South Korean Health Ministry Promises $25 Million Reward to Stop Illegal Medical Rebates

Ministry of Health and Welfare Launches Illegal Rebate Reporting Period
Up to 30 Billion Won(USD 25 million) Reward
Whistleblowers Receive ‘Liability Exemption’ and Special Protection

Recently, amidst medical students striking over the expansion of medical schools, there’s been a spotlight on cases of doctors’ abuse of power. This situation seems to present an opportunity for retaliation for sales representatives of pharmaceutical and medical device companies who have endured such mistreatment.

The Ministry of Health and Welfare declared on the 21st that it is launching a focused reporting period on illicit rebates involving pharmaceuticals and medical devices.

A rebate, typically a marketing incentive, entails giving back a portion of the amount paid by a regular customer as a gesture of appreciation. However, it involves colluding with hospitals to purchase specific drugs in the medical context.

Pharmaceutical companies can provide benefits, and doctors can demand compensation for prescribing drugs from specific companies.

Illegal rebates have long been a chronic problem in the medical field. Despite the government’s efforts to eradicate them by introducing a ‘double penalty for rebates,’ they were openly practiced.

Earlier this month, the government took action when an exposé was posted about some doctors forcing pharmaceutical company sales representatives to attend the ‘National Doctors’ Strike’ in protest against the policy of increasing medical school admissions.

The target of this report is illegal rebates in the field of medicines and medical devices.

Reports can be filed through the government representative complaint phone line (110) or the corruption/public interest report phone line (1398) without requiring a national number from any part of the country. Moreover, submissions are accepted in person, by post, or online.

Once a report is received, it is referred to investigative agencies such as the police department and the Fair Trade Commission for investigation after verifying the facts. This process is handled in cooperation with the relevant agencies.

Since numerous reports are anticipated to be internal whistleblowing, proactive measures are being implemented to safeguard whistleblowers.

Thorough confidentiality and identity protection, advanced disadvantage prevention, and personal protection are provided to prevent whistleblowers from suffering disadvantages. Even if the whistleblower participated in the illegal rebate, the punishment would be reduced by actively applying the liability exemption.

If the report contributes to the public interest by recovering unjust profits, a reward of up to 30 billion won(approximately USD 25 million) or up to 5 billion won(approximately USD 3.73 million) will be paid.

In 2010, the government implemented a double penalty for rebates. Both the company that gave the rebate and the doctors and pharmacists who received it from the pharmaceutical company were classified as targets for punishment.

If the amount of money received for the first violation is more than 25 million won(approximately USD 18,636.98), a 12-month license suspension is imposed, and if the amount is less than 3 million won(approximately USD 2234.82), a warning is issued. If a doctor practices medicine during the license suspension period due to rebate charges or receives a license suspension three or more times, the license can be revoked.

However, the proposal of liability exemption is attracting attention in a situation where improvements are needed as only pharmaceutical companies receive strict punishment and doctors go unpunished, failing to balance the fairness of the sentence.

Meanwhile, this report includes cases of abuse of power, such as sales representatives acting as chauffeurs for doctors’ local business trips, attending family events, and running errands as subjects of the report.

Earlier this month, a post titled “I’ll tell you about the daily life of a pharmaceutical company salesman” caused a stir in an online community.

Author A, who introduced himself as a pharmaceutical company sales representative, revealed a conversation he claimed to have had with a doctor between 2018 and 2019.

He was asked to do various chores by a doctor, such as “Replace my laptop’s HDD with an SSD,” “Install Hangul (document program) for me,” and “Make two frames in A4 size,” and he did not refuse any of them.

But A added, “This director is kind,” and said, “Today’s schedule is to pick up the director’s child from kindergarten at 8 am, go to the clinic to unclog the toilet at 10:30 am, deliver sushi for the director’s lunch at 12:30 pm (nineteen thousand won, approximately USD 14.17), pick up the son from kindergarten and take him home at 3 pm, and pay for the hospital family’s dinner at 7 pm.”