Vaanannan

Global Market
Access Solution
Vietnam
Expert Commercial Insights. Deep Global Coverage.
Updated: September 2018
© 2018 DR/Decision Resources, LLC. All rights reserved. www.DecisionResourcesGroup.com

Global Market Access Solution: Vietnam www.DecisionResourcesGroup.com
Table of Contents
4 Updates: Key Market Events 21 Health Technology Assessment
4 September 2018 - Lack of health insurance coverage makes
hepatitis C treatment inaccessible in Vietnam 22 Market Authorization
4 April 2018 - Ministry of Health aims to modernize healthcare 22 Laws
into a “smart system”; new information added under 23 Key Decision Makers
Product Specific Regulations 23 Clinical Trials
4 February 2018 – Centralized drug procurement generates 24 Registration Process
savings to health insurance fund; Health Ministry 24 New Decree Eases Drug Imports
issues new criteria to classify private healthcare 25 Access to Therapies
providers; new decree eases drug imports; 25 Potential Strengthening of Regulatory Oversight
government improving grassroots healthcare centers;
updated content under Pharmaceutical Market 26 Product-Specific Regulations
section 26 Branded or Originators
5 November 2017 - New key insight tables highlighting essential 26 Generics
questions and answers for understanding the 26 Biologics and Vaccines
Reimbursement System, Pharmacoeconomics and
Procurement; over-expenditure of national health 27 Regulatory Harmonization
insurance fund leads authorities to look toward cost
containment 28 Pricing System
5 September 2017 - Major investment from government to 28 Drug Prices
improve healthcare infrastructure across the country; 29 Hospitals
fraudulent cancer drug scam calls for strengthened 29 Price Setting
regulatory processes
5 August 2017 - New key insight tables highlighting essential 32 Reimbursement System
questions and answers for understanding the 33 National List of Essential Medicines
Pharmaceutical Market, Pricing System and Drug Lists 34 Public Sector
5 July 2017 - New key insight tables highlighting essential
questions and answers for understanding the 36 Drug Lists
Healthcare System, Marketing Authorization, and
Intellectual Property 37 Supply Chain
37 Distribution
6 Commercialization Outlook
38 Procurement
8 Healthcare System 39 Tendering
8 Key Decision Makers 39 Law on Tendering (2013) and the Law on Bidding (2014)
9 Historic 39 Guidelines for Bid Packages of Generic Drugs
10 Health Insurance 40 Technical Evaluation Criteria of Invitation to Bid for Medicine
13 Public Healthcare System Supply
16 Out-of-Pocket Payments 42 Hospital Sector Drugs and Reform Recommendations
17 Private Sector 42 Centralized Procurement
18 Pharmaceutical Market 43 Cost Containment

18 Market Size and Growth 43 Case-Mix Payment Mechanisms
18 Market Trends 43 Common Price for Active Ingredients
43 Generics
20 Pharmacoeconomics 43 Parallel Imports
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© 2018 DR/Decision Resources, LLC. All rights reserved. 2

Table of Contents (Cont.)

43 Price Ceilings 49 Smart Healthcare System
50 Trans-Pacific Partnership Agreement
44 Intellectual Property 50 Foreign Invested Enterprise Establishments
45 Key Decision Makers 50 Government Health Priorities
45 Compulsory Licenses
46 Counterfeit Drugs 52 Glossary of Names and Abbreviations
47 Laws
47 Patents 53 About Decision Resources Group
48 Trans-Pacific Partnership Negotiations 53 For More Information
53 Corporate Office
49 Government Activities
49 Improving Grassroots-Level Healthcare Services
Tables and Figures

Tables Figures
8 Table 1. Key Questions for Understanding the Healthcare System 9 Figure 1: Vietnam: Health Insurance Coverage from 2006-2012
in Vietnam and Targets for 2015 and 2020
11 Table 2. Vietnam’s National Poverty Line (2011-2015) 10 Figure 2: Vietnam: Composition of Population with Health
12 Table 3. SHI Premium Rates for a Household in Vietnam (2014) Insurance in 2012
18 Table 4. Key Questions for Understanding the Pharmaceutical 14 Figure 3: Vietnam: Public Healthcare System Structure
Market in Vietnam 46 Figure 4: Global: Incidents of Pharmaceutical Crime Involving
20 Table 5. Key Questions for Understanding Pharmacoeconomics in Counterfeiting, Theft, and Illegal Diversion of Drugs,
Vietnam 2016
22 Table 6. Key Questions for Understanding Market Authorization in
Vietnam
28 Table 7. Key Questions for Understanding the Pricing System in
Vietnam
30 Table 8. List of Selected Drugs in Drug Cost Management Pilot
Program
31 Table 9. Maximum Wholesale Surplus Calculation
32 Table 10. Key Questions for Understanding the Reimbursement
System in Vietnam
34 Table 11. Law on Health Insurance: Levels of Health Insurance
Benefits
36 Table 12. Key Questions for Understanding Drug Lists in Vietnam
38 Table 13. Key Questions for Understanding Procurement in
Vietnam
39 Table 14. Drug Bidding of Healthcare Institutions: Categorization
of Generic Drugs Bidding Package
40 Table 15. Technical Evaluation Criteria
44 Table 16. Key Questions for Understanding Intellectual Property in
Vietnam
51 Table 17. Vietnam: Government Health Priorities
52 Table 18. Vietnam: Names and Abbreviations

Updates: Key Market Events
[ Vietnam ]
September 2018 - Lack of health insurance coverage makes hepatitis C

UPDATED
treatment inaccessible in Vietnam
High-cost and highly effective hepatitis C medicines are not covered under the public health insurance and
therefore are not reimbursed by the Vietnam Social Security agency, which makes treatment in-accessible for
majority of the patients. Therefore, concerned pa-tients and healthcare professionals are urging the government
au-thorities to include them in the public health insurance list.
April 2018 - Ministry of Health aims to modernize healthcare into a “smart

system”; new information added under Product Specific Regulations
Vietnam’s health ministry deploys sophisticated IT applications drawing on big data and artificial intelli-gence
to transform the healthcare system into a smart system to implement EHRs, establish a central-ized database
system to collect and store patients’ records and to personalize therapy for patients based on their health
profile; new information added under Product Specific Regulations section to out-line regulation of different
pharmaceutical products in Vietnam
February 2018 – Centralized drug procurement generates savings

to health insurance fund; Health Ministry issues new criteria to
classify private healthcare providers; new decree eases drug imports;
government improving grassroots healthcare centers; updated content
under Pharmaceutical Market section
Vietnam Social Security reports that implementation of the first ever centralized drug procurement generated
savings to the public health insurance fund; Vietnam Social Security urges private healthcare providers to have
their hospitals and clinics classified by the Health Ministry based on a new quality criteria in order to rationalize the

UPDATED
reimbursement cost for the services offered; pharmaceutical market section updated with 2017 revenues, drug
import data and emerging market dynamics; new decree favors foreign invested enterprises, allowing them to
import approved drugs approved into Vietnam and to distribute through local partners; Vietnamese health ministry
in cooperation with the WHO plans pilot project aimed at improving commune level healthcare centers
November 2017 - New key insight tables highlighting essential

questions and answers for understanding the Reimbursement System,
Pharmacoeconomics and Procurement; over-expenditure of national
health insurance fund leads authorities to look toward cost containment
New key insight tables highlighting essential questions and answers added to the Reimbursement System,
Pharmacoeconomics and Procurement sections; Vietnam Social Security (VSS) has exhausted 70% of the allocated
2017 health insurance fund and concerns mount that cost overruns may impact long-term fund sustainability
September 2017 - Major investment from government to improve

healthcare infrastructure across the country; fraudulent cancer drug
scam calls for strengthened regulatory processes
Vietnamese government allocated major healthcare budget to improve modern, traditional and remote area
healthcare infrastructure across the country; National government ordered a probe to investigate certain
activities conducted by ministry of health and its affiliated bodies in wake of a fraudulent cancer drug scam that
impacts pharma industry
August 2017 - New key insight tables highlighting essential questions

and answers for understanding the Pharmaceutical Market, Pricing
System and Drug Lists
New key insight tables highlighting essential questions and answers added to the Pharmaceutical Market,
Pricing System and Drug Lists chapters
July 2017 - New key insight tables highlighting essential questions

and answers for understanding the Healthcare System, Marketing
Authorization, and Intellectual Property
New key insight tables highlighting essential questions and answers added to the Healthcare System,
Marketing Authorization, and Intellectual Property chapters

Commercialization Outlook
The Vietnamese market has many positive and negative characteristics that have important implications for
multinational pharmaceutical companies exploring business opportunities in the country.
Fast growing pharmaceutical market. Pharmaceutical sales were 92.47 trillion dong (US$4.22 billion) in 2015,
representing a growth of 14.5 percent in local currency and 10.7 percent in US dollar terms (BMI). This growth
rate is expected to continue in 2016 with sales forecasted for 105.5 trillion dong (US$4.61 billion).
Third largest population in Southeast Asia. In November 2013, the population of Vietnam reached 90 million,
making it the third most populous country in Southeast Asia behind Indonesia and the Philippines. Vietnam’s
population is the14th largest in the world.
Rapidly aging population. According to the Department of Population and Family Planning, Vietnam currently
has one of the fasting aging populations in the world. Results from the country’s latest population census show
that more than 8.6 million people were aged 60 years or older in 2011, representing nearly 10 percent of the
population. This may lead to a greater prevalence of chronic diseases in the years ahead.
Extensive healthcare infrastructure. The country’s healthcare system has four levels of provision, reaching
the majority of communes in the country. In 2013, there were a total of 13,562 health establishments in the
country. There were 11,055 medical service units in communes and precincts, 1,069 hospitals and 636 regional
polyclinics. The majority of people are within reasonable travel distance to a healthcare service facility, although
some living in more remote coastal regions of the country may have access difficulties.
Infrequent updating of reimbursable drugs list. Vietnam has two primary lists of drugs that are reimbursable.
The latest National List of Essential Medicines (NLEM) was issued in December 2013, but historically had
been updated infrequently with the previous list dating back to 2005. The list expanded from 355 to 466
western medicines. In 2008, the government released the major drug list, which expanded the total number of
reimbursable drugs in the country to about 750 western medicines and 237 traditional herbal medicines. The
infrequent updating of the reimbursable list of drugs, compounded by the potentially long process of obtaining
drug approval and marketing authorization, may severely limit foreign manufacturers’ ability to distribute its
products in the country.
Protracted approval process for imported drugs. The process of obtaining drug approval and marketing
authorization can be protracted. After all required documents are submitted by the manufacturer, the Drug
Administration of Vietnam (DAV) will evaluate the application before approving for marketing authorization,
which typically takes six to eight months. In most cases, the DAV will require supplementary documents from
the applicant, which could extend the approval process by three to five more months from the date of the
supplementary documents submission. If the drug is approved, the DAV will issue a marketing authorization
(MA) registration number for that drug. It is typical for the issuance of a MA number to take one to two years.
High out-of-pocket (OOP) spending. The burden of healthcare remains high on the population. In 2012,
private health expenditure was estimated to be 57.4% of the country’s total health expenditure, 85% of which
is attributed to patients paying OOP. While this is an improvement from the previous year, high OOP reflects
the need to improve the range of treatments and services covered by public health insurance as well as the
population’s access to healthcare services. In addition to working towards universal health coverage, the
country may explore the expansion of its drug reimbursement list, reducing co-payment costs for certain
treatments, or simplifying access to foreign medicines.
Lack of medical personnel. Vietnam has ensured a high percentage of its healthcare facilities have qualified
medical staff providing healthcare services. In 2009, 100% of communes and 90% of villages had health
workers, while almost 70% of communes had doctors. For the period of 2009 to 2012, the proportion of rural
villages with health workers was maintained above 96%. However, staff is still lacking, particularly in rural areas,
resulting in long wait times and poor quality of services.

