Novartis will soon discover just how much fallout it faces from last year’s kickbacks case in South Korea, local media says. Officials there levied one set of punishments and are weighing further options that are likely to be "tougher."
On top of punishments imposed by the Ministry of Food and Drug Safety—a small fine and suspensions for some medicines sold in the country—authorities are considering lowering the prices of Novartis drugs involved in the alleged kickbacks scheme, a Ministry of Health and Wellness source told South Korea’s The Investor.
Novartis itself disputes the details of The Investor's report. In a statement to FiercePharma, the Swiss drugmaker said it's not aware any decision is "imminent."
"The court case will continue for some months yet and a decision is expected from the MOHW in due course," a spokesperson said.
Early last year, prosecutors raided a Novartis office in Seoul, rounding up documents and account books. Later in the year, the government handed out indictments to a half-dozen Novartis execs, plus more than a dozen doctors and five heads of medical journals.
Prosecutors contend that Novartis staff offered payments to doctors who attended meetings set up by journals in order to boost sales.
South Korea’s Health Ministry is likely to hand out fines and a sales ban of up to half a year, according to The Investor’s source. The Ministry of Food and Drug Safety last week levied a $177,000 fine and a three-month ban on 12 drugs, the report states.
Novartis says three, not 12, of its brands are suspended for three months. Twelve "stock keeping units" received the suspension, meaning different formulations and dosages of the drugs had to be shelved. A MFDS spokesperson told Reuters the ban, which will run from March 17 to June 16, includes the Alzheimer's drug Exelon. The fine was over 30 products, according to the spokesperson.
In acknowledging the recent MFDS decision, Novartis stressed that it doesn't "tolerate misconduct" and is "continuing to invest significant efforts to fully embed a culture of compliance throughout our Korean organization."
"We’ve previously acknowledged and expressed our regret that certain associates in Korea took actions in violation of our policies and inconsistent with our culture and the expectations society has for us and our industry," according to a spokesperson.
The unnamed official quoted by The Investor expects “tougher” penalties from the Health Ministry. Korea is Novartis’ tenth-largest market, according to the publication.
Previously, Novartis said “certain associates in Korea conducted small medical meetings and other scientific-related activities through trade journals.”
“Some associates supported travel to overseas congresses for some healthcare practitioners" in a way that didn't comply with domestic self-regulation standards, according to the company's previous statement.
Separately, Novartis ran into trouble in Japan back in 2015 with a high-profile data scandal. The Japanese government eventually suspended the company’s operations there for 15 days, and executives traveled to the country to apologize for its mistakes.
As industry watchers know, the Swiss drugmaker is far from alone in the Big Pharma world in working through kickbacks charges. GlaxoSmithKline notoriously paid nearly $489 million in 2014 to resolve its bribery case in China, and Teva Pharmaceutical recently reached a $520 million settlement with U.S. officials to resolve Foreign Corrupt Practices Act violations in a few countries.
Editor's note: This story was updated with a statement from Novartis.