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The pharmaceutical and healthcare industries in Vietnam have seen a number of positive developments in recent years, including the passage of the Law on Pharmacy in 2016. Among other areas, Article 32 of the law provided clearer guidance on the rights and duties of pharmaceutical business establishments (PBEs), including in areas such as clinical trial services and bioequivalence study services. Article 42 of the law expressly permits PBEs to conduct drug information and advertising activities, and to provide drugs to patients at no cost through patient-assistance programs at healthcare establishments. And foreign-invested enterprises (FIEs) can enjoy drug import-export rights by obtaining a certification of satisfaction of conditions for drug-importing businesses (CSC).
Along with Decree 54/2017/NĐ-CP, released in 2017, the Law on Pharmacy was instrumental in the fight against COVID-19, as the two laws provided the legal framework for FIEs to import vaccines into the country. The Law on Pharmacy has also reduced certain administrative burdens for FIEs by removing the obligation to renew the CSC (although the authority retains the right to assess the operation every three years and may revoke the license if the enterprise fails to meet requirements).
Finally, the law also introduced price negotiation as a new mechanism to procure branded, rare and off-patent drugs, as well as drugs with uncommon ingredients or those reflecting special cases.
That said, some issues remain. For example, allowing for price negotiation caused significant disruption for some branded-drug manufacturers, particularly in the face of hospitals’ reluctance to procure such drugs until receiving further guidance from the Ministry of Health.
Also, under Article 91.10 of Decree 54, foreign-invested drug importers are prohibited from participating in distribution-related activities, including drug storage and delivery services to local partners. This conflicts with the Law on Pharmacy, Vietnam’s World Trade Organization commitments, and other local legislative documents. Article 32 of the 2016 pharmacy law, for example, expressly recognizes storage service as a separate pharmaceutical business activity.
A number of other similar issues have had a cumulative impact on the ability of companies to navigate registration, price-negotiation and other regulatory processes. Although these conflicts point to a number of needed changes, FIEs and other industry participants should work with local counsel as they seek to expand their market presence and business activities.
Click here to read the full blogpost on Vietnam Law Insight by Mr. Ngo Thanh Hai of Ally Law member firm LNT & Partners.
