] A Case of Unfairly Luring Customers by 17 Pharmaceutical Companies
KFTC Decision No. 2009-117
Bong-Eui Lee (Professor, Seoul National University)
This is the case about unfair behaviors and practices done by domestic and multinational
pharmaceutical companies in order to promote sales and increase prescription of their
products. To that end, they provided various economic kickbacks to medical doctors, clinics
and hospitals concerned, such as those for seminars and conferences, landing costs and
support under the name of post market surveillance (PMS).
The Korea Fair Trade Commission (KFTC) regarded the rebate practices by pharmaceutical
companies as a practice of unfairly luring or inducing customers, especially for potential
unfair advantage, and it decided the practices had violated the Monopoly Regulation and Fair
Trade Act (MRFTA). As a result, it took a corrective order and imposed surcharges on the
companies in the case. In response to this, some companies raised an objection and filed a
annulment lawsuit, but the KFTC has won in the most cases.
Following two different times of investigations and corrective order by the KFTC, the in-
depth discussion over bubble in reimbursement price of insured drugs was unfolded. The
KFTC proposed an introduction to drug pricing policy, aiming to lower the price through
competition, to the Ministry of Health and Welfare (MOHW) which is in charge of this
matter. The MOHW accepted the KFTC’s proposal; it thus, revised the old actual transaction
pricing system to the market-oriented one. On the top of that, a newly introduced dual
punishment has significant implications because not only the pharmaceutical companies,
which are the rebate providers, but also the health care professionals, including doctors and
pharmacists, who are the rebate recipients, can be punished all together. This dual
punishment is expected to play a monumental role in bringing fair and transparent
competition in the healthcare market, which had been left as blind spots from legal
enforcement.
] A Case of Unfairly Luring Customers by 17 Pharmaceutical Companies
KFTC Decision No. 2009-117
Bong-Eui Lee (Professor, Seoul National University)
This is the case about unfair behaviors and practices done by domestic and multinational
pharmaceutical companies in order to promote sales and increase prescription of their
products. To that end, they provided various economic kickbacks to medical doctors, clinics
and hospitals concerned, such as those for seminars and conferences, landing costs and
support under the name of post market surveillance (PMS).
The Korea Fair Trade Commission (KFTC) regarded the rebate practices by pharmaceutical
companies as a practice of unfairly luring or inducing customers, especially for potential
unfair advantage, and it decided the practices had violated the Monopoly Regulation and Fair
Trade Act (MRFTA). As a result, it took a corrective order and imposed surcharges on the
companies in the case. In response to this, some companies raised an objection and filed a
annulment lawsuit, but the KFTC has won in the most cases.
Following two different times of investigations and corrective order by the KFTC, the in-
depth discussion over bubble in reimbursement price of insured drugs was unfolded. The
KFTC proposed an introduction to drug pricing policy, aiming to lower the price through
competition, to the Ministry of Health and Welfare (MOHW) which is in charge of this
matter. The MOHW accepted the KFTC’s proposal; it thus, revised the old actual transaction
pricing system to the market-oriented one. On the top of that, a newly introduced dual
punishment has significant implications because not only the pharmaceutical companies,
which are the rebate providers, but also the health care professionals, including doctors and
pharmacists, who are the rebate recipients, can be punished all together. This dual
punishment is expected to play a monumental role in bringing fair and transparent
competition in the healthcare market, which had been left as blind spots from legal
enforcement.
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