As the government obligates drugmakers’ making financial benefit-expense reports starting next year, the pharmaceutical industry is expressing concerns that illegal rebates using contract sales organizations (CSOs) would emerge as a problem, industry officials said Monday.
Some pharmaceutical companies have actively used CSOs, which specialize in the sales business, over the past several years. It is little wrong with their use of CSOs, but the problem is the drugmakers are highly likely to use them as the channels for providing illegal rebates, they noted.
Such concerns became a reality last year when the law enforcement authorities uncovered a pharmaceutical company providing unlawful rebates through its CSO, prompting many industry insiders to call for working out preventative measures.
It is against this backdrop that Won Hee-mok원희목, chairman of Korea Pharmaceutical and Bio-Pharma Manufacturers Association한국제약바이오협회(KPBMA), held a directors’ meeting on May 30 and asked member companies to come up with “self-purification” efforts concerning CSP-based rebates.
The participants shared the views that CSOs’ rebate-giving activities could dash cold water on the industry’s resolve for ethical management, serving as the stumbling block to the sector’s development. The association concluded both the executive and legislative branches believe that they should hold pharmaceutical firms accountable for “CSO’s rebate giving.”
The association has already sent official letters to CEOs of its member companies to prevent illegal rebate through CSO. In the letter, the industry group said, “The pharmaceutical companies should keep in mind the association’s strong will to cope with illegal rebates as well as the consistent principles of the government and parliament, conducting thorough supervision not to allow the occurrence of illegal rebates using CSOs.”
“The new government shares the consensus that pharmaceutical and bio industries are new growth engines and we have repeatedly asked it to provide policy supports,” the letter went on to say. “At this crucial juncture, we hope our member companies to do their best to conduct ethical management never allowing unseemly scandals to happen, raising doubts about this industry’s fairness and transparency.”
The association cited the authoritative interpretation, made on Aug. 4, 2014, which stipulated that “manufacturers are responsible for providing a kickback to the third party, including CSO. And even though COSs contend they gave bribes on their own, manufacturers should take full or some responsibility.”
The Ministry of Health and Welfare also included CSO in the financial profit-expense report, which will become obligatory next year. It accepted opinions from the pharmaceutical industry and decided to include spending through the third party, such as CSOs and CROs (Contract Research Organizations) when pharmaceutical companies make the report.