organizations continue to work hard for strict execution of dual punishment on rebates.
Although there may be some difficulties in the initial stage of its execution, in the mid and
long term, with enhanced transparency in the market of medicines and medical device, it will
lead to more room for R&D investment of pharmaceutical companies as well as the increased
public credibility in the healthcare sector.
3. The Revision of the Fair Competition Code
After the KFTC’s recent corrective order against the pharmaceutical companies, the KPMA
carried out a revision of fair competition code in order to improve effectiveness and
regulatory power. Complaints have been raised questions that the regulatory power and
effectiveness of the code were compromised because the code could not properly reflect the
conditions of healthcare market and decisions by the KFTC. The KFTC came to review the revision (draft) of the fair competition code by the request from the KPMA on October 28
2009. In order to make an effective competition code, the KFTC came up with the final
revision (draft) of the code through a close consultation with the MOHW. The code has been revised for three times, taking into effect from December 20, 2010 after the revision of sub-
criteria (detailed management criteria). Compared with the current provision, the revised
version is improved in three main areas as discussed below.
First, it prescribes the compliance principles per each provision of gifts or cash toward
medical professionals and institutions tolerated in light of a normal trade practice. According
to the code, the cash and gifts, which are inevitable in the process of collecting any
information and delivering products or can be acknowledged under a normal trade practice,
are tolerated as far as they do not negatively affect the purpose of the code – the prevention of
unjust customer inducement. By specifying the principle of practice per each provision
allowed under the code, the guideline on proper practice within the scope was suggested.
Second, the legal provision of gifts or cash shall be controlled by the KPMA or be reported
before or after, thereby strengthening the control and monitoring of the KPMA. Third, more
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than half of committee of the KPMA shall include non-member of the KPMA, thereby
ensuring objectivity and transparency of control and monitoring.
The code revision of the KPMA was made eight years after its first revision in 2001. The
strong commitment to improve fairness and soundness in the pharmaceutical market is
properly reflected, thereby resulting in enhanced effectiveness of the code. As the KPMA
came to have more self control with more participation of outside members to the review
committee, overall responsibility, objectivity and transparency of code management have
been reinforced. The KFTC regarded the revision of this code as the best practice, planning to
use it as the criteria to judge unfairness of rebate.