Migration of medical staff to urban areas. Similar to other developing countries, medical staff tend to migrate
from rural lower level health facilities to urban higher level health facilities. There is a general shortage of
qualified medical staff at grassroots facilities, as many choose to move to district or provincial level hospitals
and health facilities due to better pay, better equipment, greater career opportunities, and greater quality of life.
High drug prices. Drug prices in Vietnam are generally higher than international reference prices (as compiled
by the Joint Annual Health Review). In 2010, a price survey indicated that retail drug prices are 12.1 times higher
than the international reference price for original brand drugs and 1.4 times higher for generic drugs. A number
of factors contribute to this difference, such as brand loyalty to branded drugs, a lack of cost containment, and
corruption within the healthcare provision system.
Transition towards capitation-based payment system. Fee-for-service payment is currently the dominant
payment mechanism for all secondary and tertiary level health facilities. However, the inclination to overprovide
for treatments or health services to boost revenue tends to exclude vulnerable populations (such as the poor)
from healthcare access, and contributes to OOP. The health sector is gradually shifting towards a capitation-
based payment system as a way to restrict rising healthcare expenses. The government has a roadmap for all
first level of health care facilities to use a capitation payment system by 2015.
High penetration of counterfeit drugs. Counterfeit drugs are widespread in Vietnam. Despite increased efforts
to prevent the manufacturing and distribution of counterfeit products in the country in recent years, fake drugs
continue to circulate. Low awareness of intellectual property (IP) issues, the lack of trained personnel and
resources at the Department of Health, and the lack of qualified pharmacists in the country are cited as reasons
for the ineffectiveness in reducing the circulation of counterfeit drugs. When directly purchasing medication
from local pharmacies, patients often cannot differentiate between branded generics and lookalike counterfeit
products. The lack of efficacy and safety from using the counterfeit may harm the reputation of foreign-based
multinational companies whom the product imitates.

Healthcare System
Table 1. Key Questions for Understanding the Healthcare System in Vietnam
Key Question Answer
What type of healthcare system is in place in Both public and private health insurance. But heavily dependent on out-of-
the country? pocket (OOP) payment.
Public is through mandatory Social Health Insurance (SHI) and private

through Voluntary Health Insurance (VHI)
To what degree is the healthcare system Healthcare system is largely decentralized as it has 3 levels of
centralized or fragmented? administration and 4 levels of service delivery such as national, provincial,
district and commune
How is healthcare funded? Both public and private, but primarily through private expenditure
What are the respective roles of the public Mandatory Social Health Insurance (SHI) is the primary source of health
and private sectors in healthcare delivery? insurance for the population
Voluntary Health Insurance (VHI) acts as a supplementary health insurance

for people who need extra coverage
What is the role of primary health insurance? SHI role is to provide benefits package which include most outpatient and
inpatient services (excluding services such as HIV/AIDS prevention and
treatment, cosmetic surgery, vaccination, dental care, treatment for self-
inflicted injuries or drug addictions, and drugs that are not approved by the
MOH or not on the essential drug list) for all the policy holders.
Health insurance card will be issued for all the SHI enrollees to avail
healthcare services at medical facilities
What is the role of private health insurance? Private health insurance or VHI mostly serves as supplementary or
additional health coverage for family members of formal workers, self-
employed and students.
What are the primary sources of insurance Generally, government health insurance (SHI) reimburses for the cost of
coverage for pharmaceuticals? drugs on the major drug list
Vietnam Social Security (VSS) reimburses health services providers for

medicines and treatments covered under the benefits package of the public
health insurance schemes
What percentage of healthcare spending is In 2014, of the total health expenditure (THE), 33.2% was spent on
dedicated to pharmaceuticals? pharmaceuticals. Of the total expenditure on pharmaceuticals (33.2%),
government share was 16.5%
Source: Decision Resources Group. Based on data from the Organization for Economic Co-operation and Development (OECD).
Under the Constitution of the Socialist Republic of Viet Nam (1992), every citizen is entitled to healthcare. The
State invests in, develops, and makes health insurance available for all of its people. Vietnam’s healthcare
system has both public and private sector components.
Key Decision Makers
Ministry of Health. The Ministry of Health (MOH) is the central government agency that manages health
initiatives for the country. It is responsible for developing national health strategies and programs and allocating
the necessary resources (such as finance, infrastructure and human resources) to implement them. As
specified in the Law of Health Insurance 2008, the MOH conducts the management of health insurance for
the state. In its recent Five-Year Health Sector Plan 2011-2015, the MOH emphasized preventive medicines,
communicable disease prevention, environmental, occupational and emergency health, health education,
maternal and child health, geriatric health, rehabilitation services, food safety and hygiene, and HIV/AIDS
control as areas of focus.

Ministry of Finance. The MOF is tasked with coordinating with the MOH in formulating the financial aspects
of health insurance-related policies and regulations. The agency also monitors the implementation of legal
provisions on the financial mechanisms of the health insurance schemes.
Vietnam Social Security (VSS). VSS is the agency in charge of the country’s health insurance policies. Its
responsibility spans from implementing the health insurance schemes, collecting contributions from various
funds, to reimbursing health services providers. According to the Law on Health Insurance, VSS will fully
reimburse medical treatment and examination of various groups of the population, including children under 6,
the police, and meritorious individuals.
Historic
During the late 1980s, the Vietnamese government initiated the Doi Moi (‘Renovation’), a series of economic
re-forms that were designed to steer the country towards a socialist-oriented market economy. These reforms
liberalized the economy by encouraging international trade and the growth of the private sector, resulting in
greater economic growth and a reduction in poverty. Vietnam was considered one of the poorest countries in
the world 20 years ago, but is now a lower middle- income country with an average GDP growth rate of 7.4%
between 1991 and 2010. The health sector developed in tandem with the economy; the introduction of public
health insurance and the emergence of private practice accelerated its expansion. The country achieved
improvements in health outcomes that greatly exceeded expectations. For example, Vietnam’s poverty rate
was reduced from 41% in 1990 to 10.7% in 2010, lower than its economically more advanced neighbors such
as the Philippines, Indonesia, and China. In 2011, life expectancy at birth was 75.2 years and the under-five
mortality rate (per 1,000 live births) was 24, outcomes that were better than many of its neighboring countries.
Challenges remain as more than 30% of the population is still not covered by health insurance. Nevertheless,
public health insurance programs have steadily expanded to cover more people, and the government aims
to achieve universal health coverage by 2015, although this appears unlikely with current enrollment rates
underperforming expectations. In 2014, Vietnam’s Minister of Health Nguyen Thi Kim Tien conceded that the
2008 Law of Health Insurance target of achieving universal health coverage by 2014 was not met, but stated the
new goal of reaching 70% by 2015 and 80% population coverage by 2020, under the universal health coverage
master plan approved by the prime minister in 2012.
Figure 1:
Source: DR/Decision Resources, LLC.

Health Insurance
Overall, health insurance coverage in Vietnam is relatively low. Despite having legislation for mandatory health
insurance in place, enrollment has not been enforced. In 2012, only 65-70% of the population had health
insurance. There are currently two major health insurance schemes in Vietnam: Social Health Insurance (SHI)
and Voluntary Health Insurance (VHI). The SHI has been expanded over time to include an increasing number
of groups from the general population.
Figure 2:
Source: DR/Decision Resources, LLC.
Benefits Package
As stipulated by the Law of Health Insurance, VSS covers 100% of medical costs for children under 6 years of
age, police and armed forces, meritorious individuals, and all treatment at commune health centers; 95% of the
costs (100% by 2015 under the revised health insurance law) for pensioners, recipients of social allowances,
the poor and ethnic minorities; and 80% of the costs for all other insured members of the population. The
benefits package of the health insurance programs is essentially the same, aside from the poor who have
transportation costs for referrals included and meritorious individuals who have more generous coverage
of health services. The benefits package include most outpatient and inpatient services apart from several
exclusions such as HIV/AIDS prevention and treatment, cosmetic surgery, vaccination, dental care, treatment
for self-inflicted injuries or drug addictions, and drugs that are not approved by the MOH or not on the essential
drug list. Policy holders are issued a health insurance card to receive healthcare services at medical facilities.
Social Health Insurance

In 1992, the government promulgated its first decree on SHI. Decree 299/1992/HD-BT aimed to curb the
country’s rising OOP spending on healthcare by mandating compulsory health insurance schemes for civil
servants, workers in state-owned enterprises and non-state owned enterprises with more than ten people,
pensioners, recipients of social welfare, and staff of international organizations. During the 1992 to 2009 period,
members of these schemes had to contribute 3% of their salary (or pension or social allowance), of which
the employer contributed 2% and the employee the remaining 1%. In 2010, the contribution was adjusted to
4.5% of the minimum wage, made up of a 1.5% contribution from the employee and a 3% from the employer.
All provinces implemented this scheme, each with its own health insurance fund in additional to a national
reserve fund. In 1998, the government promulgated Decree 58/1998/ND-CP. By Decree 58, all provincial
health insurance funds were unified into one single national health insurance fund. Moreover, insurance

coverage extended to members of the Congress and People Council, war veterans, meritorious individuals,
pre-school teachers and foreign students. In 2002, the VSS agency became the administrator of the scheme.
In 2005, Decree 63/2005/ND-CP expanded the health insurance coverage to employees of non- state- owned
enterprises with less than ten people. The poor and the ethnic minorities, who were previously beneficiaries
of Decision 139/2002/QD-CP (known as Health Care Fund for the Poor; HCFP, which required all provincial
governments to provide free healthcare to disadvantaged people), were also incorporated into the SHI scheme
and required to enroll into the compulsory health insurance with the state funds subsidizing their premiums
(See Table 1). Three years later, Law 25/2008/QH12 (Law on Health Insurance), was enacted. All children
under the age of 6 and the near poor were incorporated into compulsory health insurance and were entitled
to government-subsidized free healthcare. Since this law was enacted, health coverage has slowly extended
to cover more people in the country. Specifically, students were enrolled by January 2010 and farmers and
workers of agriculture, forestry and fishery sectors were enrolled by January 2012. All remaining groups were
slated to be enrolled by January 1, 2014.
Table 2. Vietnam’s National Poverty Line (2011-2015)

