine of 300 million KRW on Jeil Pharmaceutical for offering unfair economic benefits, including golf entertainment and meals, to hospitals and clinics with the aim of increasing prescriptions of its pharmaceutical products.
From January 2020 to November 2023, Jeil Pharmaceutical provided economic benefits (rebates) through various means such as golf and meal entertainment to medical personnel affiliated with hospitals and clinics in the metropolitan and Yeongnam regions in exchange for supplying its pharmaceutical products.
During this period, the total amount of rebates provided by Jeil Pharmaceutical related to 36 pharmaceutical products to hospitals and clinics was approximately 250 million KRW.
In particular, the company used methods such as converting gift certificates into cash, which is difficult to trace, or disguising support funds for medical personnel’s dining expenses as legitimate promotional activity costs like product briefings.
These actions by Jeil Pharmaceutical constitute unfair customer inducement, which involves improperly enticing customers of competing businesses to trade with oneself.
The Fair Trade Commission pointed out, "Illegal rebate provision by pharmaceutical companies leads to distorted outcomes in the prescription drug market, where patients cannot directly choose medicines, causing medical personnel to select drugs based on benefits received from pharmaceutical companies rather than prescribing medicines suitable for patients."
It added, "The significance of this measure lies in uncovering and strictly sanctioning illegal rebates secretly conducted through methods such as converting gift certificates into cash, thereby sounding an alarm to industry practices."
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