Illegal Rebates: The Only Way to Protect Your Medical License

Illegal rebate cases are being reported in the media daily. Such conduct in the medical field, involving economic benefits provided for the purpose of promoting the sale of pharmaceuticals or medical devices, is a matter prohibited under the Fair Trade Act, the Medical Services Act, and related statutes.

Accordingly, if you are implicated in a case such as the recently reported Korea United Pharm rebate case, not only the pharmaceutical company that provided the economic benefit but also 'medical personnel' at hospitals or pharmacies who actually handle the sale of medical devices may also be punished.

In particular, since this type of case may harm consumer rights and cause social controversy, you must prove through your initial statement during the investigation stage that the act was not intentional or premeditated.

Otherwise, a severe penalty may be imposed, so a prompt response is necessary. Accordingly, you should select legal counsel who understands the various stages of a Police Investigation under the Medical Services Act and other laws and respond quickly.

At LAWFIRM LEAP, since attorneys with experience at major law firms and the police handle each case, we understand the positions of both the police and the prosecution better than anyone, and we can find strategic ways to demonstrate the absence of the alleged charges during the investigation stage.

In that regard, today we will explain how to respond if you are being investigated in connection with this type of matter.

01When a Doctor Is Implicated in an Illegal Rebate Case

Types of rebates include cash payments, entertainment, education expense support, and research funding. In particular, medical personnel implicated in such cases may face harsher penalties because such conduct can undermine fair prescribing practices and distort market competition.

If a person received goods or money to influence the drug selection or prescribing process, or to maintain a business relationship with a pharmaceutical company, they are subject to punishment under Article 23-5 of the Medical Services Act. If the charge is established, the person will be sentenced to imprisonment of up to 3 years or a fine of up to KRW 30 million.

02Article 23-5 of the Medical Services Act

(1) Medical personnel, founders of medical institutions (including representatives, directors, and other persons engaged in the corporation; the same applies hereinafter in this Article), and employees of medical institutions shall not receive, or cause a medical institution to receive, money, goods, benefits, labor, entertainment, or other economic benefits (hereinafter "economic benefits, etc.") provided by a drug supplier under Article 47(2) of the Pharmaceutical Affairs Act for the purpose of promoting sales, such as inducing the adoption or prescription of drugs or maintaining transactions. However, this does not apply where the economic benefits, etc. fall within the scope prescribed by Ministry of Health and Welfare ordinance as acts such as providing samples, supporting academic conferences, supporting clinical trials, product presentations, discounts based on payment terms, or post-marketing surveillance (hereinafter "acts such as providing samples, etc."). (2) Medical personnel, founders of medical institutions, and employees of medical institutions shall not receive, or cause a medical institution to receive, economic benefits, etc. provided by a manufacturer under Article 6 of the Medical Devices Act, a medical device importer under Article 15 of the same Act, or a medical device seller or lessor under Article 17 of the same Act, for the purpose of promoting sales, such as inducing the adoption or use of medical devices or maintaining transactions. However, this does not apply where the economic benefits, etc. fall within the scope prescribed by Ministry of Health and Welfare ordinance as acts such as providing samples, etc.

This is a matter subject to severe penalties, and administrative sanctions such as revocation of a medical license or suspension of hospital operations may also be imposed. You must therefore exercise caution in advance so that a momentary lapse in judgment does not result in serious disadvantage.

However, if the investigation is proceeding based on an existing transaction and evidence of a rebate, it is important to acknowledge the offense during the police investigation, show remorse, and plead for leniency.

Distorting the facts or reversing statements, which creates confusion in the investigation, may cause you to lose the opportunity for a reduced sentence. Therefore, prepare your initial statement through careful review by an experienced attorney before undergoing questioning.

It is also advisable to demonstrate the absence of intent and the limited negative social impact of the rebate in question.

03How to Protect Your License in an Illegal Rebate Case

In this type of case, it is important for medical personnel to both defend against the sentence and protect their license.

Therefore, even if the charge is legally established, you should demonstrate that the conduct was not habitual and did not undermine trust in you as a doctor, thereby ensuring you do not fall under the circumstances for license revocation prescribed by law.

Fortunately, even in a rebate case, there are situations that are not considered rebates under the law, such as providing samples, supporting academic conferences, supporting clinical trials, product presentations, discounts based on payment terms, and post-marketing surveillance. Proving that the transaction falls under such conditions may also help you obtain a determination that you are Cleared of Suspicion.

If the charge is established, you must obtain a Suspended Indictment after the Police Investigation and Prosecution investigation to avoid the risk of losing your license, and you must respond to prevent administrative fines or business suspension from causing fatal harm to your hospital's operations. Accordingly, it is advantageous to discuss the matter with a veteran attorney who has handled numerous such cases.

You should also gather and prove sufficient legally recognizable sentencing materials to plead for leniency. Choose a legal professional who can guide you through a process advantageous to evidence analysis and securing sentencing factors, and respond without error from the investigation stage onward.

Attorneys with police backgrounds understand the position of the police better than anyone.

The attorneys at LAWFIRM LEAP have worked at Korea's largest law firms, Kim & Chang and Bae, Kim & Lee, handling a wide variety of cases, and, having backgrounds as police officers, have conducted numerous critical initial investigations, giving them in-depth expertise necessary to respond to police investigations.

In particular, since attorneys with experience at major law firms and in the police accompany clients directly during police investigations and provide substantial assistance to actively support the client's case, we can find ways to defend against the sentence and prevent administrative sanctions at the same time.

If you are implicated in a matter of this kind, please prepare your response strategy for the investigation stage together with LEAP before undergoing questioning.

We emphasize once again that proving the absence of intent through your initial statement is critical in such cases. To find a strategy tailored to your situation, we urge you to consult with our experts at LEAP right away.

Thank you for reading this long article.