[Column] Imposing fine enough to prevent rebate?

Professor Lee Pyoung-soo (Department of Healthcare Industry at Cha University)

Korean government’s plan to revise illegal rebate penalty regulation and replace insurance reimbursement suspension with fine on an accused drug product came under fire.

 

However, the government is committed to protect drug access considering patient’s safety and convenience.

 

For the justification of rebate regulation against rebate, the government points its finger on financial factor, other than pure objective of treatment, intervening the process of selecting and purchasing drug products, and negatively affecting on patient’s health, National Health Insurance (NHI) and general medical expense.

 

The objective of rebate regulation is to induce adequate use of drug and transparent trading.

 

The execution of rebate regulation should be able to achieve the objective, and the regulators should maintain fairness when executing it.

 

The existing penalty against rebate is to revoke NHI reimbursement listing and to impose fine depending on the number of committed offenses.

 

The proposed revision of the regulation starts from lowering of upper limit healthcare expense (drug price) to suspension of healthcare reimbursement, as well as imposing of fine, depending on the number of committed offenses.

 

The major differences are utilization of drug price reduction, increase in amount of fine, and excluding revocation of reimbursement listing.

 

It seems appropriate not to remove the responsible drug product from reimbursement listing for the sake of patient’s stable drug access, because it would be far-fetched to correlate illegal practice and quality of the drug.

 

Furthermore, the regulators should contemplate on how effective the revised penalties would be to eradicate the illegal practice, compared to the revocation of reimbursement listing.

 

The purpose of the regulation should not only stress on punitive aspect, but also stress on preventive aspect.

 

Reduction of drug price and increased fine are undeniably punitive.

 

However, the issue is the severity level of the penalty sufficient enough to bring preventive effect.

 

When the level of penalty is bearable, then companies with agenda would rather take the chance of committing offense.

 

Other issues are drug price reduction, reimbursement suspension period and the unclear definition of the ‘period’ when imposing fine.

 

Positively speaking, they could be seen as ‘flexibility’ in administrative measure, but negatively speaking, ‘voluntariness’ of the administrative measures are questionable.

 

It is easy to predict who would exploit and abuse the regulatory standard (interpretation of the term).

 

Also, the term ‘one year-worth of reimbursement cost’ addressed in the regulation summing the amount of fine is ambiguous.

 

Depending on the point of the ‘year’, the accused company’s absolute amount of fine and countermeasure differ vastly.

 

At the moment, dual penalty system is applied on the rebate giver, a pharmaceutical company, and the receiver, a doctor or healthcare institute.

 

But the off-balance between regulations against the giver and the receiver, as addressed by the National Health Insurance Act, are under fire.

 

The regulators are reinforcing financial penalty on rebate-giving product, instead of imposing regulation on the product itself to maintain access to the treatment.

 

On the other hand, regulators suspends license of the rebate-receiving healthcare provider, and also confiscates illegally obtained financial gain.

 

How about some more attention on re-evaluating the fairness between reimbursement revocation on a drug product and suspension of doctor’s license?

 

Or between drug price reduction and reimbursement cost refund, and financial gain confiscated from healthcare providers?

 

Effective execution and fair penalties of rebate regulation should be revisited at this point in time.

 

Moreover, we should not forget to contemplate on revising the regulation to prevent rebate practice in long-term and fundamental fashion, taking the unique qualities of the pharmaceutical industry’s rebate practice and distribution environment into account.

 

Although the ultimate consumer of a drug product is patient, it is undeniable that doctors are in control over the pharmaceutical options.

 

Keeping in mind that a drug is also a commercial product, the regulators would also have to face the reality of marketing without some form of rebate.

 

The point is to bring down healthcare provider’s openness of receiving rebate and the level of rebate provision.

 

Besides the problem within rebate practice, National Health Insurance’ payment system and healthcare provision system should be reformed to achieve fair and good healthcare.