April 26, 2024

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[THE INVESTOR] South Korea is considering temporarily removing national insurance coverage for dozens of medications sold by Novartis in Korea and also slap monetary fines on the Swiss drug maker for allegedly paying multibillion won kickbacks to doctors, a Health Ministry official said on March 17.

“The government is poised to order a suspension of health insurance reimbursement for Novartis’ rebate-related drugs for up to one year,” an official at the ministry told The Investor. 

Taking the firm out of the reimbursement list could drive up its drug prices, eventually ousting Novartis from the market, according to industry experts.

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While 42 rebate-related products are subjected to the punitive measures, orphan drugs and medications that the ministry determines to be essential for treatment will face administrative fines, in lieu of suspension, the official said.

He added that the ministry is “assessing the amount of reimbursement claims submitted for Novartis medications last year to decide the degree of sanctions.”

The official didn’t confirm when the ministry will announce the measures, saying “it takes time to analyze a large volume of data.”

Losing health insurance reimbursement will be a blow to Novartis. Revenue from its diabetes treatment Galvus, one of the drugs involved in the kickback case, stands at 10 billion won (US$9.28 million) per quarter here.

“If a biologic drug loses its insurance coverage, competitors get a price edge and it can be eliminated from the market soon,” an official at the Korea Pharmaceutical and Bio-Pharma Manufacturers Association said.

The move comes as six former and current Novartis employees in Korea were indicted over illegal practices to boost sales of the company’s drugs in August last year.

They were charged with indirectly offering bribes worth 2.59 billion won from 2011 to 2016 to doctors through medical trade publications.

The proposed sanctions are highly expected to be tougher than the measures announced by the Ministry of Food and Drug Safety, the country’s drug and health regulator, in February.

The drug regulator fined Novartis 200 million won on 30 drug items and banned sales of 12 variations under the pharmaceutical affairs law.

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