South Korea prosecutors indict Novartis execs on drug sale rebate charges


South Korean prosecutors indicted 6 executives from the local unit of Swiss-based Novartis ($NVS) for paying rebates to doctors in return for prescribing the company's drugs to patients in a sweep that also netted 15 doctors and 6 medical publishers.

The Korea Herald reports the executives included suspended Novartis Korea chief Moon Hak-sun in an allegedly illegal sales effort that saw the doctors at general hospitals receive KRW2.59 billion ($2.3 million) in payments in either cash or through arrangements with the medical publications via conference appearances and fees for articles.

South Korean health regulators and prosecutors have worked in tandem for years to halt domestic and foreign firms paying rebates on drug sales since passing a drug anti-rebate law in 2013.


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The latest case with Novartis launched by the Seoul Western District Prosecutors' Office was acknowledged by the local unit of the company, which issued a statement saying it does not "tolerate misconduct and we are already implementing a remediation plan in Korea based on the findings from our own investigation."

The case first surfaced in February of this year with investigators examining whether the company and its executives systematically encouraged the practices, a charge Novartis rejects.

Novartis has faced some hot water in relation to sales in Asia in the past year. In March the company agreed to pay $25 million to settle a Securities and Exchange Commission investigation into bribery allegations in China that included travel and other inducements to boost prescriptions of its drugs in the country.

- here's the story from The Korea Herald

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