Mid-sized drug manufacturer Samil Pharm Co. has been charged with offering massive illegal kickbacks to doctors and hospitals, state prosecutors said Sunday.
The pharmaceutical company is suspected of giving what in the industry is known as "rebates" worth some 3.25 billion won ($3.1 million) to a total of 1,132 doctors and officials from 894 hospitals across the country in exchange for prescribing its products, they said.
Wrapping up an intensive eight-month probe, prosecutors said they have also indicted the firm's four employees, including a 51-year-old executive only identified by his surname Hong, for allegedly leading company's illegal business practice blamed for driving up medical costs for patients.
"It marks the first time that both the pharmaceutical company and people linked to the rebates are punished together," an investigative prosecutor at the Seoul Central District Prosecutors' Office said.
The prosecution office said it fined the 45 doctors and five hospital officials between 2 million won and 6 million won for allegedly taking cash and other kinds of graft from Samil Pharm.
Prosecutors said they have also requested health authorities suspend the licenses of 1,086 doctors and a pharmacist. The amount and frequency of the kickbacks they had allegedly received did not meet criminal thresholds, they said.
The probe followed a complaint by the county's antitrust watchdog last year against several drug makers, including Samil Pharm, suspected of engaging in kickback-related deals.
State prosecutors have since raided the drug firm's headquarters in southern Seoul and its two branch offices in Daejeon, 164 kilometers south of the capital, in May as part of their investigation.
The government last year declared war against the long-running illegal practice in a bid to ease the financial burdens of patients and to enhance overall transparency in the medical industry. (Yonhap News)