By Bae Ji-sook
Staff Reporter
Doctors and pharmacists who receive what are widely known as "rebates" from drug makers in return for prescribing or recommending their products may spend up to a year behind bars or have their license suspended for up to a year.
If doctors choose to get a discount on drugs rather than receive the rebates, the government will provide them with incentives in terms of pricing, the Ministry for Health, Welfare and Family Affairs said Tuesday.
The plan is part of a guideline to make dealings between drug makers and doctors more transparent. The plan will go into effect in as early as October.
According to the guidelines, those who receive kickbacks from drug makers will be punished with a prison term. If caught more than twice, the drugs will be scrapped from the national health insurance coverage list. Removal from the list means a drastic drop in sales in most cases.
Those who report cases of doctors or pharmacists taking kickbacks will receive up to 300 million won in reward.
"By punishing those on both the giving and receiving ends of the rebates, we are expecting to root out the practice," ministry official Park Ha-jeong said during a briefing. A related bill has already been submitted to the National Assembly with passage expected soon.
Moreover, the ministry has come up with an overall pricing format. Hospitals with doctors who "give up" their taking of kickbacks and opt for the legal discount for prescription drugs will receive about 70 percent of the difference from the state fund.
Park said the system will enable patients to benefit from cheaper drugs and hospitals to clean up their acts, while still keeping their profits steadily.
Such an aggressive plan comes as rebates have long been accused of being the No.1 reason behind high drug prices. According to a report by the Korea Health Industry Development Institute, 120 domestic drug companies dished out a total of 4.2 trillion won ($3.3 billion) over a one-year period, which accounts for 40 percent of their annual revenue, on marketing, rebates and other expenses for boosting sales.
The ministry expects the comprehensive plan to bring down drug prices by 3 to 5 percent a year, helping patients save up to 154 billion won a year.
However, pharmaceutical companies are opposed to the plan, with some referring to it as the "industry killer."
"It is true that the illegal practice of rebate-giving have been a headache for a long time. However, inducing hospitals and doctors to give out discounts will only fuel severe price competition among drug makers. Moreover, the illegal rebate practice will remain among doctors who still want rebates and those who do not want to mark down the prices of their drugs," the Korea Pharmaceutical Manufacturers Association said in a press release.
The group's president Auh June-sun recently offered to resign in protest against the plan.
bjs@koreatimes.co.kr
