Doctors’ Dinner: Fresh Catch with Lawka
- The company was penalized for offering illegal rebates and later lost appeals in both the first and second trials.
- Daewoong Pharmaceuticals has lost it's legal battle against a penalty imposed for illegal rebates, failing in both the initial trial and a subsequent appeal.
- According to court documents, the suwon High Court upheld the ministry of Food and Drug Safety's (KFDA) decision to fine Daewoong Pharmaceuticals ₩2.25 million (approximately $1,780 USD).
Daewoong Pharmaceuticals Loses Lawsuit Over Illegal Rebates
Table of Contents
- Daewoong Pharmaceuticals Loses Lawsuit Over Illegal Rebates
- Daewoong Pharmaceuticals: Legal Battles Over illegal Rebates - A Q&A
- Introduction
- What Were the Illegal Rebates Daewoong Pharmaceuticals Involved In?
- What Was the Ministry of food and Drug Safety (KFDA) Decision?
- Did Daewoong Pharmaceuticals Fight the KFDA’s Decision?
- What Were the Court Rulings?
- What Arguments Did Daewoong Pharmaceuticals Present in the Second Trial?
- How Did the Court Respond to Daewoong’s Arguments?
- Has Daewoong Pharmaceuticals Appealed the Ruling to the Supreme Court?
- Key Dates and Outcomes Summary
The company was penalized for offering illegal rebates and later lost appeals in both the first and second trials.
Daewoong Pharmaceuticals has lost it’s legal battle against a penalty imposed for illegal rebates, failing in both the initial trial and a subsequent appeal. The company had enlisted the support of major law firms, including Yulchon, in its defense.
According to court documents, the suwon High Court upheld the ministry of Food and Drug Safety’s (KFDA) decision to fine Daewoong Pharmaceuticals ₩2.25 million (approximately $1,780 USD). The court ruled that Daewoong Pharmaceuticals would be responsible for covering the costs associated with the litigation.
the KFDA initially penalized Daewoong Pharmaceuticals in December 2021 following an investigation into illegal rebate practices. The investigation revealed that a Daewoong Pharmaceuticals salesperson, identified as Mr. A, had provided a total of ₩636 million (approximately $502,000 USD), including ₩2 million (approximately $1,580 USD) to plastic surgeons over a 17-month period starting in february 2016. These payments were linked to a spray used for burn treatment.
Authorities determined that Mr. A made these payments to promote the sales of Daewoong Pharmaceuticals’ products. In one instance, Mr. A allegedly used a corporate card to cover dinner expenses at the request of a doctor.
In response to the KFDA’s penalty, Daewoong Pharmaceuticals filed a lawsuit, arguing that the illegal rebates were the result of individual deviations
despite the company’s efforts to prevent such practices. The company pointed to its Fair Trade Autonomous Program (CP), introduced in 2007, as evidence of its commitment to compliance.
though, the Suwon District Court rejected Daewoong Pharmaceuticals’ claim in December 2023, stating that if the sales of pharmaceuticals are promoted by illegal rebates, the profit will eventually belong to Daewoong Pharm.
The court also noted that Daewoong Pharmaceuticals had been subject to administrative sanctions three times since the introduction of its CP program, in 2014 and 2016.
Daewoong Pharmaceuticals’ argument that the penalty was excessive was also dismissed. The court emphasized the high public interest
associated with pharmaceuticals, given their direct impact on public health.
Following the initial unfavorable ruling, Daewoong Pharmaceuticals replaced Yulchon with a lawyer from the law firm Square for the appeal.Though, the suwon High Court upheld the original decision on the 14th, affirming the KFDA’s penalty.
The appellate court stated that illegal rebates seemed to be caused by the performance stress imposed by Daewoong Pharm.
During the second trial, Daewoong Pharmaceuticals argued that Mr. A’s provision of dinners to hospital doctors was due to the persistent demand
of the hospital’s medical director.
The court rejected this argument, noting that Mr. A visited the hospital’s plastic surgery department, which included a burn ward, specifically to promote the company’s medicine. The court also highlighted the duration and amount of the rebates, stating, The period of providing rebates is not short, about a year and five months, and the amount is not small.
