1. Background

 As we reported in our previous Healthcare Legal Update, the Ministry of Health and Welfare (the "MOHW") announced that Korea"s version of the "Sunshine Act" will go into effect on June 3, 2017. Under Article 47-2 of the Pharmaceutical Affairs Act and Article 13-2 of the Medical Devices Act, all pharmaceutical and medical device companies are required to establish and maintain an expense reporting system to collect and report on economic benefits provided to healthcare professionals (the "Expense Reporting System"). The Expense Reporting System requires pharmaceutical and medical device companies to collect and keep records of any economic benefit provided to a medical institution or healthcare professional and prepare an expense report on such benefits with other supporting documentation, all of which must be submitted to the MOHW if requested by the Minister of the MOHW. We reported in our previous Healthcare Legal Update that the MOHW was preparing a draft reporting template. After various revisions to the reporting template in consultation with industry stakeholders such as pharmaceutical and medical device companies, on March 24, 2017, the MOHW announced the proposed amendments to the Enforcement Regulations of the Medical Device Act and the Enforcement Regulations of the Pharmaceutical Affairs Act in which the proposed expense report template is included. After public review and input, which shall be submitted to the MOHW by May 4, 2017, the finalized amendments with the expense report template will go into effect on June 3, 2017.

2. Reporting Template for Expense Report of Economic Benefits

The proposed template is substantially similar to its initial draft. In the template, there are seven (7) reporting categories: (i) samples; (ii) clinical trials; (iii) post-market surveillances; (iv) product presentations to multiple medical institutions; (v) product presentation to a single medical institution; (vi) academic conferences; and (vii) price discounts based on payment conditions. These seven (7) categories represent economic benefits that are permitted by the exception under the Pharmaceutical Affairs Act and Medical Devices Act, provided that they meet strict requirements as prescribed by applicable laws and regulations. Below we provide an unofficial English translation of the proposed expense report templates for the seven (7) reporting categories. Please note that some of the expressions in our translation of the templates have been changed from the original language for better understanding.  

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It is noteworthy that after much controversy, the MOHW has decided to include in the reporting template disclosure of each healthcare professional who receives the economic benefits, including their names, affiliated institutions and signature. However, the MOHW has decided to exclude the disclosure of the healthcare professionals" license number from the reporting requirements in response to comments by the medical community.

3. Conclusion

Although it is possible for further revisions to be made to the reporting templates after the public review period expires on May 4, 2017, we believe any revisions will be limited as the current reporting template drafts already reflect most of the industry"s requests.

Korea"s version of the "Sunshine Act" will go into effect on June 3, 2017, and pursuant to Article 2 of the Addendum to the Pharmaceutical Affairs Act, implementation of the Expense Reporting System will be enforced starting from the 2018 fiscal year.

Therefore, it is highly advisable that pharmaceutical and medical device companies doing business in Korea review their internal systems to properly and effectively prepare for the Expense Reporting System.