Novartis faces potential South Korea sales ban after executive dodgy dealings

Billy Bambrough
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In South Korea offering illegal rebates to doctors in exchange for medical prescriptions can lead to a six month product ban (Source: Getty)

One of the world's largest drug producers, Novartis, is facing a sales ban in South Korea due to an ongoing scandal over kickbacks – known in the industry as rebates – that has engulfed its senior executives.

Six former and current Novartis executives – including former South Korean chief executive Moon Hak-sun – have been indicted on charges of offering rebates to doctors in return for prescribing its drugs.

According to the investigators the executives paid £1.8m to doctors in return for them prescribing Novartis drugs to patients.

Novartis has now acknowledged media reports of the indictment. The company said some of its Korean staff had held meetings with doctors that violated its policies and were "inconsistent with our culture and the expectations society has for us".

A statement issued by the company said:

We have acknowledged and regret that certain associates in Korea conducted small medical meetings and other scientific related activities through trade journals.

We have also acknowledged that some associates supported travel to overseas congresses for some healthcare practitioners in a way that did not fully comply with KRPIA self-regulation standards.

However, we reject the implication that the alleged conduct was sanctioned by the most senior management of Novartis Korea. Novartis does not tolerate misconduct and we are already implementing a remediation plan in Korea based on the findings from our own investigation. The trust of patients, and society as a whole, is central to our long-term success.

A total of 34 people were implicated in the case, including 15 doctors and the heads of five medical journals – most of whom work at general hospitals.

It's alleged that Novartis Korea provided £12.7m to five medical journals between 2011 and 2015. On behalf of Novartis, the journals then paid doctors for writing articles or taking part in seminars.

An anti-rebate law passed in 2013 has lead to South Korean regulators battling alongside prosecutors against domestic and foreign firms paying rebates on drug sales.

Novartis – which has a market-cap of around $280bn (£215bn) – had previously faced an investigation against two former CEOs who managed the drug maker's Korean unit from 2011 to 2015, but the charges were dropped after the two refused to return to Korea.

The company has faced a string of scandals and investigations around the world in recent years.

It agreed in March to pay $25m to the US government to settle civil charges that it bribed healthcare professionals in China and last year paid $390m to settle charges in the US after it paid specialty pharmacies illegal kickbacks.

The news was first reported in the Korea Herald.

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