[THE INVESTOR] Swiss pharmaceutical giant Novartis is facing mounting criticism in South Korea for failing to take full responsibility for bribing local doctors to boost its sales here over the past five years.

Last week, the Seoul Western District Prosecutors’ Office indicted without detention six high-level officials at Novartis Korea, including former Chief Executive Moon Hak-sun, for providing 2.59 billion won ($2.34 million) in kickbacks to doctors in exchange for prescribing its products from 2011 to 2016.



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 fees and reimbursement for articles the doctors contributed to the publications.

While admitting some of its employees were involved in illegal practices, Novartis Korea has denied the prosecution’s core charges that its executives were involved in the employees’ wrongdoing -- a position that has drawn high scrutiny from the media and industry officials.

“We have acknowledged and regret that certain associates in Korea conducted small medical meetings and other scientific related activities through trade journals, in violation of our policies and inconsistent with our culture,” Novartis Korea said in a statement.

However, the firm “reject(ed) the implication that the alleged conduct was sanctioned by the most senior management of Novartis Korea,” adding that the “actions taken by certain associates in Korea” do not reflect Novartis’ internal policies.

Though the court has yet to issue a final ruling, local media outlets have asserted that it is highly unlikely that Novartis Korea’s unlawful actions were orchestrated by a handful of employees without its top executives’ knowledge or involvement.

Unlike the past when it would directly pass on bribes to doctors, Novartis seems to have devised more indirect, less-traceable methods of providing kickbacks such as through events organized by trade journals.

A former employee at the Seoul branch of a foreign pharmaceutical company here, who wished to remain anonymous, told The Korea Herald that “bribery is a rampant practice in the local pharma industry and that despite the lack of paper records, top managers, particularly those in the marketing department, are definitely involved.”

“There is no way that individual employees act alone in offering kickbacks to doctors to boost sales,” the employee said. “Companies usually offer sales employees incentives in return for an immediate improvement in sales, which almost always requires acts of bribery.”

This is also not the first time that Novartis was found to have engaged in large-scale bribery in Korea and other parts of the world.

Back in 2011, the Fair Trade Commission fined Novartis Korea 2.3 billion won for offering some 7.1 billion won in bribes to doctors over three years from 2006.

Last March, the company paid $25 million to the US Securities and Exchange Commission to settle charges that it violated the Foreign Corrupt Practices Act by bribing health care providers in China to prescribe its drugs.

The same month, an anonymous whistleblower accused Novartis of paying bribes in Turkey through a consulting firm to secure business advantages worth an estimated $85 million, according to Reuters.

In the US, Novartis is slated to stand trial later this year on charges of violating federal anti-bribery laws for nearly a decade by holding “sham events” used to encourage doctors to prescribe several types of blood pressure medicine, according to US court documents cited by STAT, a US-based news outlet specializing in the health and medicine sectors.

By Sohn Ji-young /The Korea Herald (jys@heraldcorp.com)