With pharmaceutical companies obliged to submit their economic profit reports to regulators from next January, the Ministry of Health and Welfare emphasizes the presentation of such statements will not necessarily exempt corruptive acts from punishment.
That is, if the reported contents violate the law, they constitute kickbacks, and so the act of reporting does not automatically lead to the exemption from disciplines.
“The pharmaceutical industry seems to be misunderstanding this matter. Expense reports and judgment on rebates, or kickbacks, are two different concepts,” said Park Jae-woo, a section chief at the ministry’s Pharmaceutical Policy Division. “If you think specific expenses omitted from reports are automatically kickbacks and those included in them are not, you are dead wrong.”
If the content of a drug expense report is regarded as illegal, the company will be subject to investigation on rebates. Submitting those reports does not guarantee an exemption from the probe. If the expenses were paid within a legal boundary, the reports would play the role of a safety net, Park said.
In the case of payment for lectures and consultation, government and business officials should carefully judge whether they are related to sales promotion, he added.
“When we judge whether lecture and consultation fees are for sales promotion or not, we don’t primarily regard them as aimed at promoting sales,” Park said. “We have different criteria from the court from various aspects, such as fairness in selection criteria, procedural appropriateness, and cost reasonableness. And therefore, we will make decisions case by case.”
“Lectures and consultation may be justifiable, not for sales promotion basically, but if they make these payments too often and for long, these will cause problems,” Park went on to say. “If the businesses abide by the rules, however, we will not regard lecture and consult fees as kickbacks.”
Unlike lecture and consulting fees, the government will look into the appropriateness of providing product samples included in expense reports, he noted.
“Let’s say a pharmaceutical firm gave out an erectile dysfunction drug to a pediatrics physician as a sample. We should check whether this kind of offering is appropriate,” he said. “The government will judge such offering within a minimum quantity as legal but regard it as a kickback if the situation is hard to understand.