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Drugmakers play it safe under ‘K-Sunshine Act’
  • By So Jae-hyeon
  • Published 2018.01.10 14:23
  • Updated 2018.01.10 14:23
  • comments 0

Drugmakers are limiting salespersons’ use of corporate credit cards amid concerns that excessive marketing expenses might breach the law enacted this month.

The new law calls for pharmaceuticals and medical device manufacturers to keep records of all the “economic benefits” given to doctors and pharmacists, such as sample products and payments for conference participation. The companies should always be ready to submit the documents to the minister of health and welfare, at the request of the authorities. Similar to the Sunshine Act in the U.S., the industry calls it “K-Sunshine Act.”

For example, a pharmaceutical salesperson having dinner or tea with a doctor should get the signature of the physician and submit it to the company. The company ought to keep the record and provide it for the government on request.

Some drugmakers have banned salespersons from using corporate cards, worrying that they might become the first case to breach the law. Such moves might discourage marketing activities and push down sales, some industry sources said.

Regarding the enactment of the K-Sunshine Act, salespersons are showing mixed reactions depending on which kind of products they sell.

A salesperson at a multinational pharmaceutical firm said he did not feel much difference.

Before the new law, he used to get a signature of a doctor after payments, he said. The demand for the drugs he was selling remained the same, even after stricter regulations on illegal rebates and the enactment of the law.

“If sales go down because of reduced dinners, that company has a structural problem. I’ve been doing this work for 10 years but has never experienced that the sales surged after a lot of dinners. I don’t worry too much about the impact of the Sunshine Act,” the salesperson said.

Another salesperson at a different drugmaker expressed a similar view. “Except for the limitations in the use of corporate cards, there will be no problem in sales. In time, the Sunshine Act will naturally settle in,” he said.

However, salespersons at small- and medium-companies who mostly sell generic drugs showed a different response.

“Doctors can change generic drugs whenever they want to. So, for us, it is important to meet them in person to sell our drugs,” said a salesperson at a company dealing mostly with generic drugs. “Due to the Sunshine Act, we might have a problem in securing new client lines. Even if we use our personal cards, it could cause trouble. Original drug sellers would be in a better position. But we’re having big trouble.”

A marketer at another small drugmaker said his company’s revenue would not be able to avoid a decline in sales due to the new law.

“Original drugs will sell as they used to regardless of changes in regulations. But our products (generics) are different. We manage to mention our products in dinner, but that is not possible anymore,” he said. “As the company’s incentives depend on the size of the sales, some salespersons might stock drugs in their homes.”

Since the enactment of the K-Sunshine Act, compliance program operators at pharmaceutical firms have raised concerns that salespersons might resort to makeshift tactics individually.

“I’m worried that salespersons might deviate from company rules because the company cannot help but put pressure on them to increase sales,” said an executive in charge of compliance program at a mid-sized drugmaker. “Some have already asked me about whether using an expedient would cause trouble. It will take some time for the new law to take root.”


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