The South Korea’s drug authority fined the Korean unit of Swiss drug giant Novartis 55.9 billion won ($49.6 million) and suspended insurance coverage on some of its drugs for six months over charges of handing out rebates to local doctors.

The Ministry of Health and Welfare said on Wednesday that it decided to slap a 55.9 billion won penalty on Novartis Korea for its 33 products and a six-month insurance coverage suspension on nine variations of two drug types including Alzheimer’s drug Exelon starting August 24.

The drug maker was accused by the Seoul district prosecution office in August last year for rewarding local doctors with rebates worth 2.6 billion won for five years from January 2011 to illegally promote its drugs.

The final penalty was upped from initial 55.1 billion won.

It is the first time for the Korean drug authority to levy the highest penalty of suspending insurance coverage, which would virtually stop prescription of the concerning drugs as few patients would choose to pay fully for them.

If rebate practice is caught twice, insurance coverage would be permanently suspended which would mean the drug virtually dead in Korea.

The insurance coverage suspension will be implemented after a three-month grace period to allow doctors reserve drugs that can replace the Novartis drugs under probation.

Novartis said it has taken steps to reform its sales performance evaluation system and raised its monitoring standards. It also vowed to rebuild its trusts in the market.

By Kim Hye-soon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]