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March 29, 2024

Novartis faces W55b fine, insurance coverage suspension over rebate

PUBLISHED : April 27, 2017 - 18:01

UPDATED : April 30, 2017 - 18:10

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[THE INVESTOR] The Korean unit of Swiss drug giant Novartis was slapped with a 55.1 billion won (US$48.80 million) fine and insurance coverage suspensions for giving illegal kickbacks to doctors in Korea.

On April 27, Korea's Health Ministry made the preliminary decision that will be finalized in May following further consulations with the company. 

Of the 42 rebate-related Novartis products, nine variants of two drugs -- Alzheimer’s drug Exelon and bone cancer treatment Zometa -- will not be covered by insurance for six months. Fines were imposed on 33 other products. 



Related:

Seoul may suspend insurance coverage for 42 Novartis products
Korea to announce more punitive measures against Novartis in March


If finalized, this will become the first time local authorities imposed an insurance coverage suspension on a drug maker since the government implemented stringent anti-rebate laws in 2014. When insurance coverage is suspended, drugs become more expensive, causing both patients and doctors to shun them. 

“We expect the ministry to reach a final decision next month, and understand there may be a grace period of up to three months,” Novartis Korea told The Investor in a statement.

The penalties come after Novartis Korea was charged with indirectly offering bribes worth 2.59 billion won from 2011 to 2016 to doctors in exchange for recommending its drugs. Six former and current employees were indicted in August last year.

Earlier in February, the Ministry of Food and Drug Safety, the nation’s drug safety regulatory, fined the firm 200 million won on 30 drug products and imposed a three-month sales ban on 12 others for the same charges.

In the meantime, the ministry excluded the company’s cancer-fighting drug Gleevec from the list of the drugs facing insurance coverage suspension. Local patients had showed concerns over possible price hikes, claiming that generic drugs have not yet been fully tested for side effects. About 6,000 cancer patients are estimated to be taking Gleevec in Korea.

Novartis is one of the top-selling multinational pharma companies in Korea, which is the 10th largest market for the company in terms of sales. Last year, its Korean sales reached 448.4 billion won.

By Park Han-na (hnpark@heraldcorp.com)

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