April 19, 2024

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[THE INVESTOR] South Korea’s Health Ministry said on Feb. 27 it plans to announce punitive measures against the Korean unit of Novartis in March over allegations that the company’s executives illegally paid doctors kickbacks in return for prescribing its drugs.

The ministry is expected to slap fines or sales ban up to six months on drugs sold by Novartis Korea involved in the illegal rebates case. 

“The ministry will come up with a decision on administrative measures against Novartis in mid-March. We are currently reviewing whether we will lower the prices of the involved medicines,” an official at the ministry said.

Novartis is one of the top-selling foreign pharmaceutical companies in South Korea, which is the tenth-largest market for the company in terms of sales.

The move follows the Ministry of Food and Drug Safety’s announcement on Feb. 24 of the imposition of a 200 million won (US$177,000) fine on Novartis Korea and the suspension of 12 medicines for three months over the misconduct.
The amount of fine is equivalent to three months sale ban on 30 drugs, including Novartis’ diabetes treatment Galvus.

“The Health Ministry is likely to slap tougher penalties than the MFDS,” the official said. 

Prosecutors say Novartis Korea offered illegal rebates worth up to 2.6 billion won to doctors between 2011 and 2016.
The unit's executives including former CEO Moon Hak-sun is charged with circumventing bribery laws by funding academic events organized by publishers of medical journals and offering kickbacks disgused as attendance fees. In total, as many as 34 people were implicated, among them doctors and the heads of five medical journals.

Meanwhile, Novartis Korea was fined 2.3 billion won in 2011 for offering 7.1 billion won of illegal rebates for three years from 2006.

By Park Han-na (hnpark@heraldcorp.com)