Pharmaceuticals firms are offering doctors "research fees," discounts and free medication to promote their products and some doctors aren't reporting the additional income on their tax returns, the Ministry of Finance announced yesterday.
"Competition between pharmaceutical firms is intense. Because of this competition, they'll give more medicine than was ordered when they make deliveries to doctors and hospitals ... or they'll give rebates after the medicine is sold and offer `research' or `testing' fees [to doctors who use their products]," said taxation department director Sam Wang (?y敢o?s).
"And for the most part, doctors aren't reporting this as income," he said.
"Research" or "testing" fees are given to doctors who help a pharmaceutical company test its products and is subject to the same tax as any other income, he said.
Free medication is a more insidious problem, Wang said.
A common practice is that a doctor or a hospital would order 1,000 pills from a pharmaceutical company and get 100 pills free, he said.
The doctor or hospital keeps costs low while getting a higher income from passing the difference on to patients and the National Health Insurance plan, he said.
"But whether it's a rebate or extra pills, the result is the same," he said.
Wang refused to say how many cases the ministry was currently investigating or what the monetary value of the unreported income was. The cases are still under investigation, he said.
The ministry hopes that doctors who have accepted "research fees" or rebates from pharmaceutical companies will come forward and report the extra income, he said.
Doctors or hospitals who fail to do so will be subject to back taxes, he said.
A close relationship between pharmaceutical companies and hospitals has existed for years but is better now than it was in the past, said legislator and head of psychiatry at Mackay Memorial Hospital, Hung Chi-chang (
"It used to be more common for doctors and hospitals to take money from pharmaceuticals companies, but that's changing. Things are much more transparent now, and the system is modernizing," he said.
In the past, pharmaceutical company executives could offer hospital management gifts and rebates in exchange for promoting their products, he said.
But it is still common for pharmaceutical companies to offer free and discount medication, he said.
"The bigger the hospital, the more serious the problem. It's a question of bargaining power," he said.
"Research" and "assistance" fees can be a legitimate exchange of goods and services between pharmaceutical companies and hospitals, Hung said.
"But any case that involves unreported taxes is worth investigating," he said.
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