The Fair Trade Commission (FTC) said Thursday that it has imposed a 300 million won ($266,100) fine on Smith & Nephew for providing illegal financial support to medical institutions and workers while issuing a corrective order.
Smith & Nephew is a multinational medical manufacturer and supplier of medical devices and supplies such as artificial joint inserts, wound healing supplies, and artificial skin. It posted sales of 44 billion won in 2017.
The British company provided illegal support in the form of surgery assistance and financial support for academic conferences and overseas training.
The antitrust agency prohibits sales activities that may hinder the distribution order to prevent distortion of purchase choices by unfair competition, based on Fair Trade Act and other laws and regulations. More specifically, it forbids providing illegal or excessive benefits to take customers away from competing companies and their products.
Also, medical laws ban medical device manufacturers from providing economic benefits such as labor, products, and money to promote sales.
The Korea Medical Devices Industry Association has also been operating its regulation, approved by the FTC in 2011. It prohibits providing rebates and directly financing overseas conference trips for doctors while putting a ceiling on lectures fees for medical professionals.
In the case of Smith & Nephew, the British company’s marketing agent offered such benefits in the form of labor provision, such as doing the job of scrub nurse and physician assistant, at seven locations of a hospital chain that uses the company’s product from 2007 to 2014. The company also placed its sales staffs in advance when the hospital conducted operations with its medical device, using labor as a means of promoting sales.
Under current law, medical device sales personnel can only provide technical support such as explaining how to assemble and use medical devices using laser pointers in controlled areas.
The top corporate watchdog also found the company guilty of providing illegal expenses to doctors participating in academic conferences and overseas training.
While the regulations strictly prohibit funding of leisure activities such as sightseeing or golf, the company continued to offer such entertainments to doctors, and paid travel fees for the doctor’s family members and arranging their tour schedules on multiple occasions.
The company also requested the organizers of an Arthroscopy and Sports Medicine Society Conference in India to invite Korean doctors friendly to the company. Smith & Nephew also violated the regulation on limiting lectures for medical professionals by paying 500,000 won for 40-minute lectures.
“The fine is significant as it is the first sanction to a medical device company for providing labor as a form of financial benefits to a medical institution,” the corporate watchdog said. “We hope the punishment will create a fair trade climate within the industry.”
Given the giving and taking bribes are likely to infringe on patients’ interest, the agency will take stern measures against violators, it added.
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