University hospital professors face trial over 4.2 billion won kickback scheme

Six professors from university hospitals are heading to trial on charges related to a bribery scheme involving a medical device manufacturer. Prosecutors allege that over a decade, the manufacturer, identified as Company 'A', paid approximately 4.2 billion won ($3 million USD) in kickbacks to professors at 53 university hospitals nationwide, disguised as research funds.

The manufacturer allegedly exploited the post-market clinical trial system, a process for verifying the safety and efficacy of medical devices after they have been released. Company 'A' is accused of providing funds to professors who agreed to use their cardiovascular stents in patient procedures and enroll them in clinical studies. The investigation revealed that the company paid between 200,000 and 1.15 million won per patient registered for these studies. This practice effectively used public healthcare funds, as stent procedures are covered by national health insurance, to increase the company's sales and market share, particularly in a market dominated by foreign companies.

Further details indicate that the clinical trials were often superficial, involving mere tracking and observation, with records allegedly being falsified by Company 'A' employees. Some of the accused professors had deep financial ties with the company, including holding shares in its unlisted stock. One professor, identified as 'B', is accused of establishing a fictitious sales dealership, Company 'C', through his wife. Between February 2018 and April of the previous year, Professor 'B' allegedly received approximately 778 million won ($520,000 USD) in sales commissions from this sham operation. Most of the dealership's core functions, such as sales, delivery, and inventory management, were reportedly handled by Company 'A' employees.

This case follows an earlier action by the Fair Trade Commission, which in July 2024 imposed a corrective order and a fine of 287 million won ($190,000 USD) on Company 'A' for unfair customer inducement practices. The Ministry of Health and Welfare subsequently referred the case to prosecutors in September 2024. Prosecutors had sought arrest warrants for Company 'A's CEO and Professor 'B' in June, but the court denied the requests, citing no risk of flight or evidence tampering. A prosecutor stated, "We will do our best to respond strictly to illegal rebate crimes that threaten fair trade order in the medical market and public health insurance finances, and to thoroughly recover criminal proceeds."

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We will do our best to respond strictly to illegal rebate crimes that threaten fair trade order in the medical market and public health insurance finances, and to thoroughly recover criminal proceeds.