MOHW to Develop Early Detection System for Pharmaceutical Rebates

The Ministry of Health and Welfare (MOHW) has announced plans to develop an early detection and prevention system for pharmaceutical rebates by analyzing health insurance claims, drug pricing, and distribution data.

According to the National Assembly on November 10, the ministry disclosed its plan in a written response to a parliamentary audit inquiry regarding rebate monitoring for pharmaceutical companies.

During the audit, Rep. Mi-ae Kim of the People Power Party, a member of the National Assembly’s Health and Welfare Committee, asked whether the ministry intended to introduce a real-time rebate monitoring system at the medical benefits claim stage.

In its written response, the MOHW stated, “We agree on the need to develop an early detection system for rebates using pharmaceutical distribution and pricing claim data,” adding that it will “work with the National Health Insurance Service and the Health Insurance Review and Assessment Service to review the technical feasibility, additional data requirements, legal amendments, and funding needs for implementing such a system.”

Rep. Kim emphasized that “repeated violations of the Medical Service Act by healthcare professionals receiving rebates continue to occur,” calling for stronger penalties for repeat offenders — including enhanced monitoring of pharmaceutical companies that reoffend and higher drug price reduction rates for those found to have provided rebates again.

According to the MOHW, over the past five years there have been eight cases where healthcare professionals received administrative sanctions for repeat violations of the Medical Service Act, 29 cases involving two administrative actions, and one case involving three or more. While the number of annual administrative sanctions for rebate-related offenses fell from 53 in 2021 to nine in 2024, a special police crackdown last year caused a temporary spike to 96 cases.

Under Article 47-2 of the Pharmaceutical Affairs Act, companies found to have violated rebate regulations for the first time may face a reduction of up to 20% in the upper limit of their reimbursed drug price, as defined by Article 41-2 of the National Health Insurance Act. A second violation within five years can result in a reduction of up to 40%, and a third violation within the same period may lead to reimbursement suspension for up to one year. In cases where suspension would cause significant patient inconvenience or harm public welfare, the penalty may be replaced with a fine.

Regarding repeat offenses, the MOHW stated, “We are working to prevent recurrence by imposing aggravated penalties based on the number of violations, as stipulated in the Enforcement Rules of the Regulations on the Safety of Drugs and Related Administrative Dispositions.” While there is currently no separate monitoring system for repeat offenders, the ministry said it would “review the need and feasibility of establishing an additional monitoring and prevention framework in consultation with relevant departments and agencies.”

The ministry added, “The current National Health Insurance Act already provides for progressively stricter sanctions when rebate-related laws are violated again within a certain period. However, as no cases have yet fallen under the revised provisions, any further strengthening of the penalty system requires careful consideration.”