Concerns have been raised that the turmoil in the contract sales organization (CSO) management market is undermining trust in the pharmaceutical industry. Some companies have reportedly engaged in questionable contracts, such as compensating CSO commissions later to avoid price reductions by aligning with research and development (R&D) cost ratios. In response, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) held a workshop to discuss potential improvements.
On May 27, the KPBMA hosted the "2026 KPBMA Ethical Management Workshop" at its headquarters in Seocho-gu, Seoul, aimed at establishing order in drug distribution and strengthening ethical management.
The workshop addressed key topics currently affecting the pharmaceutical sector, including drug price reductions, CSO management, and amendments to fair competition regulations.
Key presentations included: △ Drug Price Reduction and CSO Risks (Kim Ki-ho, Executive Director of HK Inno.N) △ Interim Report on Strengthening CSO Management and Oversight (Kang Han-cheol, Lee Hwan-beom, Kwon Hyuk-chan, Attorneys at Kim & Chang) △ Compliance Issues Related to Patient Support Programs (Yoo Sung-wook, Kim Hyun-ok, Attorneys at Hwawoo Law Firm).
During the event, attorney Lee In-seok shared insights on recent investigations targeting pharmaceutical companies, emphasizing the importance of effective management. He stated, "In the future, simply having internal compliance programs, training, and signed pledges will not suffice for immunity. Companies must prepare objective evidence that demonstrates effective management oversight through rational and accurate expenditure reports."
The research project aimed at enhancing the CSO management and oversight system was commissioned by the KPBMA to establish distribution order and improve industry transparency, with completion expected by the end of June.
The domestic CSO market has faced management challenges, with over 15,000 registered companies since the implementation of a reporting system in October 2024, significantly exceeding initial government estimates. Notably, about 70% of these are identified as sole proprietorships with only one employee.
The average commission rate for these companies is reported to be around 37%, with some demanding excessively high rates nearing 50%.
KPBMA President Noh Yeon-hong emphasized, "As the importance of compliance and ethical management grows due to changes in drug pricing systems and strengthened CSO management, I hope this serves as an opportunity for companies to review their ethical management systems and enhance their compliance capabilities."
* This article has been translated by AI.
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