Income per capita per month in VND (USD)
Group Rural Urban
Poor household 400,000 (~$19) 500,000 (~$24)
Near poor household 401,000-520,000 ($19-25) 501,000-650,000 ($24-31)
Source: DR/Decision Resources, LLC. Based on Decision No. 09/2011/QD-TTg.
Despite the compulsory nature of the scheme, enrollment has been underwhelming in some groups. Due to
the fragmentation of the health insurance sector and the lack of clear auditing, reported rates of enrollment vary
considerably. According to VSS data in 2010, 81% of children were covered. In 2012, only 20% of the labor
force contributed to this program. Reports suggest an increasing number of employers embezzle insurance
contributions from employees to invest in the business or for other personal gain, which may explain the low
enrollment rate of the workforce. As for the poor, approximately 97% of the poor had been enrolled in SHI by
2011, although this has not translated into an adequate level of health coverage; high OOP spending persists
and the poor continue to face barriers to healthcare access.
Revision of the Health Insurance Law in 2014

In response to persisting challenges such as poor enrollment rates, coverage deficiencies, and rising healthcare
costs, a number of key meetings were held in 2013 and 2014 between the MOH and the National Assembly
to discuss the revision and implementation of the Health Insurance Law. A revised Health Insurance Law was
adopted by the National Assembly in June 2014. Apart from an upwards adjustment of contribution rates for the
employed, Law 46/2014/QH13 also outlines several key articles designed to further extend accessible health
insurance for more of the population as it works towards universal health coverage goals:
■■ All citizens must be enrolled in SHI; employees’ dependents are required to enroll in health insurance if
not already covered.
■■ The employer shall pay for the health insurance contributions for the employee during maternity leave.
■■ 100% of the premium is subsidized by the government for the poor, children under six, the elderly over
eighty, war veterans, and beneficiaries of social protection schemes.
■■ 100% of treatment cost is subsidized by the government for enrollees who have continuously participated
in the health insurance scheme for the previous 5 years and whose treatment fees exceed 6 months’ salary.
■■ The poor and ethnic minorities are exempt from paying the remaining 5-20% of copayment fees.
■■ From 2016, the poor and populations living in remote areas/islands have access to healthcare services at
all levels (from commune level to central level) fully paid.

Premium
During the 1992 to 2009 period, members of these schemes had to contribute 3% of their salary (or pension
or social allowance), of which the employer contributed 2% and the employee the remaining 1%. In 2010, the
contribution was adjusted to 4.5% of the minimum wage, made up of a 1.5% contribution from the employee
and a 3% from the employer. All provinces implemented this scheme, each with its own health insurance
fund in additional to a national reserve fund. Following the amendment of the Health Insurance Law in June
2014, contribution rates have been adjusted to 6% of the minimum wage, with employees contributing 2%
and employers the remaining 4%, coming into effect on January 1, 2015. Moreover, as it is now mandatory for
the employee’s dependents to enroll in health insurance, any additional member of the household not already
covered by health insurance must pay a premium based on the employee’s monthly salary at a decreasing
percentage, as follows:
Table 3. SHI Premium Rates for a Household in Vietnam (2014)

Beneficiary Premium Rate
Policy Holder Maximum 6% of salary base
1st dependent 70% of policy holder’s premium
2nd dependent 60% of policy holder’s premium
3rd dependent 50% of policy holder’s premium
4th dependent onwards 40% of policy holder’s premium
Beneficiary Premium Rate
Source: DR/Decision Resources, LLC. Based on Law No. 46/2014/QH13.
Voluntary Health Insurance

The VHI was introduced in 1994 to cover family members of formal workers, self-employed, and students, though
employees under the SHI program can also enroll should they want additional coverage. Like the CHI program,
VHI has been unpopular, and the majority of those enrolled are students who are coerced by insurance agents
working on campuses to participate in the program. Insured members are entitled to the same benefits package
but the premium rate is defined by the ability to pay; this can range between VND 50,000 (USD $2.38) for students
living in the rural areas to VND 320,000 (USD $15.28) for family members living in urban cities. [The average VND
/ US $ foreign exchange rate of 0.0000478 for 2013 is used throughout this report].
Strategies to Curb Health Insurance Fund Expenditures

Vietnam Social Security (VSS) has exhausted 70% [VNĐ50 trillion (US$2.17 billion)] of its 2017 national health
insurance fund within the first 8 months of the year and the VSS estimates that the fund will encounter a deficit
of VNĐ10 trillion (US$0.43 billion) by the end of the year. This cost overrun can be traced to over-expenditure
of the health insurance fund by provinces and cities, with some provinces (Quảng Nam and Quảng Trị) already
approaching 90% of their allocated yearly funds. Concerns are mounting that if overspending continues on
the current pace, the overall health insurance fund will only be able to meet planned healthcare expenses for
2018 and 2019, with even reserve funds exhausted by 2020. The reasons for over-expenditure can be traced
to both healthcare providers and patients. Key factors include:
■■ Expansion of health insurance coverage for more people in rural areas
■■ Increase in hospital fees by over 40% due to unnecessary hospitalizations and medical tests
■■ Increasing costs of healthcare services offered in hospitals
■■ Health insurance policy enables card holders to avail themselves of healthcare services at any facility
within their district by foregoing the referral process resulting in multiple hospital visits
■■ Prescription of high-cost drugs by physicians over low-cost generics

To contain health insurance expenditures, VSS has stressed the provincial and city health authorities to
assess fund misuse activities and to revoke illegal healthcare spending. However, misuse of health insurance
in Vietnam is due to weak enforcement, including lack of stringent penalties imposed on frequent offenders.
Further, to overcome the annual deficit and balance the overall health insurance budget, the MoH has proposed
the government to increase the monthly health insurance contribution rate from 4.5% to 6% of workers’ salary.
The proposal is timed with the assumption that the health insurance fund will be exhausted post 2018 due to
an increase in healthcare service fees and expansion of health insurance coverage to people in rural areas.
The proposed contribution rate is aimed at balancing the health insurance fund as VSS has spent VND80
trillion (US$3.52 billion) in last 5 years, but only managed to collect a mere VND69 trillion (US$3.04 billion).
[Vietnamnet Bridge. Higher health insurance contribution rate proposed. July 13, 2017. Available at: http://
english.vietnamnet.vn/fms/society/182014/social-news-13-7.html.]
Over-expenditure of the health insurance fund questions the sustainability of the universal healthcare coverage
and reimbursement activities for services offered. Increasing the contribution rate might be an option to
overcome fund deficit, but it will have a direct impact on peoples’ earnings as it lowers their monthly income. To
ensure sustainability and balanced use of the budget, VSS has to implement key strategies such as effective
fund management by improving vigilance systems, mandate healthcare service providers to increase their
efficiency and adopt technology based provider payment systems. [Vietnam News. Health insurance fund
in deficit. September 1, 2017. Available at: http://vietnamnews.vn/society/393073/health-insurance-fund-in-
deficit.html#aqEXwRQ10FGGkCtm.97.]
On this front, Japan is cooperating with Vietnam to improve its health insurance system. On July 11, 2017,
MoH and Vietnam Social Security (VSS) entered into an agreement with the Japan International Cooperation
Agency (JICA) to cooperate on a technical project aimed at developing and strengthening management of
provider payment systems and the basic health service package. Key focus areas of the project would be
increasing SHI enrollment rates, identifying optimal provider payment methods, developing benefits package
based on situational analysis and to improve health insurance claim review process. The project commenced
in October 2017 and will be implemented for a period of 2 years. Further, in August 2016, based on Japan’s
model, Vietnam’s health ministry established a national advisory council on health insurance policy to provide a
platform for stakeholders (MOH, VSS, health service providers and users) involved in providing healthcare and
payment. The council assists and advises the health ministry in drafting health insurance policies. [Customs
News. Japan and Vietnam cooperate in improving health insurance system. June 11, 2017. Available at: http://
customsnews.vn/japan-and-vietnam-cooperate-in-improving-health-insurance-system-4036.html.]
Public Healthcare System
The country’s public healthcare system has three levels of administration and four levels of service provision:
Central Level
The MOH is at the central level. It is the central government agency that formulates, governs, and implements
the national healthcare policies. It oversees many of the country’s health programs, including preventive
medicine, traditional medicine, pharmaceuticals, medical devices, rehabilitation, health consultation, vaccine
production, national health insurance, and family planning. Health service providers at the central level include
central and regional hospitals.
Provincial Level
There are 63 provincial health bureaus (PHB) operating under the MOH. They are managed by the Provincial
People’s Committee (PPC) and advise the PPC on issues relating to the management of local people’s
healthcare. Provincial hospitals are at this level.

