GSK, Yuhan, GC, SK discovery among 32 firms fined for fixing vaccine prices < Policy < Article

The Fair Trade Commission (FTC) has decided to fine a total of 40.9 billion won ($32.2 million) on 32 companies, including GSK Korea, Yuhan Corp., GC, and SK discovery, for colluding in 170 vaccine tenders ordered by the Public Procurement Service for more than six years.

One vaccine maker (GSK), six vaccine distributors (GC, Yuhan Corp. SK discovery, Kwangdong Pharmaceutical, Korea Vaccine Sales, and Boryung Biopharma), and 25 drug wholesalers colluded in 170 vaccine tenders issued by the Public Procurement Service from February 2013 to October 2019 by selecting predetermined bid winners and sharing the prices in advance, FTC Chairperson Han Ki-jeong said during a press conference on Thursday.

GSK received a fine of 351 million won, and the six vaccine distributors received a fine totaling 10.5 billion won -- Korea Vaccine Sales (7.19 billion won), GC (2.03 billion won), SK discovery (482 million won), Kwangdong (342 million won), Yuhan Corp. (325 million won), and Boryung Biopharma (185 million won).

According to Han, the bid-rigging case had three distinctive features.

“The vaccines targeted by the bid-rigging were all government-purchased national immunization program (NIP) vaccines,” Han said. “Such vaccines included vaccines for influenza, hepatitis, tuberculosis, tetanus, cervical cancer, and pneumococcal vaccines, totaling 24 items.”

Also, the bid-rigging was possible due to the long-standing practice of rampant collusion in the vaccine bidding market, making it easy to arrange participants for the bid rigging and share prices, Han added.

Han explained that, for example, a prospective bidder could easily arrange companies that will outbid them so they could win the bid by making a phone call.

“Such a practice went on for so long that at one point, prospective bidders did not even have to contact such companies as they participated voluntarily,” Han added.

The head of the antitrust watchdog also said that the participants in the collusion changed their method according to the change in government procurement methods.

To ensure a stable supply of vaccines produced by global pharmaceutical companies, the government changed its procurement method from the third-party unit price contract to the total government procurement in 2016.

Before 2016, the government purchased only 5-10 percent of the total vaccine supply from public health centers. After 2016, the government purchased the entire annual vaccine supply.

As a result, global pharmaceutical companies and vaccine distributors could join hands in vaccine bidding collusion, and global pharmaceutical companies directly arranged bidders that would make high bids and vaccine distributors would be selected as bid winners.”

Three companies – GC, SK discovery, and Boryung Biopharma – were found guilty of participating in the bid-rigging process for a second time, despite being fined and sanctioned for the same violation in 2011, Han added.

Han said the FTC's penalties and corrective orders were significant because they confirmed the existence of a long-standing bid-rigging scheme in Korea.

GSK said they could not comment on further details.

“We are committed to operating in a transparent, ethical, and professional manner consistent with the company’s values, and do not tolerate any breach of these values,” a GSK Korea official told Korea Biomedical Review.

SK discovery also said it is too early to issue a statement but admitted there were such bid-riggings.

“We will be able to make an official comment regarding the issue after we receive the resolution letter from the FTC,” the official said.

GC, Yuhan Corp., and Boryung were unavailable for immediate comments.

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