The Korea Herald


[Editorial] Die-hard practices

By 류근하

Published : April 7, 2011 - 17:57

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Old business practices die hard. For an example, look no further than the pharmaceutical industry. Some unscrupulous drug producers are unable to quit the bad habit of offering kickbacks to doctors and pharmacists to boost the sales of their products.

According to the Ministry of Health and Welfare, it has received more than 100 tip-offs about illegal kickbacks since November last year when the relevant law was revised to toughen punishment on those involved in such practices.

The amended law has made doctors and pharmacists as well as pharmaceutical firms subject to punishment if they are found to have been involved in illegal deals. Policymakers hoped this dual punishment clause would reduce kickbacks significantly.

It turned out to be wishful thinking. If anything, the revised law has led drug companies to employ methods that are more difficult to detect. As a result, more intensive investigation has become necessary to crack down on kickbacks.

In this regard, the Seoul Central District Prosecutors’ Office was right to form Tuesday an investigation team with experts from all related fields, including the Health Ministry, the Korea Food and Drug Administration and the Health Insurance Review and Assessment Service.

The full-scale investigation is welcome as it would put real teeth into the revised law. It is necessary to uproot the unethical rebate practice because it would not only establish a fair trade order in the drug market but contribute to lowering local drug prices.

High drug prices are a main cause of deficits in the state-run health insurance scheme. According to the National Health Insurance Corp., drug expenses accounted for 29.6 percent of total expenditure in 2009, much higher than the OECD average of 17.6 percent. Furthermore, drug spending tends to grow more rapidly than overall medical spending in Korea.

To curb the rapid increase in drug expenses, the government reformed the drug reimbursement formula last year but its effect has fallen short of expectations. This is all the more reason to crack down on kickbacks in the drug trade.