On December 2, 2016, the anticipated amendments to the Pharmaceutical Affairs Act and Medical Device Act of Korea came into effect and similar amendments to the Medical Affairs Act, which were passed by the Korean National Assembly on December 1, 2016, are expected to come into effect in the end of 2016 or early 2017. The following is a brief summary of the key amendments.

1. Amendments to the Pharmaceutical Affairs Act and Medical Device Act

A. Heightened Criminal Punishment

The amended Pharmaceutical Affairs Act and Medical Device Act impose heightened criminal punishment against pharmaceutical companies, medical device companies, distributors, wholesalers, and medical professionals1 that give or receive illegal economic benefits or "kickbacks" for the purpose of promoting sales of their pharmaceutical products or medical devices. Under the amendments, such a violation now carries a criminal fine not to exceed KRW30 million or imprisonment of up to three years. Prior to the amendments, violators were subject to a criminal fine of up to KRW30 million or imprisonment of up to two years. These heightened criminal penalties, however, will not be imposed retroactively on violations that took place prior to the effective date of the amendments.

B. An Important Implication of the Amendment - Arrest Without a Warrant

The Korean Criminal Procedures Act permits an arrest without an arrest warrant if (i) there is probable cause to suspect that a person is committing or has committed a criminal offense that may be subject to imprisonment of three or more years, (ii) such person is likely to destroy relevant evidence or flee (or has actually fled), and (iii) the urgency of the circumstances makes it impossible to apply for an arrest warrant. Therefore, because illegal kickbacks subject the violator to possible imprisonment of up to three years under the amendments, the law enforcement agency now has the authority to make an arrest of violators that give or receive illegal kickbacks without an arrest warrant. If an arrest is made without an arrest warrant, however, the law enforcement agency is still required to obtain the arrest warrant within 48 hours from the arrest.

2. Anticipated Amendments to the Medical Affairs Act

A. Heightened Criminal Punishment

The same heightened criminal punishment for illegal kickbacks (i.e., criminal fine not to exceed KRW30 million or imprisonment of up to three years) shall also be imposed on medical doctors (including dentists and traditional medicine doctors) under the Medical Affairs Act once it comes into effect, and the law enforcement agency's ability to arrest violators without an arrest warrant will equally apply.

B. Notice and Consent Requirement to Ensure Patient Safety and Autonomy

In order to ensure the safety and autonomy of a patient in receiving medical care, the amended Medical Affairs Act will require medical doctors to provide a patient with a description of any medical care to be performed and its possible side effects and precautions, and obtain the patient's prior consent to such medical care in writing. A violation of this requirement will be subject to an administrative fine not to exceed KRW3 million. This notice and consent requirement will take effect six months after the date of promulgation of the amended Medical Affairs Act.

C. Details of Non-Reimbursed Medical Expenses to Be Made Public

In order to ensure the patient's right to know and promote the patient's right to choose between medical institutions, the amended Medical Affairs Act will authorize the Minister of Health and Welfare to collect and analyze the current status of non-reimbursed medical expenses by item, qualification and amount for which medical institutions apply. The results of the analysis may be made public and in case of analysis related to hospitals and general hospitals, are mandatorily made public by the Minister. This disclosure provision will take effect on the date of promulgation of the amended Medical Affairs Act.

Footnote

1 Medical professionals include doctors, dentists, traditional medicine doctors, pharmacist, medical technicians, nurses, and midwives.

Healthcare Legal Update, December 2016

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