[Top 10 Healthcare News in 2024 ⑥] Pharma companies’ provision of economic benefit was put to broad daylight

The year 2024 has been a turbulent one for the healthcare industry, marked by ongoing conflicts between the medical community and the government over a policy to increase medical school admission quotas by 2,000. Tensions escalated further with the Dec. 3 martial law debacle. Many sectors within the healthcare industry faced significant challenges, with some reporting their worst year on record. Here, we highlight the top 10 healthcare news stories that defined this year. -- Ed.

In December 2024, the economic benefits provided by the Korean pharmaceutical and medical device industry were made public for the first time.

In July 2021, the expenditure report for fiscal year 2023 was made available to the public in accordance with the revised Pharmaceutical Affairs Act and Medical Device Act.

According to data submitted by the Health Insurance Review and Assessment Service (HIRA), the pharmaceutical and medical device industry provided 1.43 million cases of economic benefits in 2023, worth more than 800 billion won ($54.5 million). In detail, the pharmaceutical sector provided 1.36 million cases and 722.8 billion won, and the medical device sector provided 70,000 cases and 85.8 billion won.

The disclosures included details of legitimate economic benefits provided by drug and medical device suppliers to medical practitioners and others. However, personal information about healthcare providers and business strategies was de-identified.

The industry has established a system for verifying information and collecting supporting evidence before disclosing expenditure reports.

On Nov. 22, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) held the “Ethical Management Workshop for the Second Half of 2024” to discuss countermeasures with more than 300 compliance officers from pharmaceutical companies. The workshop covered disclosure details of the HIRA's expenditure report, how to respond to tax inspections, and compliance issues related to the commission and consignment of drug promotion sales.

While the measures are expected to increase the transparency of drug and medical device transactions, there are concerns.

The industry has pointed out that the public could mistake legitimate economic benefits for illegal kickbacks. In response, the Ministry of Health and Welfare and HIRA have decided to provide separate guidance messages when disclosing expenditure reports to prevent legitimate economic benefits from being mistaken for rebates.

The industry is monitoring the impact of the disclosure of expenditure reports, which will begin in earnest in 2025. The challenge is to compensate for problems that may arise during implementation while utilizing the system's intention to enhance transaction transparency.