[The Editors' Verdict] It's Time to End Illegal Rebates in the Pharmaceutical Industry

The pharmaceutical industry is in turmoil after an employee of Daewon Pharmaceutical raised allegations of illegal rebates on an online community for office workers. According to reporting by Asia Economy, the employee's claims have been partially confirmed as true. It is alleged that sales department employees were given performance bonuses and travel expenses, which were then returned to create slush funds, and that these slush funds may have been used for illegal rebates. Daewon Pharmaceutical admitted to Asia Economy that "there were deviations by some sales team leaders," but explained that "there were no illegal rebates." Industry insiders unanimously say, "It is hard to believe that the purpose of collecting slush funds in the sales department is unrelated to illegal business practices." As Daewon Pharmaceutical's business performance improved this year, it is known that even special bonuses paid were returned to managers, and the scale of the slush funds collected by Daewon Pharmaceutical is estimated to be in the tens of billions of won. Many questions surrounding these slush funds remain unresolved.

The first issue to address is the problem of illegal rebates. Illegal rebates occur when pharmaceutical or medical device companies provide bribes in exchange for hospitals prescribing specific drugs. They are also used as compensation for selling only certain drugs or medical devices at pharmacies. The power dynamics surrounding rebates are clear: doctors or pharmacists are the "gap" (dominant party), and pharmaceutical companies selling drugs are the "eul" (subordinate party). Pharmaceutical sales employees handle not only cash, gift certificates, and gifts but also take on tasks such as managing hospital counters or running personal errands. There is an anecdote about a sales employee who was tasked with taking a hospital director's child to an academy and said, "When the director gave me his car keys, it meant I had finally won his trust, which was an honor as a sales employee." Pharmaceutical sales are sometimes glorified as the "flower of sales." Although the work is tough, it is recognized accordingly. However, all acts of giving money or running errands are illegal.

Such illegal rebates are strictly prohibited for both doctors, pharmacists, and pharmaceutical companies under relevant laws because they constitute unfair practices that disrupt the market. According to data submitted by the Ministry of Health and Welfare to Choi Jong-yoon, a member of the Democratic Party of Korea, 852 pharmaceutical products from 14 pharmaceutical companies have been administratively sanctioned for illegal rebates over the past five years. Leading domestic pharmaceutical companies have been fined hundreds of millions of won, demonstrating that illegal rebates are still rampant. While hospital directors pocket kickbacks and pharmaceutical companies increase sales through illegal rebates, the victims are patients and consumers, who have to buy more expensive drugs.

Whether Daewon Pharmaceutical's management knew about or was unaware of the illegal activities is also important. Since the creation of slush funds within the company was routine and the whereabouts of these funds are unclear, there is a possibility that illegal activities were conducted systematically. It is also necessary to consider that the slush funds may have been used for purposes other than illegal rebates. The possibility of direct or indirect involvement by management should be examined. If there were more sophisticated criminal acts beyond the illegal rebate cases that frequently surface in the pharmaceutical industry, it would be a much bigger problem.

The suspicions surrounding Daewon Pharmaceutical require active investigation not only by prosecutors and police but also by health authorities and tax authorities. If illegal activities are uncovered through thorough investigation and inquiry, strict punishment must be enforced. The greatest expectation the public has for the Yoon Seok-yeol administration is to properly judge those who break the law and deceive the people. Show that the rule of law (法治) is alive.

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