Prosecutors have indicted six executives from the South Korean unit of Novartis for paying rebates to doctors so they may prescribe the company’s drugs to patients. Twenty-eight other individuals, including fifteen doctors and six medical publishers, were also part of the prosecutorial sweep.
The six executives who were prosecuted include Novartis Korea chief Moon Hak-sun. It was alleged that he initiated illegal sales efforts in which doctors at general hospitals were paid nearly 2.59 billion won or $2.3 million in payments. The payments were made either in cash or through arrangements made with the medical publications via fees for articles and conference appearances. According to the prosecution, all of these activities were conducted between January 2011 and early 2016.
Efforts Made by South Korean Prosecutors and Health Regulators
The past few years have marked a number of joint efforts by South Korean health regulators and prosecutors aimed at preventing domestic and foreign firms alike from paying rebates for drug sales. For the record, these efforts were initiated after a drug anti-rebate law was passed in 2013.
Investigations into this particular case were launched by the Seoul Western District Prosecutors’ Office and were acknowledged by a local Novartis unit. They released a statement saying Novartis does not “tolerate misconduct, and we are already implementing a remediation plan in Korea based on the findings from our own investigation”.
Investigators claimed that the company funded academic events outwardly organized by the publications. Up to 1 million won were handed to involved doctors as attendance fees and for articles that were contributed to the concerned publications by the said doctors. Novartis Korea has, however, rejected the allegations that such illegal activities were being conducted with the consent of its executives. As per the company, internal investigations have uncovered several unfair trade practices, but the executives never knew about any such activities.
Apart from Moon, the first Korean CEO of the unit who has been suspended from all his duties since April, Novartis has not identified any of the other five executives charged. The company further did not provide any contact information for Moon or his attorney. Also, none of the other twenty-eight individuals were arrested.