District Level
The district level makes up the primary health network, which includes district health offices (DHO), district
hospitals, and on a smaller scale, commune health stations and other regional clinics. The district level is
managed by the District People’s Committee (DPC), but is also under the control of PHB. District health centers
and regional polyclinics are at the district level.
Commune level
Commune health stations (CHS) are designed to be the first point of contact in the government healthcare
system. They are managed by the DHO and the Commune People’s Committee (CPC) and carry out a number
of primary healthcare services at the grassroots level, such as treatment of common illnesses, health promotion
at villages, and the education of local villages on preventive hygiene as well as birth control. At the commune
level, Vietnam’s health services coverage is extensive and continues to improve. Not surprisingly, most patients
that use health facilities at the commune and district levels are poor, while more financially secure and well-off
patients tend to use hospitals more heavily. In January 2013, it was reported that 100% of communes and 90%
of villages had qualified medical personnel; 72% of communes had local doctors and 95% had a nurse or a
midwife in the community.
Figure 3:
Source:DR/Decision Resources, LLC.
Financing
In 2010, government expenditure on healthcare accounted for 44.6% of total health expenditure. A breakdown
of this amount shows that funding was from central and local government revenue (26%), health insurance
revenue (17%), and foreign aid (1.6%). The remaining 55.4% was private expenditure, the majority of which
was OOP spending. In the beginning of 2013, Prime Minister Nguyen Tan Dung approved the ‘National
Strategy for the Protection, Care and Promotion of the People’s Health for the Period 2011-2020, with a vision
to 2030, which states the objective of increasing public investment in health, developing universal health

insurance, and reducing direct household expenditure on health. Some of its key measures for achieving
greater healthcare coverage include the consolidation and completion of the primary healthcare network, the
promotion of preventive medicine and safe hygiene, the improvement of the quality of medical services, as well
as the development of medical technology. According to World Bank data, Vietnam’s public health expenditure
has hovered around 8-9% of the total government expenditure in recent years. The government intends to
increase its annual budget for healthcare to at least 10% of the total state budget, spending at least 30% of this
health budget on preventive medicine as stipulated by Resolution 18/2008/QH12.
Provider Payer Mechanisms. Before the Doi Moi reform, Vietnam’s public health sector was fully financed by
general tax revenue. The introduction of SHI also introduced the fee-for-service payment model, which became
the predominant payment mechanism for all health facilities at the secondary and tertiary level. Hospitals
contracted with VSS are reimbursed by the agency according to a local fee schedule that is within the range of
the national fee schedule. The prices on the national fee schedule were published in 1995 and have not been
adjusted since to reflect current costs, even though nearly 1000 additional services were added to the schedule
in 2006. Due to the outdated pricing of services, providers are frequently insufficiently reimbursed relative to
the cost of service delivery. Consequently, providers are inclined to offer services that are most profitable as
opposed to what is most suitable for the patient. These tend to be services outside of the SHI benefits package,
or higher-end services on the fee schedule that were added after 1995, and are more reflective of current costs.
Cost is then passed onto the patients and VSS in the form of higher OOP spending and reimbursement amount.
Capitation was first piloted in 2004. Under this payment mechanism, the service provider is paid a flat fee per
patient for health services. Currently it is a common mechanism used in district hospitals and community health
centers. Hospitals can choose between capitation or fee-for-service payment, but most prefer fee-for-service.
Capitation payments tend to vary across different healthcare levels and provinces. For example, a service may
cost three times more at a district hospital than at a commune health center. Moreover, capitation rates vary
across different membership groups. Pensioners, meritorious individuals, beneficiaries of social benefits, and
war veterans have the highest capitation rate, whereas students have the lowest. As a result, providers tend to
discriminate by favoring members with higher capitation rates. Diagnosis-related group payment mechanisms
can also be found in Vietnam, although it is currently only at the pilot stage. The government has a roadmap
for all first level of health care facilities to use the capitation payment system by 2015.
Health Service Delivery Network

As mentioned previously, Vietnam’s healthcare system has four levels of service delivery: commune, district,
provincial, and central. According to the country’s General Statistical Office (GSO), in 2016, there were a total
of 13,591 health establishments in the country. There were 11,812 medical service units in communes and
precincts, 1,077 hospitals and 609 regional polyclinics (health clinics that offer outpatient services, diagnostic
tests, and dental care).
As of December 2016, health staff working under the government increased by 1.9% (YOY) to 303,100. Of
which, 270,100 are working in medical discipline (+2.3%) and 33,000 in pharmacy discipline (-0.9%). Doctors
per 10,000 inhabitants increased from 8 persons in 2015 to 8.4 in 2016. The ratio of medical staff to the general
population has increased over the years. In 2009, 100% of communes and 90% of villages had health workers,
while almost 70% of communes had doctors. For the period of 2009 to 2012, the proportion of rural villages with
health workers was maintained above 96%. The ratio of nurses to doctors, how-ever, remains low, which limits
the quality of patient care. According to World Health Organization (WHO) statistics, since 2008 the nurse to
doctor ratio of the Philippines, Indonesia, and Thailand was 5.5, 6.1, and 7.7, respectively, while Vietnam’s ratio
that year was 1.4. From 2012 national estimates, the ratio dipped further to 1.36. More recently in an interview
in 2014, the minister of health reported that the country does not have a nursing shortage but the autonomy
given to the public hospital system allows hospital management to not hire more staff and paying more salaries
to keep revenues high. For this reason, while government guidelines recommend a ratio of 4 nurses to 1 doctor,
the current ratio is still only 1.5. Vietnam has invested in increasing its capacity to train medical staff, although
the quality of training remains poor by international standards. In 2010, almost all provinces had secondary
medical schools or colleges. There were 21 public medical or pharmacy schools and three private medical
schools from private universities in the country.

Like other developing countries, Vietnam faces the problem of migration of medical staff from rural, lower level
health facilities to higher- level health facilities in urban areas. There is a general shortage of qualified medical
staff at grassroots facilities, as many choose to move to district or provincial level hospitals and health facilities
due to better pay and better equipment. Other factors that cause health workers to move include the general
improvement of living standards in urban locations, opportunities to gain better training, and enjoy free housing.
Some doctors and medical staff also switch to the private sector for similar incentives. The most qualified health
workers are in urban areas even though only 30% of the population lives there. As a result, commune and
district level facilities have difficulties recruiting doctors and are often understaffed, which translates into poorer
healthcare quality and services.
Patients have the option to consult any healthcare facility. Due to lower quality of healthcare at the commune
level in general, patients can directly go to district or provincial level hospitals. If they go directly to higher
level facilities without referral, they may face greater copayment costs. As some communes are far away,
patients often travel long distances to visit the nearest district or provincial level hospitals or health centers.
The 2010 Vietnam Household Living Standards Survey (VHLSS) reported that the average distance from a
commune without healthcare facilities to the nearest district and provincial hospital was 13.0 km and 42.1 km,
respectively, greater average distances compared with those found in the previous 2008 survey. The long
distance may deter some patients from seeking access to better healthcare. For those who take the trip, this
healthcare seeking pattern exacerbates the uneven use of healthcare facilities within the system, where there
is overcrowding at higher level facilities and low usage at more grassroots level facilities. Overall, the linkage
between the public and private sector is poor. Patients who visit public healthcare facilities do not generally
get referred to the private sector, although the private sector often refers patients back to the public sector.
However, medical records are generally not shared between providers which results in poor continuity of care.
Implementation Limitations
Although SHI has continually expanded its coverage both in benefits and in demographic reach, the provision
of healthcare is hampered by various implementation issues. Patients are free to use any level of healthcare.
Consequently, there is a general tendency to seek medical care at higher level facilities, thus creating
overcrowding at higher level hospitals and underutilization of smaller clinics and health stations. This pattern
is exacerbated by providers’ motivation of maintaining high bed occupancy rates for greater supply-side
subsidies. Further, indirect costs of transportation, caretakers, and under-the-table payments often sum up
to be greater than the reimbursable amount for healthcare. Reimbursement procedures are tedious and
cumbersome; all invoices, receipts, and certification from the healthcare provider need to be submitted to VSS.
The quality of healthcare services is generally poor and waiting times are long due to the lack of medical staff
and medical equipment. Inefficient financing of the system also causes providers to offer services that are more
profitable, which contributes to high OOP spending or discrimination against the poor, who must resort to lower
levels of healthcare services.
Out-of-Pocket Payments
Vietnam’s healthcare system is heavily dependent on OOP payments, which continues to be a heavy burden
on the population. The country has one of the highest percentages of OOP expenditure in the region, which
correlates high-ly with its private health expenditure. In 2011, 60.1% of Vietnam’s total health expenditure was
private spending, of which 93.5% was attributed to OOP. This has improved slightly in 2012, with a drop in private
spending on health as a percentage of total health expenditure to 57.4%, of which 85% was OOP spending. Data
from the WHO show that from 2002 to 2010, the average monthly OOP health payment per household has shown
a consistently increasing trend. In 2010, the goal set by the MOH in the Five-Year Health Sector Development
Plan was to achieve a minimum of 50% public spending of the total health expenditure by 2015; this target was
readjusted in 2012 to reducing out-of-pocket expenditure to less than 40% of total health expenditures by 2015.

Private Sector
After the Doi Moi reforms were implemented in 1986, private health clinics started operating in the country and
provided greater access to those who could afford private healthcare services. The private sector comprises
of 170 hospitals and 30,000 healthcare clinics. Despite the growth of the private sector, its contribution to
healthcare services has so far been limited to outpatient services, because most patients go to public health
facilities for inpatient services, mainly for reasons of cost and accessibility. Moreover, private health clinics tend
to be located in urban areas of the country, thus creating an uneven distribution of medical personnel. The
for-profit motivations of the private sector put them at odds with the public system, although the public facilities
have quiet incentives to increase their revenues to obtain greater supply side subsidies and pay higher salaries
to its staff. The private sector as a whole has continued to grow much faster in recent years.
Classification of Private Healthcare Providers

In December 2017, the Vietnam Social Security agency noted that private hospitals and clinics signing a
contract with the agency in 2018 for providing healthcare services to people with health insurance cards
should present a legal document proving their quality as per the health ministry standards. In December 2017,
the health ministry followed decree No 6062/QD-BYT defining the criteria to classify private health facilities
based on quality parameters. Facilities will be classified into 4 levels (with level 1 the highest) based on
number of hospital beds, ratio of doctors and nurses employed, staff qualification and quality of infrastructure.
Classification is as follows:
Level 1: hospital with 400 beds, nurses’ ratio is twice the doctors (2:1), 60% of the heads of departments have
PhDs and hospital infrastructure meets quality standards
Level 2: hospital with 100 to 400 beds, nurses’ ratio is not twice the doctors, 20 to 60% of the heads of
departments have master’s degrees
Level 3: hospital with 30 to 100 beds, nurses’ ratio is not twice the doctors, only 20% of heads of departments
have master’s degrees
Hospitals below Level 3 will be classified as Level 4, but all private clinics have been classified as level 3.
Classification of private healthcare facilities helps the agency to calculate the health insurance fees to be paid
for a patient treated in private setting other than public facilities as there will be payment related issue when an
insured person generally registered at one public facility receives medical treatment in private hospitals or clinics.
Classification benefits private hospitals and clinics interested in providing healthcare services to insured
populations by offering competition against the quality of public health facilities. The government hopes this
will decrease unnecessary public health expenditure on substandard facilities and rationalize reimbursement
costs at private facilities in accordance with their quality level. [Vietnam News. New criteria classify private
hospitals. January 12, 2018. Available at: http://vietnamnews.vn/society/health/421023/new-criteria-classify-
private-hospitals.html#WyuvFjDkMHobSd5b.97.]

