Abbott Korea·Medtronic Korea caught subsidizing doctors

FTC issues corrective order to both companies…imposes a 16 million won fine on Abbott Korea

The companies induced academic societies overseas to invite specific doctors to increase use of their stent

Abbott Korea Co.

 

and Medtronic Korea Co.

 

were found to have unfairly supported doctors to participate in overseas seminars to encourage the use of their cardiovascular stents.

 

As a result, the Korea Fair Trade Commission (KFTC) decided to impose a 16 million won fine on Abbott Korea.

 

Both companies have kept a record of sales for each doctor and encouraged the use of their company's stent by providing unfair support to the doctors as an expense for overseas conferences.

 

More specifically, sales representatives of both companies used this support for overseas academic conferences as a sales promotion strategy to increase the use of its products for doctors that show decrease usage or to manage sales.

 

Overview of the support provided for attending overseas academic conferences (Before event)

From May 2014 to April 2018, while providing support to a Korean medical society in accordance with the Fair Competition Code, Abbott Korea had violated the same Code that prohibits direct support to a specific doctor by notifying its Hong Kong branch and the overseas academic society in advance to issue invitations to 21 doctors in 21 hospitals.

 

In the process, the company requested the Hong Kong branch make exemptions and issue invitations to doctors that submitted their case presentations after the deadline or pressed the branch and academic society to issue invitations in line with the registration period set in Korea.

 

Also, 14 of the 21 doctors that received invitations used the invitations to attend the conferences and received financial support for their participation from the Korean medical society.

 

During the period, Abbott Korea had supported a total of 16.99 million won as expenses to doctors that participated in 2 conferences.

 

In addition, the company had proposed to provide the expense for a business class upgrade to doctors that participated in overseas education·training sessions in 2018 and provided local tours in China to 17 doctors in 2014.

 

From August 2017 to June 2019, Medtronic Korea had internally selected doctors to attend overseas conferences and offered support for their participation.

 

Then, the company sent the list and role of the 34 doctors in 36 hospitals that accepted the offer to the overseas conference organizers to issue invitations.

 

Also, the company requested the conference organizers to issue the invitations to the company so they could personally hand over the invitations to the doctors.

 

23 of the doctors that received the invitations attended the conferences using the invitations and received financial support for their participation in an overseas conference.

 

During the period, Medtronic Korea had supported a total of 27.72 million won as expenses to doctors that participated in 2 conferences.

 

FTC explained that the acts by the two companies violate Article23(1)-3 of the Monopoly Regulation and Fair Trade Act in "unfairly soliciting customers." By providing unfair or excessive profits to doctors, the companies have induced doctors to do business with their companies rather than their competitors, which counts as an unfair trade act by unfairly soliciting customers.

 

As a result, the government issued a fine (16 million won) and a corrective order (cease and desist order) to Abbott Korea and a corrective order (cease and desist order) to Medtronic Korea.

 

The FTC said that the measure was meaningful in that they were able to expose a roundabout rebate act of supporting specific doctors that violates the Fair Competition Code, and that they will continue to take stronger measures to prevent companies from conducting acts that hinder competition under the pretense of supporting overseas conferences or education and training in the overall medical device market, including the stent market.