29 August, 2016
The Seoul Western District Prosecutors' Office (the "PO") has indicted the former chief executive of the Korean office of a global pharmaceutical company and five of its former and current managers for offering illegal rebates to doctors. Fifteen doctors and six publishers of medical journals (the "Publishers") have also been indicted over suspected involvement in the said transactions.
Since 2011, an alleged KRW 2.6 billion (USD 2.3 billion) has been paid to doctors, in exchange for prescribing the company's drugs. The PO alleges that such payments had been made to doctors participating in seminars hosted by the indicted Publishers, under the guise of attendance fees in return for their participation. Under South Korean laws, drug companies cannot provide doctors with rebates or discounts for drugs which they prescribe.
This indictment indicates a fine line between accepted practices and illegal conduct of marketing activities by healthcare and pharmaceutical companies. Fees paid to doctors for participation in academic events will likely constitute an 'improper benefit' if it is clear that such payments were made to promote doctors' prescriptions of pharmaceutical products.
For further information, please contact:
Andy Leck, Principal, Baker & McKenzie.Wong & Leow
andy.leck@bakermckenzie.com
