GSK, GC, SK, Yuhan acquitted in NIP vaccine bid-rigging case

Six pharmaceutical companies previously fined for alleged bid-rigging in the National Immunization Program (NIP) for human papillomavirus (HPV) vaccines have been acquitted by the Seoul High Court in a significant reversal of the initial verdict.

The Seoul High Court delivered the acquittal on Tuesday. The companies—GC Biopharma, GSK, Boryung Biopharma, Yuhan Corp., SK Discovery, and Kwangdong Pharmaceutical—along with seven executives, were cleared of charges related to violating the Monopoly Regulation and Fair Trade Act.

The court pointed out that it is difficult to recognize the establishment of a crime of bid rigging.

The court stated, "It appears that this bid, from the beginning, was not based on the premise of forming a reasonable price through fair competition, and even if the defendants participated in the bid with proxy companies, it is hard to see that it caused an unfair impact on the formation of a reasonable price."

Further, the court pointed out that officials from the Korea Disease Control and Prevention Agency (KDCA) did not recognize any substantial competition.

The court also noted that officials from the Korea Disease Control and Prevention Agency (KDCA) lacked awareness of actual competition.

The court pointed out, "KDCA acknowledged the fact that it wanted the HPV vaccine bid to be concluded quickly and demanded that bidders finalize the process as soon as possible to meet the government's NIP procurement schedule."

The court also addressed the structural constraints of the bidding process.

"The bid required a supply assurance document for the final decision, which made it practically impossible for a third-party company to obtain such a document from vaccine manufacturers, other than the joint sellers," the court said.

Moreover, the court noted that the final bid price was determined by averaging four randomly selected preliminary prices, rather than by deliberate inflation through proxy companies, as suggested in the original ruling.

The acquitted companies expressed varied reactions.

GC Biopharma remained cautious about making a statement as there is still the possibility of the case going to the Supreme Court.

Boryung Biopharma stated, "Having been vindicated in the second trial after unjust accusations in the initial trial, we will now focus on our business activities."

GSK simply stated, "We welcome the judgment."

The second ruling comes after the companies were initially fined in a Sept. 2020 ruling by the Seoul Central District Court for colluding to inflate bids for HPV vaccines ordered between 2016 and 2018.

GC and GSK were fined 70 million won ($50,596) each, Boryung Biopharma and Yuhan Corp. 50 million won each, and SK Discovery and Kwangdong Pharmaceutical 30 million won each. Some executives also faced personal fines between 3 million and 5 million won.

The initial court ruling condemned the collusion as a public interest crime that undermined the fairness of the vaccine bidding process.

However, the lower court also acknowledged that the government set bidding guidelines and that the successful bid prices were within controlled ranges, minimizing the total unfair profits.

As the case potentially moves to the Supreme Court, the pharmaceutical companies and the KDCA await the final verdict that will definitively conclude this high-profile case.

Meanwhile, industry officials have stressed that the recent Supreme Court ruling on Korea Vaccine's bid collusion case may have influenced this trial.

Korea Vaccine was indicted for fraudulently obtaining state funds by participating in the BCG vaccine bids with wholesalers from 2016 to 2018. At that time, Korea Vaccine was the only company that imported the BCG vaccine.

The court, both in the first and second trials, ruled that Korea Vaccine did not have the intention to form an unfair price or obstruct the bidding.

In March, the Supreme Court upheld the same judgment as the first and second trials, and the industry had been predicting that a similar judgment would be made in the case of the six pharmaceutical companies accused of HPV vaccine collusion.

"The Supreme Court's ruling on Korea Vaccine's bid collusion and the appellate court's decision on the six pharmaceutical companies' HPV vaccine collusion is virtually identical," an industry official told Korea Biomedical Review, asking to remain anonymous due to the sensitivity of the issue. "Although it is possible that the prosecution will appeal to the Supreme Court regarding the vaccine collusion of the six pharmaceutical companies, it seems unlikely that the appellate court's decision will be overturned even if additional litigation proceeds."