South Korea fines Novartis over kickbacks, suspends sales of some drugs

SEOUL (Reuters) - South Korea said it has fined Swiss drugmaker Novartis NOVN.S 200 million won ($174,937) and temporarily banned sales of some of its drugs for paying kickbacks to doctors in exchange for recommending the company's drugs.

A sign marks a building on Novartis' campus in Cambridge, Massachusetts, U.S., February 28, 2017. Picture taken February 28, 2017. REUTERS/Brian Snyder

A spokeswoman for the Ministry of Food and Drug Safety said on Thursday the ministry levied a fine on 30 drug items and banned sales of 12 variations of 3 drug types including Alzheimer’s drug Exelon for three months.

The sales ban will be effective from March 17 through June 16, the ministry’s website showed.

Novartis Korea said in a statement sent to Reuters that it “acknowledges and accepts” the government’s decision. “We do not tolerate misconduct and are continuing to invest significant efforts to fully embed a culture of compliance throughout our Korean organization,” it said.

In August last year, six former and current Novartis employees in South Korea were indicted over illegal practices to boost sales of the company’s drugs.

They were charged of “indirectly” providing doctors with rebates through medical trade publications, a court spokesman said on Thursday, adding that six others from those publications were indicted as well.

For example, the prosecution alleged the Novartis officials had a medical publication hold a symposium for doctors and pay them “travel expenses” of up to 500,000 won ($438) each for participating in the event, the spokesman said.

Novartis Korea, which at that time said it acknowledges and regrets the misconduct of certain associates, declined to comment on Thursday on details of the charges, saying trials are under way.

Novartis faced numerous probes in several countries, including in the United States, where authorities or whistleblowers accused it of bribing doctors to boost sales of pharmaceuticals products.

In Novartis’s 2016 annual report, it said that 1,701 misconduct cases had been reported involving the company’s employees, with 893 of them substantiated. About 400 of the cases resulted in dismissals or resignations.

Reporting by Jane Chung and Hyunjoo Jin; Additional reporting by John Miller in ZURICH; Editing by Stephen Coates and Muralikumar Anantharaman