Healthy Skepticism Library item: 11893

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Publication type: news

South Korean drug firms fined $22 mn over kickbacks
The Economic Times (Indiatimes) 2007 Nov 1
http://articles.economictimes.indiatimes.com/2007-11-01/news/27685134_1_oil-companies-kickbacks-ice-cream-makers

Full text:

SEOUL: South Korea’s anti-trust watchdog said Thursday it has fined 10 local pharmaceutical companies a total of 19.97 billion won (22.2 million dollars) for paying kickbacks to doctors and hospitals.

The Fair Trade Commission (FTC) said the companies, including Dong-A Pharmaceutical, Yuhan Corp, and Hanmi Pharmaceutical, were found to have offered various inducements in return for the use of their drugs.

It said that in some cases cash was given to doctors and hospital staff in the form of “post-market surveillance” while the provision of free dinners and special trips was also common.

Some companies effectively set prices for wholesalers so that prices of a certain drug would not fall below a certain level.

The illegal practices were estimated to have caused damage werth about 2.18 trillion won to consumers, the watchdog said, adding it plans to refer the top five companies to prosecutors.

The latest findings mirror those of a 2005 report by the Korea Independent Commission Against Corruption, Yonhap news agency said. That report said kickbacks could reach 10 to 15 percent of the cost of all medicine used by a hospital in a year.

The FTC began to investigate pharmaceutical companies in October 2006, with 11 local, six foreign and six wholesalers being examined.

The commission has previously levied multi-million dollar fines on US software giant Microsoft, as well as on local non-life insurance companies, oil companies and even ice cream makers deemed guilty of price-fixing.