Dongsung Bio Pharm and Kukje Pharma were caught providing improper money and goods to hospitals and clinics in exchange for using their own medicines. The Korea Fair Trade Commission imposed corrective orders and other sanctions on the two drugmakers.
The Korea Fair Trade Commission (FTC) said on Feb. 18 that it found Dongsung Bio Pharm provided rebates to hospitals and clinics in return for prescribing its medicines and issued a corrective order (an order to cease the practice going forward).
According to the Korea Fair Trade Commission (FTC), from Oct. 2010 to Apr. 2019, Dongsung Bio Pharm provided medical personnel at four hospitals and clinics in the Seoul metropolitan area with economic benefits worth about 250 million won, including cash. The purpose was to induce them to maintain or expand the adoption and prescription of its medicines.
Dongsung Bio Pharm was found to have also changed its sales structure by fully outsourcing sales to sales agencies. The purpose was to avoid legal responsibility or risk arising from rebates. In the process, circumstances were also confirmed in which it signed contracts with individuals who had retired from an affiliate and then established sales agencies.
The Korea Fair Trade Commission (FTC) viewed these actions as constituting an "unfair customer inducement," which unjustly lures a competitor's customers into a transaction with oneself. It also determined that the Monopoly Regulation and Fair Trade Act was violated. However, considering that Dongsung Bio Pharm is currently undergoing rehabilitation proceedings, it exempted the company from a penalty surcharge and imposed only a corrective order.
The Korea Fair Trade Commission (FTC) also imposed a corrective order and a 3 million won penalty surcharge on Kukje Pharma. From Nov. 2015 to Dec. 2019, to promote sales of its products, Kukje Pharma provided prizes such as department store gift certificates and home appliances at a year-end party of a hospital in Gwangju. It was also caught renting a movie theater for a group viewing by hospital staff and covering the expense. The total value of the improper benefits provided was 13 million won.
The Korea Fair Trade Commission (FTC) said, "We will strengthen monitoring of unfair transaction practices in the pharmaceutical market by working closely with related agencies such as the Ministry of Health and Welfare and the Ministery of Food and Drug Safety," adding, "If violations of the law are confirmed, we plan to take stern action."