Pharmaceutical Market
Table 4. Key Questions for Understanding the Pharmaceutical Market in Vietnam
How large is the pharmaceutical market? VND118.7 trillion; US$5.23 billion (2017)
What is the pharmaceutical market growth rate? 10.76% in VND; 11.28% in US$ (2016–2017)
Where does this country’s pharmaceutical market rank globally? 27th (2017)
Where does this Country’s pharmaceutical market rank regionally? 8th (2017) in Asia-Pacific region
Source: Decision Resources Group. Based on data from Organization for Economic Co-operation and Development.
Market Size and Growth
Recent market trends indicate Vietnam should offer a solid investment destination in the years ahead for
overseas competitors looking to expand their operations as it is a fast growing space for pharmaceutical
products. Between 2010 and 2015, the market grew at an average growth rate of 17-20%, thus making it
one among the fast growing markets in the region. According to Business Monitor International (BMI), the
Vietnamese pharmaceutical market generated VND118.7 trillion (US$5.2 billion) in sales in 2017, which is a
10.76% and 11.3% increase in local currency and USD, respectively, when compared to 2016 [VND106 trillion
(US$4.7 billion)]. Over the next 5 years, BMI predicts the market growth rate to be in the double digits.
Multiple factors have contributed to pharma market growth in Vietnam, including an increase in per capita
incomes. Furthermore, average drug expenditure in Vietnam increased by 69.5% from US$22.3 in 2010 to
US$37.8 in 2015. Overall increases in healthcare spending have fueled this trend in part; total healthcare
expenditure increased from 5% of GDP in 2010 to more than 7% by 2014, highest among the developing nations
in the region. For the same time period, out-of-pocket (OOP) expenditure decreased markedly from 70% to 45%.
Between 2005 and 2015, there was continuous and stable growth in per capita drug spending. In 2005,
average drug expenditure per capita was US$9.85 and it increased to US$22.3 in 2010 and US$44 in 2015.
Between 2005 and 2010, average growth rate per year was 17.7% and between 2010 and 2015 it was 14.6%.
If the average drug expenditure per capita maintains a growth rate of 14% per year until 2025, per capita
drug expenditure is estimated to reach US$85 in 2020 and US$163 in 2025. Key factors which attribute
to the swift growth of pharmaceutical demand are socio-economic changes such as increase in economic
growth and personal income, rising population and rapid urbanization, and increase in ageing population and
chronic conditions. Further, the factors which positively affect the demand for healthcare and pharmaceutical
products are increase in healthcare awareness, high income growth, rise in urban-middle classes changes
people’s behavior and consumption pattern, modern life styles, increase in life expectancy makes more
old people succumb to chronic disease, but on the other hand they negatively impact the sustainability of
healthcare system. [Angelino A, Khanh DT, HA NA et al. Pharmaceutical Industry in Vietnam: Sluggish Sector
in a Growing Market. Int. J. Environ. Res. Public Health. August 29, 2017. Available at: http://www.mdpi.
com/1660-4601/14/9/976/pdf.]
Market Trends
Beginning in 2018, the pharma market is primed for significant transformation due to the entry of leading non-
pharmaceutical firms interested in diversifying their businesses. The list includes smartphone distribution firms such
as the Gioi Di Dong, the Gioi So and FPT Retail, and home appliance distributor Nguyen Kim, which are interested
in venturing into pharma distribution. Among them, The Gioi Di Dong was the first firm to enter into partnership with
Vinamedic in August, 2017 for food supplements distribution. On the other hand, domestic companies are under
pressure due to market competition created by foreign firms such as Sanofi, Taisho and Abbott.

In 2018, the majority of pharma companies are focusing on new product development while select firms focus
on expanding the OTC market and strengthening their retail networks. The latter strategy reflects the particular
market dynamics in Vietnam. Specifically, in Vietnam there are 45,000 private drug stores, most of which
operate as individual shops; however, there are also pharmacy chains such as Phano Pharmacy, Pharmacity
and PAK Pharmacy. Phano Pharmacy has 49 retail outlets in 12 provinces/cities. Of the total market share,
5% is constituted by pharmacy chains, whereas 95% by individual shops. [VietNamNet Bridge. $5.2 billion
drug market attracts more foreign investors. January 04, 2018. Available at: http://english.vietnamnet.vn/fms/
business/192937/-5-2-billion-drug-market-attracts-more-foreign-investors.html.]
Challenges faced by the majority of pharma companies operating in Vietnam include bidding for hospital drugs
and high dependency on raw material imports from China and India. Import dependency has made the sector
more vulnerable to changes in foreign currency rate and high import costs, which ultimately resulted in 20-25%
higher price of drugs in Vietnam than in China and India. This is more likely a concern for local companies
which largely manufacture generics. Due to limited capital, human resources and technologies, domestic
companies lack in R&D activities and therefore, any co-operation or partnership with foreign companies helps
local firms to improve their products’ quality and thus can become more competitive in the market. On the other
hand, co-operation with domestic companies benefits foreign companies as they can import and distribute
their products in Vietnam through their local partners. [VietNamNet Bridge. Vietnam’s pharmaceutical sector
expected higher growth. January 01, 2018. Available at: http://english.vietnamnet.vn/fms/business/192807/
vietnam-s-pharmaceutical-sector-expected-higher-growth.html.]
Drug Imports
In recent years, there has been sharp increase in drug imports to Vietnam and in 2016 imports’ value reached
US$2.5 billion, a 10% increase over the previous year. This growth is due to an increase in public spending
on medicine and healthcare costs attributed to higher per capita incomes. Vietnamese per head spending on
healthcare services and pharmaceuticals is US$30 to 40 per annum, which is lower than the average spending
of developing nations (US$96) and the overall global level (US$186).
Vietnam imports 55% of its domestic drug needs, the majority of which are branded drugs. In 2016, imports
valuing US$200 million hailed from France, Germany and the US. Specialty or branded drugs are mostly
imported from Europe and the US, whereas raw materials are imported from China and India. [VietNamNet
Bridge. Vietnam spends billions of USD a year to import drugs. September 09, 2017. Available at: http://english.
vietnamnet.vn/fms/business/187056/vietnam-spends-billions-of-usd-a-year-to-import-drugs.html.]

Pharmacoeconomics
Table 5. Key Questions for Understanding Pharmacoeconomics in Vietnam
Key Question Answer
Does the government perform formal Health Yes, Vietnam has started implementing HTA for high-cost medicines and
Technology Assessments (HTAs)? health services
Are there any notable HTA reforms on the horizon? Health system is in transition to adopt mandatory HTA for drug
reimbursement as well as for:
Defining health services packages with focus on grassroots level
Streamlining the current health benefits package with an eye toward cost-
effectiveness, in order to create basic health services package (BHSP)
Developing HTA methods and process guidelines to educate different

stakeholders (decision makers, researchers, sponsors and HCPs)
Relying extensively on pharmacoeconomics to assist drug procurement

agencies in price negotiation with pharma companies
Is HTA performed nationally and/or regionally? National level
Where are these HTAs available? Health Strategy and Policy Institute (HSPI): http://en.hspi.org.vn/vclen/d15972
Vietnam Health Economics Association (VHEA): http://vhea.org.vn/News.

aspx?CateID=189&parentID=0
Who are the key stakeholders in the HTA Ministry of Health and HSPI (central institute to co-ordinate all HTA activities
process? in Vietnam)
Is the HTA binding or a recommendation? Recommendation for formulating health policies and to decide on drug reimbursement
Which drugs are subject to HTA evaluation? Currently, HTA is effective for drugs which are selected in the topic selection
workshop based on the criteria defined by HSPI.
By 2016, HSPI completed assessment of a total of 17 health technologies,

which included 14 medicines and 3 interventions.
In 2015, HSPI assessed cost-effectiveness of peginterferon (peg-IFN

alfa-2a and alfa-2b) and trastuzumab for treatment of chronic hepatitis C
infection (HCV) and breast cancer, respectively.
How long does the HTA process take? N/A
Is HTA compulsory for reimbursement? Not currently, but there is a proposal to implement HTA for drug
reimbursement in near future.
HTA guidelines are in the first stages of development and were reportedly
completed by October 2017.
What influence does HTA have on drug pricing? N/A
What opportunities are there for N/A
manufacturer involvement throughout the
HTA process?
What economic models are used in HTAs? Current proposal is to include cost-effectiveness and budget impact analysis
for a period of 5 years from payer (government) perspective
Do HTA bodies employ horizon scanning? No
Is the country a member of any regional or Yes, HSPI is member of HTAsialink: http://www.htasialink.org/member/
international HTA collaborations? member.php
Source: Decision Resources Group. Based on data from HSPI, Vietnam Health Economics Association (VHEA), International Decision Support
Initiative (iDSI), HITAP International Unit (HIU), NICE International and HTAsialink

Health Technology Assessment
Vietnam does not have a national health technology assessment (HTA) program but is in the process of
establishing one. In 2004, the MOH and the Department of Health Economics began researching the availability
and use of medical equipment in some hospitals. Recognizing the need for evidence-based decision making in
the country’s healthcare system, a group of 30 researchers from various universities and research institutions
established a HTA Interest Group (HTA-VN), based in the Center for Health System Research in Hanoi Medical
University. HTA-VN aims to promote the development of HTA to enable evidence-based, cost-effective health
policy making in Vietnam. Towards the end of 2010, the Vietnam Health Economics Association (VHEA)
organized the country’s first health economics conference. The group has begun to collaborate with various
international organizations about HTA implementation. More recently in November 2013, VHEA, the Center
for Health Systems Research, and Hanoi Medical University organized the Health Technology Assessment
in Vietnam conference to raise awareness of HTA in Vietnam. Among the international participants were
representatives from the Health Intervention and Technology Assessment Program (HITAP) from Thailand,
the WHO, and World Bank.

