The recent decision by the Ministry of Health and Welfare to abolish the current “two-strikeout policy” on rebates and substitute it with a new amendment is raising concerns among pharmacists.

The ministry introduced the system in 2014 by excluding drugs found to have violated by giving rebates for two times more from insurance benefits. Under the revised disciplinary rules, the regulators ease the harsh punishment by replacing them with lower drug prices or higher fines.

The new "drug insurance benefit reduction" law against rebates.

In response to the amendment, the Korean Pharmaceutical for Democratic Society (KPDS) released a statement demanding its abolition, while requesting the reinstatement of the former regulation.

“The ministry launched the “rebate two-strikeout” system in 2014, saying that it would strongly crack down on drug rebates,” the society said in a statement. “The strong regulation was implemented because pharmaceutical company’s revenue gained from illegal rebates was greater than the losses due to penalties or drug price cuts.”

The society cited Novartis Korea’s 2.3 billion-won ($2.12 million) fine imposed by the Fair Trade Commission in 2011 as an example. It further stressed that even after the fine, the company’s continued its illegal activities, as uncovered by the Seoul Western District Prosecutors' Office in 2016.

“The National Assembly's health and welfare committee said it plans to abolish the “two-strikeout” program on the grounds of concerns over the policy’s effectiveness and patients' access to medicines,” the society noted. “However, drugs that are subject to the regulation are limited to drugs that have a clear alternative drug, which means it has nothing to do with patients' access to drugs.”

The KPDS criticized that the health authorities have only fueled the controversies among the public, and urged them to reinstate the former two-strikeout regulations.

“The ministry plans to abolish the regulation although it had never properly implemented the regulation for fear of backlash from the large pharmaceutical corporations,” the statement read. "The National Assembly and health authorities should know that it is not the time to discuss the abolition of the “two-strikeout program,” but to put the system in place and root out the rebate problem."

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