A total of 368 million won in taxpayers’ money is on the brink of disappearing. The “Digital Medical Product Jeonju Management System Construction Project,” which the Ministry of Food and Drug Safety had ambitiously pursued, has been thrown into disarray due to the contractor’s abandonment of the project and subsequent bankruptcy, leaving the pre-paid funds unrecovered for more than half a year.
According to documents obtained from the Ministry of Food and Drug Safety by Rep. Heo Jong-sik (Democratic Party of Korea, Incheon Dong-gu Michuhol-gu Gap), a member of the National Assembly’s Health and Welfare Committee, on the 10th, the Ministry of Food and Drug Safety ordered the construction of an integrated information system worth 1.38 billion won through its second supplementary budget last year and signed a contract with Company A for 855 million won in November 2025. The contract period was 120 days, until March 4 this year.
However, Company A notified the Ministry of Food and Drug Safety on February 11, three weeks before the project’s scheduled completion, that it would abandon the work. When the Ministry of Food and Drug Safety terminated the contract and settled accounts on March 13, no recovery funds were received from the company. Although there were no deliverables at all, 368 million won—amounting to 43% of the contract value—had been paid as a prepayment.
In response, the Ministry of Food and Drug Safety initiated the prepayment return procedure on March 26. However, Company A filed a lawsuit against the state on April 23, claiming it could not return the prepayment and seeking confirmation of non-existence of debt. The Ministry of Food and Drug Safety claimed 375 million won in guarantee from Seoul Guarantee Insurance, the guarantor institution.
However, payment review has been suspended until the lawsuit concludes, meaning not a single won has been recovered for six months since April. Moreover, with Company A being declared bankrupt on August 27, even the lawsuit has been halted, making it difficult to estimate when recovery will occur.
On June 8, the Ministry of Food and Drug Safety signed a new contract with a successor contractor using the remaining budget of 533 million won. Subsequently, the system was opened in three phases from June to August, and development of 168 types of complaint-handling functions was completed on the 6th of last month. A total of 1.295 billion won—99% of the total budget—has been executed, but 368 million won of that amount is tied up with the bankrupt company.
The Digital Medical Products Act took effect in January 2025. Since then, as of last August, 30 products had received approval as digital medical devices, while 14 remained unapproved. There were 61 approved clinical trial plans. However, the dedicated system to manage these only began operations in June this year—1 year and 5 months after the law took effect—and even then, the system could not be built to the extent originally planned.
Heo (Rep.) stated, “Due to inadequate contractor selection and complacent response, 368 million won in taxpayer funds is on the verge of being lost, and an administrative vacuum has persisted for a year and a half since the law’s implementation.” He emphasized, “The Ministry of Food and Drug Safety must immediately establish measures to thoroughly determine accountability for the entire contracting process and to recover the misappropriated prepayments to the end.”
in THEBIO
