Novartis under criminal investigation in S Korea for offering kickbacks to doctors

Swiss pharmaceutical giant Novartis AG on Friday acknowledged that South Korean authorities have launched a criminal investigation on whether it offered kickbacks to doctors for using its products.

The announcement in a securities filing came two days after South Korean prosecutors raided the local unit of Novartis on suspicions that the Basel-based company had provided rebates to local doctors for using its products.

The investigation comes a month after Novartis agreed to pay $25 million to the US Securities and Exchange Commission to settle charges for having gifted Chinese health-care professionals to boost sales from 2009 to 2013.

Novartis in an emailed statement to The Wall Street Journal said today that it is conducting its own internal investigation into issues raised by the South Korean authorities.

''Novartis is cooperating with the investigation being conducted by the Seoul Western District Prosecutor's office.''

''Novartis is committed to the highest standards of ethical business conduct and regulatory compliance in all aspects of its work and takes any allegation of misconduct extremely seriously,'' the email added.

The Western District Prosecutors' Office in Seoul confiscated several documents, including account books, in order to find out whether the rebates offered to doctors in the form of cash and other incentives could have been bribes.

Last year, the Japanese government suspended Novartis' operations in the country for 15 days for failing to properly report drug side effects.

Several multinational drugmakers have recently come under scrutiny in many countries for allegedly paying kickbacks and bribes in order to promote their drugs or products.

Bristol-Myers Squibb last year agreed to pay $14.7 million last year to settle the US Securities and Exchange Commission charges that gave cash and other gifts to Chinese doctors to increase scripts for its drugs, while others like Pfizer, Johnson & Johnson, Teva Pharmaceutical and AstraZeneca.

British drug giant GlaxoSmithKline was found guilty by a Chinese court of bribing doctors and hospitals and fined more than $490 million.