Market Authorization
Table 6. Key Questions for Understanding Market Authorization in Vietnam
Key Question Answer
Which organization grants market Drug Administration of Vietnam (DAV) under MoH
authorization?
What is the target average timeframe Typically, it takes 6 to 8 months to evaluate MA application
for drug approval?
In most cases, applicants are required to submit supplementary documents, which
could extend the approval process by 3 to 5 more months from the date of the
supplementary documents submission.
As a result, average target timeframe could be 9 to 13 months

What is the actual average timeframe Actual average timeframe for issuing MA number will be 1 to 2 years
for drug approval?
What are the primary sources of Local clinical trial requirement and obtaining appropriate prior licenses such as
delays to marketing authorization? Certificate of Drug Trading (or Certificate of satisfaction for drug business) for
local drug applicants and Certificate of Operating in Medicinal Products and Raw
Medicinal Materials in Vietnam (or Operating License) for foreign drug applicants
What opportunities for expedited Earlier approval by DAV is possible under special circumstances such as:
review or fast track approval are
Drugs for rare diseases which have high unmet need
available for pharmaceuticals?
Drugs used in emergency cases such as natural disasters and epidemics
Domestic drugs manufactured by manufacturers who are granted GMP license in

past 18 months
Vaccines that are pre-qualified by WHO

Are there circumstances where drugs Vietnam has no regulations for providing early market access (such as named
are provided early market access patient or compassionate use programs) for products without market authorization.
prior to authorization?
In some special cases such as insufficient supply of finished drugs containing API
which have high treatment demand, rare drugs and drugs used in special treatment
early market access without MA will be granted.
What noteworthy country-specific Study on local population is mandatory for drugs without clinical trial data. If clinical trial
clinical trial requirements are in place? data already exists elsewhere (in other countries) then local clinical trial is not required.
Source: Decision Resources Group. Based on data from Thomson Reuters Practical Law and Tilleke & Gibbins Consultants Limited.
Laws
The current Law on Pharmacy or Pharmaceutical Law 2016 was promulgated by the XIIIth National Assembly of the
Socialist Republic of Vietnam on April 06, 2016 and came into effect January 2017, replacing the Pharmaceutical
Law 2005 (Pharmacy Law No. 34/2005/QH11). The new law promotes two policies, namely “Masterplan of Medicinal
Ingredient Development to 2020” and the “National Strategy for Development of the Vietnamese Pharmaceutical
Industry to 2020”. Four new chapters such as state policies on pharmacy and pharmaceutical industry development,
pharmacy practice, clinical pharmacy and drug price management were included in the new law. Pharmaceutical
Law 2016 supports new investments in drug production, drug materials, essential drugs, social diseases drugs and
vaccines by providing incentives to R&D programs in production technology and biotechnology to manufacture
new drugs. [Angelino A, Khanh DT, HA NA et al. Pharmaceutical Industry in Vietnam: Sluggish Sector in a Growing
Market. Int. J. Environ. Res. Public Health. August 29, 2017. Available at: http://www.mdpi.com/1660-4601/14/9/976/
pdf.][Legal Normative Documents. Law on Pharmacy. April 06, 2016. Available at: http://vbpl.vn/TW/Pages/vbpqen-
toanvan.aspx?ItemID=11099&Keyword=law%20on%20pharmacy.]

Key Decision Makers
Drug Administration of Vietnam

The DAV serves an advisory role to the MOH in state management, law implementation, and operations in the
pharmaceutical sector. It is responsible for the regulation of pharmaceuticals, including registration and market
authorization in the country. The DAV also presides over other areas such as clinical trials, the import and export
of pharmaceuticals, drug quality, drug prices, and drug procurement.
Clinical Trials
The regulation of clinical trials in Vietnam is outlined by Decision No. 01/2007/QD-BYT. Drugs that require
clinical trials to be conducted include the following:
■■ Products containing newly invented substances.
■■ Products containing a new combination of approved substances already marketed.
■■ Products to be used for the first time in Vietnam (e.g. vaccines, medical bio-products).
Drugs that are exempt from clinical trials include the following:
■■ Generics.
■■ Foreign medicines that have been lawfully marketed for at least five years in the country of origin; have
been widely used by many patients and certified safe and effective by a recognized state agency in the
country of origin; and have the same indication, specifications, and route of administration in Vietnam as
in the country of origin.
■■ Traditional medicines already recognized by the Ministry of Health.
The Minister of Health may consult other regulatory bodies for specific cases, but it holds the final decision on
clinical trial requirements for each product. There are three main regulatory bodies under the MOH involved in
the evaluation and approval of clinical trial applications:
■■ The Science and Training Department
■■ The Ministerial level Science and Technology Council
■■ The Ministerial level Biomedical Research Ethics Council
Authorization Procedure
Manufacturers must submit an application dossier for clinical trial registration to the Science and Training
Department, which has 15 working days to review the application and issue an approval letter. The
manufacturer and principal researcher are then required to submit the product dossier and a protocol for
the clinical trial to the department for review. Within 60 working days, the Science and Technology Council
evaluates the scientific basis of the trial while the Biomedical Research Ethics Council reviews the ethical basis
of its design. The Science and Training Department has the following 15 working days to collect all evaluation
results and either notify the manufacturer and researcher to provide any supplementary information, or send
the results to the Minister of Health for approval. The department is also tasked with monitoring the clinical
trials, as well as informing relevant parties about the regulations and guidelines of good clinical trial practices
throughout the process.

Registration Process
The DAV is responsible for the country’s drug registration process. In order to register a drug in Vietnam, the
manufacturer must submit an application dossier which complies with the Southeast Asian Nations (ASEAN)
Common Technical Dossier (ACTD) requirements. The application dossier for new drugs or biological products
should include product information, manufacturing process descriptions, quality specifications, and preclinical
and clinical data. Applications for generic drugs do not require clinical information. The Drug Evaluation Council
of the DAV will evaluate the application before approving for marketing authorization, which typically takes
six to eight months. In most cases, the DAV will require supplementary documents from the applicant, which
could extend the approval process by three to five more months from the date of the supplementary documents
submission. If the drug is approved, the DAV will issue a MA registration number for that drug. It is typical for
the issuance of a MA number to take one to two years. However, it is possible for drugs to be approved earlier
by the DAV under special circumstances such as emergencies, including natural disasters.
The DAV issues drug registration numbers and authorizes marketing approvals for pharmaceutical products.
Apart from meeting GMP standards, manufacturers must obtain the appropriate license before their products
are authorized for market distribution in Vietnam, which can either be the Certificate of Drug Trading, for local
drug applicants; or the Certificate of Operating in Medicinal Products and Raw Medicinal Materials in Vietnam,
for foreign drug applicants. MA has an application fee of VND 1.5 million (USD 71.83) and is valid for five
years. Reapplication for extending MA has caused administrative inconvenience to manufacturers, as dossier
submission for renewal cannot be made earlier than 6 months from the expiry date, while the application
process typically takes longer than 6 months, resulting in an off-market period during which the drug cannot be
imported nor marketed (including a withdrawal of all promotional materials).
New Decree Eases Drug Imports
Pharmaceutical Law 2005 guided by Article 24 of Decree No. 79/2006/ND-CP limited drug import rights to foreign
invested enterprises (FIEs), allowing entry only to those manufacturers and wholesalers with valid certificates
for doing business and those who followed good standard warehouse practices. However, effective from July
1, 2017, the new decree No. 54/2017/ND-CP guiding the Pharmaceutical Law 2016 relieved FIEs concerns by
allowing them to import and sell drugs to their local partners. The new decree expanded drug import rights to the
FIEs, which is viewed as an opportunity for foreign companies interested in doing business in Vietnam.
According to Article 33.1(b) of Pharmaceutical Law 2016, pharmaceutical establishments with physical offices,
warehouses for drug storage and logistics infrastructure, quality control systems and technical documents,
and qualified and trained personnel fulfilling good standard practices (GSP) are eligible to import drugs. Article
44.1(d) of Pharmaceutical Law 2016 and Article 91.10 of the New Decree mentioned that FIEs have rights to
import and sell drugs to their local partners (LPs) for distribution. Further, Article 91.12 of the new decree states
that FIEs should first register their LPs with the health ministry before they begin import trade activities and also
should update the ministry about their contract termination with LPs as the health ministry will publish the list
of eligible LPs within 3 working days on their website.
The government has issued the decree in view of its commitment with WTO and the treaty on EU – Vietnam
Free Trade Agreement (EVFTA) in order to promote foreign companies to establish FIEs and to import
drugs which have been approved by the regulatory agency. These developments point to the growth of
pharmaceutical sector in Vietnam as there has been increase in import of pharmaceutical products for the
past few years. [LNT and Partners. FIEs will have greater rights to import drugs into Vietnam. October 2, 2017.
Available at: https://vietnamlawinsight.com/2017/10/02/fies-will-have-greater-rights-to-import-drugs-into-
vietnam/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original#_ftn1.]

Access to Therapies
In its White Books for 2016, the European Chamber of Commerce in Vietnam issued recommendations to
improve the efficiency of the drug registration process, eliminate local trial requirements and create timely
drug reimbursement process in an effort to make Vietnam more in line with other ASEAN countries’ timelines
(source: EuroCham accessed at http://www.eurochamvn.org/sites/default/files/uploads/English-readonly.pdf
on May 6, 2016). Compared with other markets, the time to market is 5-7 years longer in Vietnam because of
various regulatory hurdles, in particular the requirement for local clinical trials and an infrequent review of the
reimbursement list.
Clinical Trials Change

In April 2016, the Vietnamese government amended the Pharmacy Law, removing the requirement that
local trials be conducted for drugs in which global clinical trial data already exists. Under the previous rules,
pharmaceutical companies were required to perform local clinical trials or wait for five years after marketing
authorization in their home country. Vietnam was the only ASEAN country that had this requirement. As a result,
the Pharma Group (a pharmaceutical industry trade group comprised of major drug companies) estimated
the requirement added 2.5-5 years of additional time to market access. This change will likely improve overall
efficiency in getting drugs to market.
NEDL Issues
Because the NEDL is reviewed only ever three to four years and this process itself takes approximately
two years, access to therapies is often delayed by several years. In order to speed up access to therapies,
the EuroCham’s Pharma Group has recommended integrating reimbursement decisions and the NEDL
management into a single process, increasing the frequency of reviews and implementing clear criteria for drug
selection and percentage of reimbursement.
Potential Strengthening of Regulatory Oversight
Following a fraudulent cancer drug scam uncovered in 2017—discussed further under “Intellectual Property:
Counterfeiting”, the government ordered a probe into the Ministry of Health’s (MoH) activities such as drug
registration and import license procedures. [VN Express International. Vietnam’s health ministry under scrutiny
over cancer drug scam. August 30, 2017. Available at: https://e.vnexpress.net/news/news/vietnam-s-health-
ministry-under-scrutiny-over-cancer-drug-scam-3634997.html.] Stricter measures for fraudulent medicines
should benefit manufacturers of superior, branded alternatives.

