Oversight for multi-tier drug CSOs will be tightened

70% of 15,000 CSOs are one-person businesses…will improve the commission and multi-tier subcontracting structures

MOHW holds second public-private pharmaceutical innovation council.. discusses greater accountability and transparency in drug promotion

The government and pharmaceutical industry are moving to significantly strengthen oversight of contract sales organizations (CSOs) amid concerns over the proliferation of small operators and multi-tier subcontracting.

The Ministry of Health and Welfare said it held the 2nd Public-Private Council for Pharmaceutical Industry Innovation at the Korea Press Center in Jung-gu Seoul on the  17th, where participants focused on measures to strengthen the management and oversight of pharmaceutical CSOs.

The meeting brought together the Ministry of Health and Welfare, the Ministry of Food and Drug Safety and other government agencies, as well as the Korea Health Industry Development Institute, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, pharmaceutical and biotech companies, and industry experts. Participants conducted a broad review of the current oversight framework for the rapidly growing CSO market, focusing on structural issues that have emerged in sales practices and measures to improve the system.

Pharmaceutical CSOs are businesses commissioned by pharmaceutical companies to handle pharmaceutical sales and promotional activities. The market has expanded rapidly in recent years as pharmaceutical companies increasingly specialize and outsource their promotional operations.

However, about 70% of the roughly 15,000 CSOs operating as of 2024 are one-person businesses, highlighting the proliferation of small-scale operators. High and performance-linked commission structures and multi-tier subcontracting have also become widespread, prompting demand for institutional reforms to ensure greater transparency and accountability in pharmaceutical distribution and sales.

The public-private council therefore plans to identify effective measures for improving oversight of structural problems in the CSO market and establish an institutional framework for reform. Industry feedback and expert recommendations gathered at the meeting will be used as key inputs in redefining the role of CSOs and developing measures to promote the sound growth of the pharmaceutical industry.

Kyung-sil Jung, Head of the Health Policy Bureau at the Ministry of Health and Welfare, said, “As the CSO market has expanded rapidly and sales practices have become increasingly diverse, it is important to establish an institutional framework that ensures both transparency and accountability in pharmaceutical sales. We will use the wide range of industry feedback and expert recommendations presented at the council to develop effective measures to strengthen CSO management and oversight.”