As of March 27, Daewoong Pharmaceuticals had not yet decided whether to appeal the ruling to the Supreme Court.
Daewoong Pharmaceuticals: Legal Battles Over illegal Rebates - A Q&A
Introduction
Daewoong Pharmaceuticals has been embroiled in a legal battle over illegal rebate practices, facing penalties and court rulings. This article provides a complete overview of the situation, answering key questions and providing a clear understanding of the case.
What Were the Illegal Rebates Daewoong Pharmaceuticals Involved In?
Overview: daewoong Pharmaceuticals was penalized for offering illegal rebates, which are financial incentives provided to promote the sale of their products, specifically a spray used for burn treatment.
Amount and Period: A Daewoong Pharmaceuticals salesperson, identified as Mr. A, provided a total of ₩636 million (approximately $502,000 USD) in rebates over a 17-month period, starting in February 2016.
Recipients: These payments included ₩2 million (approximately $1,580 USD) to plastic surgeons.
Activities: Mr. A used various methods,including covering dinner expenses with a corporate card at the request of a doctor,to incentivize sales.
What Was the Ministry of food and Drug Safety (KFDA) Decision?
Penalty: The KFDA initially penalized Daewoong Pharmaceuticals in December 2021.
Fine: The Suwon High Court upheld the KFDA’s decision and ordered the company to pay a fine of ₩2.25 million (approximately $1,780 USD).
Did Daewoong Pharmaceuticals Fight the KFDA’s Decision?
Lawsuit: Yes, Daewoong Pharmaceuticals filed a lawsuit against the KFDA’s penalty.
Arguments:
Daewoong argued the illegal rebates were “individual deviations” despite their efforts to prevent such practices.
They pointed to their Fair Trade Autonomous Program (CP), introduced in 2007, as evidence of their commitment to compliance.
What Were the Court Rulings?
Initial Trial: The Suwon District Court rejected Daewoong Pharmaceuticals’ claim in December 2023.
Key Findings: The court emphasized that profits from illegal rebates would benefit Daewoong Pharm and noted the company had received administrative sanctions three times as its CP program was introduced. The court also underscored the “high public interest” associated with pharmaceuticals. The Court stated: “if the sales of pharmaceuticals are promoted by illegal rebates, the profit will eventually belong to Daewoong Pharm.”
Appeal: Daewoong filed an appeal and replaced their legal representation with a lawyer from Square law firm.
Appeal Outcome: The Suwon High Court upheld the original decision and affirmed the KFDA’s penalty, including the court’s statement : “illegal rebates seemed to be caused by the performance stress imposed by Daewoong Pharm.”
What Arguments Did Daewoong Pharmaceuticals Present in the Second Trial?
Argument: Daewoong argued that Mr. A’s actions, including providing dinners to hospital doctors, were due to the “persistent demand” of the hospital’s medical director.
How Did the Court Respond to Daewoong’s Arguments?
Rejection: The court rejected Daewoong’s argument.
Reasons:
Mr. A visited the hospital’s plastic surgery department specifically to promote Daewoong’s medicine.
The court highlighted the critically importent duration (about a year and five months) and the amount of the rebates as factors in their decision.
Has Daewoong Pharmaceuticals Appealed the Ruling to the Supreme Court?
No Decision: As of March 27, Daewoong Pharmaceuticals had not yet decided whether to appeal the ruling to the Supreme court.
Key Dates and Outcomes Summary
| Action | Date | Outcome |
| :————————————— | :———— | :—————————————————————————————————————————————– |
| KFDA Penalty | December 2021 | Daewoong Pharmaceuticals penalized for illegal rebates. |
| Daewoong Lawsuit Filing | | Challenge the KFDA penalty |
| Suwon District Court Ruling | December 2023 | Ruled against Daewoong Pharmaceuticals, upholding the KFDA penalty. |
| Daewoong’s Appeal | | Filed an appeal to the Suwon High Court.|
| Suwon High Court Ruling (Appeal) | March 14 | Upheld the initial ruling and the KFDA penalty, affirming Daewoong’s responsibility for illegal rebates. |
| Decision on Supreme Court Appeal (as of March 27) | March 27 | Daewoong Pharmaceuticals had not yet decided whether to appeal to the Supreme Court. |