Life Science Compliance Update

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August 14, 2017

Sunshine Act Takes Effect in South Korea

South-Korea-Internship-Information

In early 2017, South Korea joined the global transparency movement and enacted a “Sunshine Act” similar to others found around the world. The law requires pharmaceutical and medical device companies operating in South Korea to prepare an aggregated expenditure report if they have provided economic benefits to healthcare professionals and others employed at medical institutions during a fiscal year.

Interestingly, while the scope of the Korean Sunshine Act is broader than the United States law, it does not require companies to submit the aggregated report and any supporting documents to the government unless it is determined to be necessary by the Minister of the Ministry of Health and Welfare of Korea. Therefore, it follows that the collected data will not be made public.

The covered recipients for Korean Sunshine Act can be categorized into four groups: (1) pharmacists; (2) herbalists (including persons working for the relevant pharmacy); (3) “medical personnel”, which includes physicians, dentists, acupuncturists, midwives, nurses); and (4) medical institution founders (including the representative, director and other employees of a juristic person) or persons working for the relevant medical institution for the purpose of sales promotion, such as adoption of drugs or inducement of prescription.

Types of reportable economic benefits include:

  • Product samples;
  • Academic conference sponsorships;
  • Honorarium provided to a covered recipient for conducting post-marketing surveillance (PMS) (equivalent to phase 4 clinical trials in US);
  • Funding of clinical trials;
  • Food and beverages and other “freebies” (such as pens, notepads, etc.) provided at the product presentations; and
  • Discounts on drug or medical device sales made with certain payment methods.

The Ministry released seven templates for the Report for all reporting categories:

  • Provision of samples – including institution, product information, and date of provision;
  • Sponsorship to academic conferences – including conference info and support funds amount;
  • Support for clinical trials – including trial information, contact, joint investigator’s info, and support details (TOV amount, number/volume of product supported, contracting date);
  • Product presentations
  • Presentations held formultiple medical institutions: product info, HCP name and medical institution, TOV amount including travel, lodging, food and beverages, and other “souvenirs” or giveaways (e.g. pens, notepads, etc.)
  • Presentations held at a single medical institution: product info, medical institution info, HCP name, TOV amount (food and beverages) and date;
  • Post-market surveillances (PMS) – including product info, HCP info, and support details; and
  • Price discounts based on payment conditions – including medical institution info, contracting date, and discount rate

For the product presentations, the reporting threshold for food and beverages, as well as other “souvenirs” or giveaways is 10,000 won (roughly $9). For all other types of transfers of values, there is no minimum threshold amount triggering the reporting obligation, and they should all be recorded in the applicable reporting template.

The reports must be kept for five years, along with supporting documentation. Companies are required to start collecting expenditure information on January 31, 2018. The report and supporting documentation must then be prepared within three months following the end of the company’s 2018 fiscal year. For example, if Company A’s 2018 fiscal year ends December 2018, then the report must be prepared by March 2019. If Company B’s 2018 fiscal year ends in March 2019, then the report must be prepared by June 2019.

A reporting template was issued in June 2017, and can be found here. Life sciences companies operating in South Korea will need to create a clear and efficient process and system to ensure they meet these difficult reporting requirements.

Special thanks to Polaris a Quintiles-IMS Company for the tip and the analysis. www.polarismanagement.com and the Korean Ministry of Health and Welfare www.mohw.go.kr/eng/

 

 

 

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