Product-Specific Regulations
Branded or Originators
Sponsors seeking registration of new medical products such as chemical drugs, biologics and vaccines should
submit clinical dossier in ICH-CTD format. The dossier contains four parts and the required in-formation to be
submitted for each part is detailed below:
Part I: application form containing administrative data, product label, and CPP and GMP certificates
Part II: contains summary of product quality, related content and data, references and site master file
Part III: pre-clinical documents such as study summary, reports and references
Part IV: summary of clinical documents, tabular listing of studies, study reports and references
[Thomson Reuters Practical Law. Distribution and marketing of drugs in Vietnam: overview. Accessed on May
8, 2018. Available at: https://uk.practicallaw.thomsonreuters.com/9-618-0665?transitionType=Default&contex
tData=(sc.Default)&firstPage=true&bhcp=1.]
Registration timeline for new drugs takes 18 to 24 months from the date of dossier submission. [Mak-rocare.
Southeast Asia Regulatory Landscape for Pharmaceuticals (Part 2). July, 2015. Available at: https://www.
makrocare.com/WhitePapers/se-asian-regulatory-environment-p2.pdf.]
Generics
For registration of generic and herbal products, sponsors can submit registration dossier in ASEAN-CTD
(ACTD) format, which has 2 parts:
Part I: application form containing administrative data, product label, and CPP and GMP certificates and
Part II: contains summary of product quality, contents and data, references and site master file
[DAV. Vietnam Pharmaceutical Registration and Approval. August 3, 2017. Available at: https://www.fda.gov.
tw/tc/includes/GetFile.ashx?mID=133&id=66508.]
The registration timeline for generic drugs takes 12 to 14 months from the date of dossier submission.
[Makrocare. Southeast Asia Regulatory Landscape for Pharmaceuticals (Part 2). July, 2015. Available at:
https://www.makrocare.com/WhitePapers/se-asian-regulatory-environment-p2.pdf.]
Biologics and Vaccines
In Vietnam, there are no product specific regulations for registration of biologics, vaccines and serum products,
but there is a difference in the registration process of biologics and chemical products, name-ly:
For registration of vaccines, sponsor has to submit evidence from clinical trials conducted in Vietnam
Sponsors of vaccines and serum products should enclose a Certificate of Analysis obtained from the National
Institute for Control of Vaccines and Biologicals (NICVB) along with the registration dossier
Each imported batch of vaccines and biologics should be thoroughly inspected by the NICVB before circulation into the market
Combination products also do not have specific regulations or classification, instead they are classified by DAV
into respective product categories (chemical, biologics, diagnostics and medical devices) on case-by-case
basis and are subjected to regulations of that category. [Thomson Reuters Practical Law. Medicinal product
regulation and product liability in Vietnam: overview. Accessed on April 19, 2018. Available at: https://content.
next.westlaw.com/Document/Id4af42f71cb511e38578f7ccc38dcbee/View/FullText.html?contextData=(sc.Def
ault)&transitionType=Default&firstPage=true&bhcp=1.]

Regulatory Harmonization
Vietnam is part of the Association of ASEAN, made up of ten member states, for which Vietnam became a
member in 1995. ASEAN members aim to better facilitate cooperation in the economic, social, cultural, and
other fields. In 1999, the ASEAN Consultative Committee for Standards and Quality Pharmaceutical Product
Working Group (ACCSQ-PPWG) was formed with the purpose of harmonizing pharmaceutical regulatory
practices among the ASEAN member states. The ACCSQ-PPWG aims to eliminate technical barriers to trade
posed by regulations without compromising drug efficacy, safety, or quality by developing common regulatory
procedures that will enable mutual recognition arrangements (MRAs) within the ASEAN region. The key
outputs from ACCSQ-PPWG harmonization initiatives include the ASEAN Common Technical Dossier (ACTD)
and ASEAN Common Technical Requirements (ACTR) for pharmaceutical registration, various guidelines
(e.g., for the conduct of bioavailability and bioequivalence studies), a postmarketing alert system for unsafe
pharmaceuticals, and the ASEAN Sectoral MRA on the Pharmaceutical Inspectorate Cooperation Scheme
(PIC/S) Good Manufacturer Practice (GMP) inspections of manufacturers in member states. Intra-ASEAN
trade of pharmaceuticals only requires tariffs of 0-5%, which will be abolished in 2015 under the Agreement on
Common Effective Preferential Tariff Scheme (CEPT).
The ACCSQ also aims to harmonize regulatory standards and requirements across the ASEAN countries.
The ACTD depicts the common dossier requirements on drug registration from all ASEAN member states.
According to Circular No. 22/2009/TT-BYT, the registration of medicines in Vietnam requires dossiers of
chemical medicines, vaccines, serum containing antibody, and medical biologics be made to comply with
ASEAN ACTD format.
The mutual recognition on PIC/S GMP certificates was implemented in 2009. Under the MRA, once the PIC/S
GMP certificate of a manufacturer has been issued in its country, other ASEAN countries do not have to re-audit
the drug manufacturing plant if they wish to import drugs manufactured from that member state country. This
mutual recognition facilitates the process of parallel importation between ASEAN countries, especially on
domestically manufactured drugs such as generics. It also allows patients faster access to medicines because
less time and resources will be needed for PIC/S GMP inspection. The MRA is restricted only to prescription
and nonprescription drugs in finished dosage forms and does not include biologics.

Pricing System
Table 7. Key Questions for Understanding the Pricing System in Vietnam
Key Question Answer
Does the government regulate No, it is a free pricing system, but prices will be stabilized by the authorities.
drug pricing?
Who are the key stakeholders in Drug Administration of Vietnam (DAV), Ministry of Health (MoH) and Ministry of
the pricing system? Finance (MoF)
How are prices determined? Manufacturers can freely set their drug prices, but they need to declare and publish
product prices with DAV prior to sale.
Declared drug prices should not be more than the price of the same drug in reference
countries which have similar healthcare and economic conditions. Reference country
list will be published by the MoH.
Ministry of Finance (MoF) determines the prices of medical products procured by the
state health authorities and the prices of medicines purchased by hospitals and other
healthcare establishments will be determined through public tender process.
Are there any special pricing No
mechanisms for generics?
Are there any special pricing No
mechanisms for biosimilars?
Are prices reviewed? Manufacturers and distributors can increase their drug prices by notifying DVA. Drug
prices might vary due to changing economic conditions, therefore applicants generally
declare highest possible price in order to accommodate these price fluctuations.
Is therapeutic reference pricing used? No
Is external reference pricing used? Used for imported drugs but which reference price (ex-factory or retail price with or
without tax) to be used for comparison is not clearly defined.
In general, external reference pricing system ensures that the declared price of
medical product is not higher than the price of same category products in comparable
or reference countries. While undefined, Thailand, Malaysia, Indonesia, the Philippines
and Cambodia have been proposed as reference countries.
Reference countries should be chosen based on statistical indices similar to Vietnam

when it comes to: GDP per capita, GDP per capita at PPP, healthcare system.
Are managed entry agreements No
(MEAs) used?
Source: Decision Resources Group. Based on data from Library of Congress, Thomson Reuters Practical Law, Essential Medicines and Health
Products Information Portal (WHO),
Drug Prices
According to the Joint Annual Health Review, drug prices in Vietnam are generally higher compared to
international reference prices. In 2010, a price survey indicated that retail drug prices are 12.1 times higher
than the international reference price for original brand drugs and 1.4 times higher than generic drugs. Several
factors contributing to these higher drug prices and health costs are discussed below.
Dependence on Imported Medicines

Vietnam is heavily dependent on imported medicines to meet demand. In 2012, the value of domestically
produced drugs as a percentage of the total value of drugs was 47%, indicating that a sizable portion of drugs
are imported from abroad. Moreover, Vietnam relies heavily on importing raw materials for pharmaceutical

manufacturing. The country imports 90% of the active substances needed for local drug manufacturing. This
heavy dependence limits the government’s ability to put downward pressure on prices. As a result, the price
differentials between branded innovative drugs and the generic alternative remain high.
Lack of Accountability in Resource Utilization

While it is generally acknowledged that financial resources are frequently used inappropriately in the Vietnamese
healthcare system, there is currently no research or auditing being done on misuse. The lack of accountability on
resources utilization results in cost-ineffective use of drugs (such as prescribing innovative branded drugs instead
of the generic equivalent), over-prescription of medication, and unnecessary use of lab tests and other services.
The decentralized structure of the healthcare system and the wide use of the fee-for-service payment mechanism
make it difficult to manage drug prices and volumes, resulting in escalating costs for patients.
Lack of Local Raw Materials

Another factor that contributes to the high price of drugs is the lack of domestic availability of raw materials.
Vietnam imports 90% of the raw materials required for drug manufacturing, and the increased cost of production
has deterred many foreign manufacturers from establishing local manufacturing facilities in the country. While
Vietnam remains an attractive pharmaceutical market to enter due to its high growth potential, only about 30%
of drug companies have local manufacturing capacity. Among these companies is Sanofi, who currently has
two manufacturing plants. In 2013, the French drug maker announced plans of investing $75 million to build
a third plant, expected to be operational by 2015, while Japan’s Nipro Pharma also committed $250 to build a
manufacturing plant in the country.
Hospitals
Drug prices are not closely monitored or regulated by the MOH at local levels. The decentralization of the
healthcare system has given hospitals autonomy in regards to how they spend their budget. Hospitals are
given the freedom to set their own prices for drugs, by negotiating drug prices with pharmaceutical companies.
The cost ultimately is passed on to the patient or VSS, with little oversight or regulation from the MOH. This
lack of oversight has resulted in drug prices higher than in other countries, which often traces to corruption
within the system. In 2012, it was reported that around 40% of the price of hospital drugs can be attributed to
informal payments to procurement officers and doctors at hospitals. Financial incentives are often offered by
pharmaceutical representatives to procurement officers to buy their drugs, and to doctors to prescribe them.
Foreign manufacturers should take caution in dealing with hospitals as it has become common for staff to expect
a certain percentage of commission from pharmaceutical companies to procure or prescribe their products.
Price Setting
According to the Law on Pharmacy (2005), establishments involved in drug manufacturing, exporting, importing
and trading are free to set their own prices and compete within the market. The State will take measures to
stabilize market prices of drugs that are used in the public healthcare sector; the State only intervenes when the
price of a drug is found to be inappropriate, at which point the DAV or health bureaus will issue a letter in writing
requesting feedback and clarification from the manufacturer(s) to explain its pricing rationale. The law also
states that drugs must have their prices publicly declared and posted before circulation in the market. Prices
also need to be re-declared if it is changed by the manufacturer or the importing establishments to ensure
that local prices are not higher than prices in other regional countries that have healthcare and commercial
conditions similar to those in Vietnam. Transparency of drug prices is one of the country’s main mechanisms
for price control and stabilization.

