If You Are Facing a Medical Act Violation Over the Koryo Pharm Rebate Case <Response Strategy>

Media recently reported that approximately 100 doctors have been booked and are under investigation on suspicion of receiving rebates from Koryo Pharm. This case is drawing industry attention because Koryo Pharm is suspected of providing money to 'general hospital doctors' in exchange for prescribing its drugs.

As in this case, if there was an improper monetary transaction between a company for which sales activities are important, such as a pharmaceutical company, and medical personnel, any doctor who agreed to the transaction may also be subject to punishment and could lose their license.

In particular, since this case hinges on how the intent and impropriety of the act are proven through the initial statement made during the investigation stage, it is important to select legal counsel who understands the police investigation process well and to respond promptly.

At LAWFIRM LEAP, attorneys with experience at large law firms and as former police officers handle cases, so we understand the perspectives of the police and prosecution better than anyone and can propose the best way to explain the case favorably during the investigation stage.

With that in mind, today we will explain specific measures on how to respond if you come under investigation for a matter such as the Koryo Pharm rebate case.

01If Your Case Falls Under a Medical Act Violation Involving Rebates

A rebate as referred to in the Koryo Pharm rebate case means an act of returning part of the price paid for goods purchased back to the payer.

This refers to a form of transaction where, after receiving payment, a certain amount is returned to the customer to induce further transactions.

Because such transactions frequently lead to misappropriation of funds or tax evasion, strict restrictions are placed on such conduct.

In particular, if a rebate leads to an unjust increase in the price of a drug or service, this creates serious problems in the pharmaceutical market and becomes subject to punishment as an improper act.

This matter falls under Article 23-5 of the Medical Service Act, which prohibits doctors and related personnel from giving or receiving economic benefits for the purpose of promoting sales.

If this charge is confirmed, the person may be sentenced to imprisonment of up to three years or a fine of up to KRW 30 million.

02Article 23-5 of the Medical Service Act

① Medical personnel, founders of medical institutions (including representatives, directors, and other persons engaged therein of a corporation; the same shall apply 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 of, prescription of, or continued transactions in medicines. However, this shall 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 of, use of, or continued transactions in medical devices. However, this shall 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.

However, not all rebate cases result in punishment. If the case involves acts such as providing samples, supporting academic conferences, supporting clinical trials, product presentations, discounts based on payment terms, or post-marketing surveillance, legal punishment may be avoided even if an economic benefit was obtained.

Therefore, if you are facing an investigation under the relevant law due to a rebate, you should obtain the assistance of legal counsel experienced in handling such litigation to determine whether the legal standards apply, and then decide on your response.

Avoiding statements altogether is not the answer; since you must both defend against sentencing and prevent administrative sanctions, you should respond with consistent statements based on careful legal analysis.

03Preparing for the Initial Police Statement

In this matter, if evidence of a rebate exists and an economic benefit was actually obtained as a result, the charge may be confirmed.

In this case, you must not make false statements or distort the facts. You should find ways to increase the credibility of your position through careful review by legal professionals.

By acknowledging the facts while showing remorse, and by demonstrating that you were unaware the conduct violated the law—thereby proving the act was not committed with criminal intent—legal liability can be reduced.

In addition, you must prove that the negative impact of the rebate was minor, that is, that the impact on consumers' rights was limited.

With an initial statement that favors your situation and grounds to support your position, you should approach the police investigation and consistently assert that the conduct was not intentional or habitual.

04Reducing Sentencing and Protecting Your License

If you are implicated in this matter, since not only the person who paid the rebate but also the relevant 'medical personnel' are subject to punishment, you should receive legal assistance to complete your initial statement, find grounds for legal mitigation, and actively explain your position during the investigation stage.

If you rashly undergo questioning alone and make unfavorable statements or show an uncooperative attitude during the investigation, you may face the worst outcome, so you should actively cooperate with the investigation while responding under an attorney's guidance.

In addition, you must defend against sentencing while also ensuring your medical license is not revoked.

Even if a doctor avoids detention through a disposition equivalent to a fine, a 'license revocation' disposition may still be issued, so it is advantageous to select a lawyer with a strong understanding of the relevant laws and extensive experience winning cases in this type of litigation.

Depending on the size of the fine or administrative penalty, this can lead to practical problems such as difficulties running a hospital, potentially threatening one's livelihood. Therefore, you must gather and present as much sentencing-related material as possible that could be legally recognized, in order to appeal for leniency based on the negative consequences this matter may cause.

Therefore, it is important not to become involved in an unlawful matter in the first place. If you have become involved unintentionally, I strongly recommend seeking expert advice to establish a sound initial strategy and pursue the best possible explanation process to obtain a favorable outcome.

Because we have experience conducting investigations ourselves, we are able to respond to investigations effectively.

The attorneys at LAWFIRM LEAP have handled a wide range of cases while working at Kim & Chang and Bae, Kim & Lee, Korea's largest law firms, and as former police officers who have conducted numerous critical initial investigations, giving them in-depth expertise needed to respond to police investigations.

In particular, an attorney with experience at a large law firm and as a police officer personally supports the case from start to finish, actively substantiating the client's position in serious matters such as 'illegal rebate' cases to minimize legal liability.

Therefore, if you are involved in this matter and a police investigation is imminent, please contact LEAP as soon as possible.

With a strategy tailored to your situation, we will actively respond from the initial investigation stage by the authorities to reduce your legal liability.

Thank you for reading this long article.