Swiss pharmaceutical giant Novartis is slated to face additional punitive measures from South Korea’s Health Ministry later this month on charges of providing illegal kickbacks to local doctors in exchange for prescribing its drugs.

The Korean Ministry of Health and Welfare said Friday that it is in the process of reviewing its own administrative actions against Novartis Korea, which could take the form of a fine or a lifting of insurance benefits on drugs sold by the company here.


The move follows the Korean Ministry of Food and Drug Safety’s decision last week to slap Novartis Korea with a fine of 200 million won ($173,336) and a three-month sales ban on 12 drugs, including variations of the company’s flagship dementia drug Exelon.

The 200 million-won fine is equivalent to a three-month ban of 30 drugs including Novartis’ top-selling diabetes treatment, Galvus, according to the ministry.

An official from the Health Ministry’s Bureau of Health Insurance Policy told The Korea Herald that it is “carefully deciding” between a fine and an insurance benefit termination, as the latter could block local patients from accessing drugs that may be critical to their health.

Korea’s punitive measures against Novartis Korea come a year after Seoul prosecutors began a probe into a massive bribery scandal involving the company’s executives and employees in February 2016.

Following the investigation, South Korean prosecutors indicted without detention six high-level officials at Novartis Korea last August, including former Chief Executive Moon Hak-sun, for offering bribes worth 2.6 billion won from 2011 to 2016 to doctors to boost the firm’s sales.

Six publishers of medical journals and 15 doctors, most of whom work at general hospitals, were also indicted for taking part in Novartis Korea’s unlawful actions.

The prosecution said the company funded academic events outwardly organized by the publications, and handed up to 1 million won to the involved doctors as attendance payment and reimbursement for articles the doctors contributed to the publications.

The case, which is still pending in the Seoul Western District Court, had ignited fresh concerns last year over the continued expansion of illegal kickbacks offered by pharmaceutical companies -- referred to as “rebates” here -- to doctors.

The Novartis case had drawn particular alarm as it suggested that the industry malpractice, which had been carried out mostly by domestic drugmakers competing in the generic drug segment until now, had spread to non-Korean players.

Meanwhile, Novartis Korea has been operating under temporary CEO Klaus Ribbe since April 2016 when its former chief Moon Hak-sun was removed from his post.

By Sohn Ji-young (jys@heraldcorp.com)