Reimb. suspension on rebate drugs unconstitutional

with application of the old law

Seong-min Park, lawyer at HnL law firm “dispositions should be retroactively applied according to the revised law”

박성민 변호사

A claim that applying the reimbursement suspension system on illegal rebate drugs that had been abolished in 2018 to acts that had been made before the law was revised can be unconstitutional has been raised.

 

Due to unreasonable aspects of applying the existing law, the claim is that it is more reasonable to retroactively apply the law revised in 2018.

 

Lawyer Seong-min Park at HnL law firm explained so at the monthly academic conference of The Korean Society of Law and Medicine that was held on April 16th.

 

At the virtual conference, Park reviewed the ‘unconstitutionality of the insurance reimbursement suspension disposition applied under the National Health Insurance Act,’ and announced that the decision to suspend reimbursement for rebates caught before September 2018 violates the principle of prohibition of penalty surcharges or the principle of equality presented under the Constitution.

 

The reimbursement suspension dispositions on drugs caught with illegal rebates had been first made in May 2017 after the system was introduced in 2014.

 

However, due to concerns over hindered patient accessibility and side effects that arise from substituting drugs for non-medical reasons, the government revised the law to impose price cut dispositions rather than reimbursement suspensions in 2018.

 

However, the government has applied the old law and issued reimbursement dispositions to acts of rebates that arose before September 2018, raising controversy.

 

Park said, “The National Health Insurance Act revised as of 2018 does not stipulate which law to apply for rebates made before September 2018, however, the administrative agency has been issuing reimbursement suspension dispositions.” He added, “The retroactive application of the law, in particular, retrospective application of administrative laws is generally against the rule of law and therefore is not accepted as it unfairly infringes upon individual rights and freedoms and threatens the stability of living by the law.

 

However, retrospective application of laws and ordinances is permitted as an exception in cases where there is no direct relationship to the interests of the general public or when the interest is rather advanced or eliminates disadvantages or suffering.” This is in accordance with the Supreme Court precedent that was made in May 2005 (Ruling No: 2004다 8630).

 

He said, “We can’t definitively conclude that reimbursement suspensions are more advantageous than drug price cuts for the pharmaceutical companies.

 

If the company clearly states it prefers price cuts over reimbursement suspensions, the protection of trust on the company’s part is rendered unnecessary, and the retroactive application of price cuts is therefore allowed as it can advance the interests of patients, doctors, pharmacists, health insurance finances, and pharmaceutical companies." In other words, the retroactive application of the revised law is reasonable even for rebates that occurred before September 2018.

 

If the upper limit of fines is applied under the old law, the company may request a 40% penalty for one year of its sales rather than a suspension of reimbursement, and the authorities may exercise discretion.

 

Park added that even if the law that was revised last year is applied, the company may request to receive a large fine that is applied for third violations under the current law rather than a reimbursement suspension, on which the authorities can also exercise discretion.

 

Park said, “By substituting reimbursement suspensions to fines for lowest-priced drugs, the company may be subject to monetary sanctions through fines.

 

Also, the price of drugs that are not lowest-priced can be effectively reduced by inducing voluntary drug price cuts, which can effectively result as same as drug price cut dispositions.”