United States: Spotlight On Korea


Although historically U.S. regulators have not focused FCPA enforcement efforts in Korea to the same extent as other Asian jurisdictions such as China and India, multinational companies doing business in Korea, particularly in the life sciences space, should remain vigilant. In addition to the possibility of increased enforcement by U.S. regulators going forward, domestically, Korea has pursued an increasingly stringent and aggressive anti-corruption regime, marked by several high-profile enforcement actions as well as Korea's implementation of an expansive new anti-corruption law, the Kim Young-ran Act, in September 2016.

In its latest effort to battle corruption and increase transparency, Korea implemented the Sunshine Act, which requires pharmaceutical and medical device companies to establish and maintain an expense reporting system to track economic benefits provided to healthcare professionals ("HCPs") during a fiscal year. The obligation to implement the reporting system took effect on January 1, 2018, following adoption of the law in June 2017.

With the roll-out of the Sunshine Act marking a further uptick in Korea's efforts to strengthen its anti-corruption efforts, companies operating in the life sciences space in Korea should take appropriate steps to ensure compliance with local requirements, such as localizing their compliance policies and programs.

The Sunshine Act

Under Korea's Sunshine Act, pharmaceutical and medical device companies must collect and maintain records of economic benefits provided to HCPs, and prepare an aggregated expense report detailing the economic benefits provided during each fiscal year. Companies must generate aggregated expense reports within three months following the conclusion of its fiscal year, and retain expense reports for at least five years. Expense reports and relevant supporting documentation must be provided, if requested, to the Ministry of Health and Welfare ("MHW"), which may use such materials to investigate whether illegal kickbacks have been paid. There is no requirement that such reports be made public.

The MHW identified seven reporting categories: (1) samples; (2) clinical trials; (3) post-market surveillance; (4) product presentations to multiple medical institutions; (5) product presentations to a single medical institution; (6) academic conferences; and (7) price discounts. For product presentations, food, drinks, and souvenirs exceeding US$9 require reporting, while those under US$9 do not. However, no minimum threshold is required to trigger the reporting obligation for other economic benefits.

Regarding covered persons, companies must collect and keep records of economic benefits provided to a broad range of health care professionals, including physicians, pharmacists, dentists, traditional Korean medicine practitioners, nurses, midwives, founders of medical institutions, and individuals working with medical institutions for purposes of sales promotion.

Enforcement Trends

Signaling a continuing focus on domestic anti-corruption efforts, particularly in the life sciences industry, the Sunshine Act follows on the heels of several high-profile anti-corruption enforcement actions by Korean regulators. Such efforts include a US$48 million fine against Novartis International AG for allegedly bribing doctors to use its products in May 2017, and the criminal conviction of the top executive of one of the largest Korean companies.

It also follows the September 2016 implementation of the Kim Young-ran Act, which significantly expanded the scope of Korea's anti-corruption laws, imposing requirements that exceed the scope of the FCPA. Specifically, the Kim Young-ran Act criminalized the provision of "benefits" to any "public official" exceeding KRW 1 million (about USD $900) in a single instance, or KRW 3 million (about $2,500) in aggregate over a one-year period, regardless of whether benefits are provided in exchange for any particular business favor or in connection with the public official's duties. The Kim Young-ran Act also expanded the definition of public officials to cover a broader range of persons, including private educators and employees of state-owned enterprises, extended criminal liability to corporations for employee misconduct, and set caps on certain benefits offered for promotion of normal business and social relationships (KRW 30,000 (approximately US$25) for meals/drinks, KRW 50,000 (approximately US$41) for gifts, and KRW 100,000 (approximately US$82) for congratulatory or condolence payments at festive occasions and funerals).

While the Kim-Young-ran Act does not specifically target the pharmaceutical and medical device industry, it indicates that Korea is committed to eliminating corruption and improper payments. Korean regulators have long focused on potential corruption within the life sciences sector. In addition to the $US48mm fine levied against Novartis in May 2017, from 2007 to 2011, the Korea Fair Trade Commission ("KFTC") took extensive enforcement actions against the pharmaceutical industry, including global companies, and imposed numerous fines for "rebate" incentives provided to HCPs such as cash payments, lecture fees, and overseas sponsorships, which were deemed to be illegal incentives for increased prescriptions. The KFTC, and other Korean regulators, continue to investigate pharmaceutical and medical device companies for illegal rebates, improper payments, and related potential violations.

Given Korea's continued focus on rooting out improper payments and potential corruption, particularly in the life sciences sector, domestic enforcement actions are likely to increase.


To navigate through an increasingly difficult anti-corruption regime in Korea, pharmaceutical and medical device companies doing business in Korea should assess and update their policies, procedures, and internal controls to ensure they are localized to address Korean concerns, particularly with respect to travel, gifts and entertainment, and expense controls.

As part of this process, with respect to the Sunshine Act in particular, companies should ensure that their systems carefully and effectively track spend and other relevant data, and analyze their categories of spend and persons to which they provide economic benefits, to determine which expenditures and persons trigger a reporting obligation under the Sunshine Act. In addition, companies should ensure that they have robust internal controls in place, particularly with respect to the seven reportable categories of support for healthcare professionals, and the use of corporate credit cards in connection with such support. Finally, companies should provide training to appropriate personnel on the Sunshine Act, and monitor compliance on an ongoing basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions