On March 21, 2024, the Ministry of Health and Welfare (the “MoHW”) issued the “Guidelines for Disclosure of the Expenditure Reports and Operation of the Status Investigation” (the “Guidelines”), which includes the content, schedule, and method of disclosure in connection with Korea’s “Sunshine Act”, prior to releasing the expenditure reports on the provision of economic benefits prepared by pharmaceutical companies and medical device suppliers. An expenditure report refers to a report prepared by a pharmaceutical company, medical device company, distributor, etc. on the particulars of economic benefits provided to medical personnel, pharmacists, etc. to the extent permitted under the Pharmaceutical Affairs Act and the Medical Device Act, (Article 47-2 of the Pharmaceutical Affairs Act, Article 13-2 of the Medical Device Act).
I. IMPLICATIONS OF DISCLOSURE OF EXPENDITURE REPORT
After the amendment of the Pharmaceutical Affairs Act and the Medical Device Act on July 20, 2021, which introduced the obligation to disclose the expenditure reports, the MoHW issued its first guidelines on the details of the required disclosure. The expenditure report disclosure system has been widely implemented overseas, and has been actively promoted by the MoHW as part of efforts to induce transparency in the distribution of pharmaceuticals and medical devices along with the status investigations of expenditure reports conducted last year.
The Guidelines set out non-public information to address concerns about disclosure of sensitive information such as personal information and trade secrets, and include de-identification measures thereof. However, it is still important to prepare accurate expenditure reports because the MoHW has the original data that is not de-identified through the status investigations and can check all details at any time.
Although the content of expenditure reports is not illegal in and of itself, preparing false reports or failure to retain relevant materials may be subject to criminal punishment. In addition, if illegal rebates are found to have been provided, the matters related to the expenditure reports may also be subject to investigation or expenditure report data may trigger investigation or examination by regulatory agencies. Therefore, it is necessary to check in advance the status of preparation of the expenditure reports and management of relevant materials, and the consistency of the internal management system.
II. KEY PROVISIONS OF THE EXPENDITURE REPORT DISCLOSURE SYSTEM
A. Key Provisions
The MoHW requires pharmaceutical suppliers, etc. to submit the expenditure reports to the “Expenditure Report Management System (KOPS)” from June to July, and disclose the contents thereof in December to the public for five (5) years. Anyone can check through the system the medical care institutions (name and symbol of each medical care institution) that have received economic benefits from pharmaceutical suppliers, etc., information on support for academic conferences, and the amount of support for participants in a product briefing session.
However, the MoHW advised that among the details set out in the expenditure reports, (i) names of recipients, such as medical personnel, whose personal information is likely to be disclosed, and (ii) clinical trial information, etc. containing business strategies be categorized as non-public information in accordance with the Enforcement Rules of the Pharmaceutical Affairs Act and the Medical Device Act and be disclosed only after de-identification.
B. Details
1. Who Needs to Make the Disclosure?
The list of individuals / entities required to make the disclosure is as follows (for reference, whoever is required to prepare the expenditure reports is also obligated to disclose relevant information to the public):
(i) Medicine and pharmaceutical sector: A person who has obtained approval for drugs, an importer or wholesaler of drugs, and a person entrusted by a pharmaceutical supplier, etc. with sales promotion of medicine / pharmaceuticals
(ii) Medical device sector: A manufacturer, importer, distributor, lessor of medical devices, and a person entrusted by manufacturer, importer, distributor, lessor of medical devices with sales or lease promotion of medical devices
2. What Needs to be Disclosed?
In 2024, the expenditure reports on the economic benefits provided by pharmaceutical suppliers, etc. to medical personnel, etc. from January to December 2023 are to be disclosed, but if the expenditure reports contain any information subject to non-disclosure under Article 9 of the Official Information Disclosure Act (as listed below), necessary measures (de-identification) need to be taken to ensure that such information cannot be specified.
<Non-public information>
3. When Does the Disclosure Need to be Made?
The MoHW requires the pharmaceutical suppliers, etc. to prepare the expenditure reports and store relevant data from January to May 2024, and then submit the relevant expenditure reports to the MoHW as public data from June to July 2024. After applying de-identification treatment to the non-public information and confirming the final data, the pharmaceutical suppliers, etc. would need to request the MoHW to post the public data. After completing such process, the relevant expenditure reports will be released in December.
4. How to Make and Correct the Disclosure
The submission of public data of the expenditure reports may be substituted with the data submitted during status investigation of the expenditure reports, and the non-public information in the expenditure reports should be de-identified through the KOPS* and publication of the public data should be requested to the MoHW.
* Link available on the website of the Health Insurance Review and Assessment Service (www.hira.or.kr)
In addition, if a medical personnel, etc. requests correction of any information contained in the expenditure reports before or after disclosure and correction is indeed found necessary, such matters can be corrected through the KOPS, and the corrected data of the pharmaceutical suppliers, etc. will be updated collectively by the MoHW.
5. Others
Detailed procedures for e.g., submission and correction of public data in the expenditure reports through KOPS can be found in the “Manual of the Expenditure Report Management System”, which will be issued by the MoHW in the near future.
In addition, emphasizing that the person who prepares and discloses the expenditure reports is the pharmaceutical supplier, etc., the MoHW specifies that any dispute arising in relation to the disclosure of the expenditure reports must be resolved between the relevant parties, such as the pharmaceutical supplier, etc. and the medical personnel, etc., and the government will not intervene in such dispute.
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