Ministry of Health and Welfare Imposes Fine and Suspension on Dong-A ST Five Days After Health Insurance Review Committee's Hold: "Unreasonable Decision, Legal Action" (Comprehensive)

[Asia Economy reporters Lee Gwan-ju and Lee Chun-hee] It has been confirmed that the Ministry of Health and Welfare notified Dong-A ST of a fine worth over 10 billion KRW and a suspension of insurance benefits following the price reduction measure related to Dong-A ST's violation of the Pharmaceutical Affairs Act through rebates. Dong-A ST plans to take immediate legal action.

On the 4th, Dong-A ST announced through a public disclosure that it received a notification from the Ministry of Health and Welfare of a fine amounting to 10,827,630,000 KRW and a one-month suspension of insurance benefit application for 72 prescription drug items. The deadline for paying the fine is April 30 of next year, and the suspension period is for the entire month of August.

Earlier, on the 29th of last month, the 10th Health Insurance Policy Deliberation Committee (Geonjeongsim) held a meeting and implemented a drug price reduction measure for Dong-A ST's drugs violating the Pharmaceutical Affairs Act through rebates. However, at that time, the committee conveyed to the Ministry of Health and Welfare to "examine more closely the items subject to suspension and fines before implementation," so the suspension and fine measures were not carried out then.

However, just five days after the committee meeting, when the fine and suspension notifications were issued, Dong-A ST appeared to be taken aback. A Dong-A ST official stated, "We consider this administrative measure unreasonable and plan to file for a provisional injunction to suspend execution and proceed with an administrative lawsuit."

Regarding this, a Ministry of Health and Welfare official said, "Following the committee's request, we rechecked whether there would be any issues with the supply and distribution of the same ingredient by other pharmaceutical companies among the items subject to suspension. Since one item was difficult to supply by other companies, we converted the suspension into a fine and took administrative action," adding, "The suspension and fine measures for the drugs are not agenda items decided by the committee."

The controversy over the suspension and fine items arises because the timing of the rebate detection and the current punishment regulations differ. Dong-A ST's current measures are due to providing rebates amounting to approximately 5.47 billion KRW to promote sales of 162 items from August 2009 to March 2017.

The punishment system implemented from 2014 to 2018 is known as the 'Rebate Two-Out System.' If the detected rebate amount exceeds 5 million KRW, even a first violation results in a one-month suspension of insurance benefits. If the amount exceeds 100 million KRW, the suspension can last up to 12 months, and upon a second detection, permanent exclusion from insurance benefits can be imposed.

However, criticism arose that these measures did not consider practical realities during the system's implementation. Consequently, since 2018, rebate sanctions have been replaced by a mixed system of drug price reductions, benefit suspensions, and fines. Even if the rebate amount exceeds 100 million KRW, a 20% price reduction is applied for the first detection, 40% for the second, and only upon the third detection is a suspension of benefits imposed. Cases of three consecutive rebate detections are extremely rare, and even then, fines can substitute for suspension, leading to an assessment that benefit suspensions have effectively become obsolete.

This content was produced with the assistance of AI translation services.