Drugmakers Fined By South Korea Over Kickbacks

Drugmakers Fined By South Korea Over Kickbacks

September 23rd, 2011 // 12:37 pm @

Yet another country is starting to crackdown on kickbacks. The Korea Fair Trade Commission has just announced that six drugmakers were fined for organizing free seminars and conferences for doctors, clinics and hospitals, and then offering golf outings; carpets; wine; dinners; speaking and consulting fees; spa treatments; movie showings and old-fashioned cash for purportedly conducting post-marketing surveillance.

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Who got tagged? The South Korean units of Sanofi, Bayer, AstraZeneca, Novartis and Johnson & Johnson’s Jannsen Pharmaceutica. Joining the esteemed list was CJ Cheiljedang, a domestic drugmaker. However, the combined fine for providing incentives to boost prescriptions does not amount to very much – $9.3 million, to be exact. The KFTC estimated that rebates – the term used to describe the various goodies – were valued at roughly $44 million.

In some cases, overseas flights were paid for doctors under the pretext of participating in international conferences. Some doctors were offered millions of dollars in won – the South Korean currency – for speaking. And doctors were not the only beneficiaries. Nurses and hospital staffs also received goodies, even though they do not prescribe meds. There were also rewards provided under the guise of returning market survey information to the drugmakers.

“The pharmaceuticals, through the rebates, unduly turned the benefits of customers into medical institution proceeds,” the KFTC says in its statement.* “The rebates directly inflated medicine and medication prices, increasing customer burden and undermining financial soundness of national health insurance…

“Resources have been wasted and put to use in areas that have nothing to do with pharmaceutical industry development. The opportunities for new, innovative drug development have been lost since rebates could have been used for research and development.” And the KTC goes on to note that, last year, R&D accounted for 6.3 percent of domestic pharmaceutical sales, while sales, general and administrative expenses amounted to 35.6 percent.

Source: Pharmalot

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