[Contribution] Pharmaceutical sales promotion business reporting-Regarding the obligation to prepare expenditure reports

Daeryun Medical Pharmaceutical Group Attorney Yoonjeong Choi

In this contribution, we will look at the reporting obligations and expenditure report preparation obligations of pharmaceutical sales promotion operators (CSOs) based on the revised Pharmaceutical Affairs Act.

The Pharmaceutical Affairs Act defines a pharmaceutical promotion business operator as “a person who has received product approval for a drug, an importer, or a drug wholesaler who is entrusted with the sales promotion work of a drug and wishes to perform it” and “a person who is re-entrusted and intends to perform the entrusted sales promotion work,” and Article 46-2 of the same Act imposes reporting obligations. In addition, pharmaceutical companies are also prohibited from entrusting sales promotion work to undeclared sales promotion operators.

In addition, the Pharmaceutical Affairs Act contains provisions that, in principle, prohibit drug promotion business operators from providing economic benefits to pharmacists, oriental pharmacists, pharmacy workers, medical personnel, medical institution founders, and medical institution workers. However, there are also regulations regarding economic benefits that are permitted as exceptions, and based on this, an expenditure report must be prepared for the economic benefits provided.

The expenditure report preparation system was introduced around 2018, but at that time, pharmaceutical sales promotion operators were not included as subjects of expenditure report preparation obligations. As a result, problems began to be raised about drug promotion businesses that provide unauthorized economic benefits. Problems surrounding the provision of illegal profits have become more serious over the years, and as a result, pharmaceutical sales promotion companies have also been subject to the obligation to prepare expenditure reports.

Although there is some difference in the timing when the obligation to report and prepare expenditure reports was introduced, the relevant systems are currently in effect, so drug promotion salespeople must comply with the above obligations. If violated, administrative action or even criminal punishment may be imposed in accordance with the provisions of the Pharmaceutical Affairs Act.

Therefore, in order to avoid disadvantages, you must check the information on how to report sales promotions, reasons for disqualification, and benefits that can be provided, as stipulated in the Pharmaceutical Affairs Act and the Enforcement Rules of the Pharmaceutical Affairs Act. In particular, in the case of permissible economic benefits, the subject, target, and scope are defined differently for each item, so it is necessary to confirm exactly what economic benefits are allowed to be provided.

In addition, the Ministry of Health and Welfare not only conducts a fact-finding survey on expenditure reports prepared by pharmaceutical sales promotion operators, but also discloses all survey results and submitted reports. Additionally, the Ministry of Health and Welfare may request submission of supporting data for the above expenditure report when necessary. In light of this, pharmaceutical sales promotion businesses should also be aware of the obligation to keep related books and supporting data for a certain period of time.

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[Contribution] Notification of pharmaceutical sales promotion business - Regarding the obligation to prepare expenditure reports (Shortcut)