Earlier this year, illegal lobbies between the pharmaceutical companies and judges at the Health Insurance Review and Assessment Service (HIRA) regarding the insurance coverage of medicines caused shock both in and out of the industry.
In January, the Busan District Prosecutors' Office raided HIRA, Huons and LG Chem. After its investigation, the prosecution indicted two judges at the HIRA’s Medical Treatment Review Evaluation Committee and made a summary indictment of three pharmaceutical officials that gave money to these judges, in February.
In March, the prosecution also raided Dong-A Pharmaceuticals’ headquarters for allegedly offering kickbacks while supplying its products. The case attracted attention as the prosecution also searched both the Ministry of Health and Welfare and the HIRA at that time. The case is currently still going on.
Although illegal rebates between pharmaceutical companies and doctors have declined significantly this year, the pharmaceutical industry gets edgy when it comes to bribery scandals.
Pharmaceutical companies are concerned that the economic benefit spending report, which becomes obligatory next year, will also raise the contract sales organization's (CSO) illegal rebate problem. The concern comes amid some pharmaceutical companies actively utilizing CSOs, which are specialized in sales, to trim their marketing organizations in recent years. Although it is not illegal to use CSOs, the problem is that the organizations have a high possibility of serving as a window for illicit rebates. In fact, a drug company was found by related authorities for providing illegal rebates using CSOs last year.
Such problems have led to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association and Korea Research-Based Pharma Industry Association urging its member companies to refrain from offering illegal rebates through CSOs.
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