In 2006, the government issued Decree 79/2006/ND-CP which detailed the implementation of a number of
articles from the Law on Pharmacy (2005). Under article 8 of this decree, the government clarifies that the
State shall manage drug prices on the principles that any drug producing, exporting, importing, or trading
establishments must set their own prices to compete within the market in addition to submitting to inspection
and control by state bodies that are authorized to manage drug prices under the provision of law on pharmacy
and other relevant legal documents. Furthermore, only drugs that have been permitted for use and circulation
by the MOH are subject to this price management as outlined by the Law on Pharmacy and Decree 79.
Types of Drug Prices to Be Declared

Import prices: Vietnam uses cost, insurance and freight (CIF) pricing as a benchmark to determine
pharmaceutical prices for imported drugs relative to neighbouring countries. More specifically, the CIF is
determined by the following:
■■ Import Price (CIF) = selling price at exporting country + insurance charges + freight cost from exporting
country – import tax (if any).
■■ Wholesale prices: The price of drugs sold between drug dealing establishments or between drug dealing
establishments to medical care facilities.
■■ Drug retail prices: The price sold to consumers at retail stores.
■■ Projected retail prices: The price of drug projected to be sold by drug producers or importers to consumers.
Pilot Program for Drug Price Control

In an effort to curb rising drug prices in the country, the MOH issued Circular No. 06/2013/TT-BYT in February
2013 outlining a pilot program for drug cost management by means of setting a maximum wholesale surplus
for drugs covered by the state budget or health insurance funds. Effective from April 1, 2013, this pilot program
was set to run for one year. Below is a list of drugs selected for this pilot program:
Table 8. List of Selected Drugs in Drug Cost Management Pilot Program

Name of drug
Amoxicillin + clavulanic acid (or salt clavulanat)
Cefepim
Cefoperazon
Cefoperazon + sulbactam
Ceftazidim
Ceftriaxon
Cefuroxime
L-ornithine L-aspartate
Levofloxacin
Omeprazole
Oxaliplatin
Paclitaxel
Source: DR/Decision Resources, LLC. Based on Circular No.06/2013/TT-BYT, Ministry of Health, Vietnam.
Under general provision of the circular, the drug’s original value used to calculate the maximum wholesale
surplus differ for imported drugs and domestically produced drugs; for imported drugs it is based on CIF prices,
while for domestically produced drugs it is calculated as the cost of producing the drug plus 20% of the cost.
The maximum wholesale surplus is determined based on a set of formulas applied according to the value of
the drug as shown in the table below:

Table 9. Maximum Wholesale Surplus Calculation

Drug value (VND) Formula for calculating maximum wholesale surplus
0-1000 C x 0.9
> 1000 to 5000 900 + (C-1000) x 0.775
> 5,000 to 20,000 4000 + (C-5000) x 0.6667
> 20,000 to 50,000 14000.5 + (C-20000) x 0.53
> 50,000 to 100,000 29999.5 + (C-50000) x 0.4
> 100,000 to 250,000 49999.5 + (C-100000) x 0.3333
> 250,000 to 500,000 99994.5 + (C-250000) x 0.3
> 500,000 to 1,000,000 174994.5 + (C-500000) x 0.25
> 1,000,000 to 2,000,000 299994.5 + (C-1000000) x 0.2
> 2,000,000 499994.5 + (C-2000000) x 0.15
C = drug’s original value used to calculate the maximum wholesale surplus.
Source: DR/Decision Resources, LLC. Based on Circular No.06/2013/TT-BYT, Ministry of Health, Vietnam.

Reimbursement System
Table 10. Key Questions for Understanding the Reimbursement System in Vietnam
Key Question Answer
Does the government reimburse drugs? Yes, but majority of the drug expenses are through out-of-pocket (OOP)
due to limited insurance coverage for branded medicines, high preference
for branded drugs among prescribers and patients, shortage of drugs on
reimbursable list in hospitals and high drug costs.
Drug price inflation is higher than general inflation and therefore

pharmaceuticals accounts for significant share of insurance coverage and
OOP expenses.
VSS on average pays nearly 90% of total pharma expenditure in hospitals.

Who are they key stakeholders in Ministry of Health, Vietnam Social Security Institution, provincial health
determining drug reimbursement? departments and provincial VSS offices
Which drugs are reimbursed? Drugs included in essential list (NLEM) and major drug list
Drugs listed in the reimbursement drug list will be funded through the health
insurance fund
VSS reimburses the drugs included in Health Insurance Reimbursement

List (HIRL) which contains 900 active substances, 1,143 Western drugs, 57
radioactive substances, 127 traditional medicine substances, 300 traditional
medicine drugs and 57 cancer drugs.
Of all the drugs included in EML, only 27% (128) are contained in HIRL
Who is eligible to receive government- Enrollees in public health insurance system
reimbursed drugs?
Are there drug lists in place? Yes, there are 2 types of drug lists: national essential medicines list and
major drug list. See “Drug Lists” chapter
How is reimbursement determined? Currently, there is no evidence-based (cost-effectiveness) process for
determining drug reimbursement, but they are selected on the basis of
appropriateness to the prevailing disease patterns in the country.
What are the standard reimbursement Reimbursement coverage varies from 100% to 95% to 80%, dependent
rates for drugs? on age, occupation and income group and for services covered (including
pharmaceuticals at both inpatient and outpatient services) co-payment rate
varies from 0 to 20%:
Children under 6 years, meritorious persons and people working as

specialized technical and professional officers (includes noncommissioned
officers) and law enforcement officers are eligible for 100% coverage.
Pensioners, salaried individuals, working capacity loss allowance, those

receiving monthly social welfare allowances, the poor, and ethnic minorities
are eligible for 95% insurance coverage
Those not included in the above groups are afforded 80% coverage.
Is there a difference in how inpatient and Currently, pharmaceuticals are covered in both inpatient and outpatient
outpatient drugs are reimbursed? services, but there is a slight difference in copayment policy.
In inpatient services, copayment rate is 5% for pensioners, the poor and

members receiving social protection allowance and for all other groups it is
20% if they follow the referral process [patient referred from commune health
stations (CHS) or district hospitals to provincial or national level secondary
and tertiary hospitals].
For outpatient services provided at CHS there is no copayment, but in other

levels same copayment rates applies as for the inpatient services
Is real world evidence (RWE) used in the No
reimbursement process?
How often is reimbursement reviewed? Infrequent update of NLEM (roughly once per 5 years)
(continued)

(continued)
Table 10. Key Questions for Understanding the Reimbursement System in Vietnam
Key Question Answer
Are there any special reimbursement No
mechanisms (e.g., separate funds) for
higher-cost drugs?
What level of copayment is required of patients If reimbursement coverage is not 100%, then patients have to directly pay the
and how is this copayment determined? balance amount as co-payment (5% and 20%) to the healthcare facility (both
public and private hospital) which have contract with health insurance institution.
Co-payment varies across insured groups or categories and will be determined

based on peoples’ age, occupation type and income level (see above).
What avenues for reimbursement are N/A
available to manufacturers following a
negative decision?
Source: Decision Resources Group. Based on data from Health Policy Project (HPP), United States Agency for International Development (USAID),
World Bank, EU-Vietnam Business Network (EVBN) and Flanders Investment and Trade and WHO office for Western Pacific Region (WPRO IRIS)
Vietnam is largely a self-pay market with private health expenditure accounting for approximately 60% of the
country’s total health expenditure, most of it is OOP spending. The state contributes the remaining 40% of
health expenditure. The government’s reimbursement system for healthcare is not well developed, leading
providers to seek other means to improve its revenue, mainly through additional OOP treatments and services.
National List of Essential Medicines
The MOH issued its first NLEM in 1985 and it has been updated very infrequently, roughly every five years
(1989, 1995, 1999, and 2005). The NLEM from 2005 contained 355 medicines and 94 traditional medicines.
Following the issuance of Decision No.5/2008/QD-BYT dated February 1st 2008, the list was expanded by the
MOH’s release of the major drug list, intended to aid healthcare facilities in selecting drugs that can meet the
medical needs of patients in its locality, as well as to highlight drugs that are reimbursable under the insurance
schemes. From this list, hospitals can create their own drug formulary based on the needs of their locality. The
reimbursable list of drugs for health insurance members now stands at 1,143 western medicines, 57 radioactive
substances and 300 traditional herbal medicines (higher than the Philippine’s list, which has approximately
630 western medicines, while Thailand’s list has approximately 740). The list also covers 57 expensive cancer
drugs. In December 2013, the MOH issued the country’s fifth NLEM (Circular No.45/2013/TT-BYT) containing
466 western medicines to replace the previous list from 2005, effective from February 2014.
While the selection criteria for drugs in the NLEM include safety, cost, minimal side effects, and the availability
of generic alternative, some concerns have been raised about the development of the NLEM. Specifically, the
selection of drugs lacks the basis of cost-effectiveness evidence. Some drugs on the list are infrequently used
even in developed countries, and other drugs are expensive with no substantial evidence of effectiveness,
but are still given the license for use and are reimbursable. The infrequent updating of the list also means that
some health facilities (especially at the commune level) lack information on reimbursable drugs, and some
more remote communes do not even have the list. The general lack of familiarity with essential medicines may
contribute to low prescription of drugs from the list. According to the WHO, only 40.8% of drugs prescribed by
doctors in Vietnam are from the NLEM, compared with the average of 80% in most other countries. In addition,
the general belief that branded drugs are of higher quality compared with generic named alternatives also
encourages doctors to use the more expensive option, often not on the essential drug list.
The NLEM also falls short of relieving OOP expenditure. Although the reimbursement list has grown over
the years, hospitals frequently find themselves in temporary shortage of supply. In this case, patients resort
to getting the prescription from private pharmacies. Furthermore, under the motivation of financial (or other)
incentives from pharmaceutical companies or suppliers, doctors may prescribe drugs not on the reimbursement
list. Systemic corrupt practices in the pharmaceutical sector may contribute to the general lack of transparency
in the process of drug selection into the NLEM.

Public Sector
Public health insurance coverage in Vietnam is regulated by the Law on Health Insurance. Article 22 of this
law outlines the level of medical care reimbursement for different subpopulations of the insured. The MOH has
developed a NLEM outlining drugs that are deemed essential. Unfortunately, this list is updated infrequently
and the selection process of drugs is poorly understood, with a general lack of transparency surrounding
the selection process (for further detail, see “National List of Essential Medicines”). There are also other lists
such as the major drug list that healthcare providers can refer to for a list of reimbursable drugs. Generally,
government health insurance reimburses for the cost of drugs on the major drug list.
The VSS reimburses health services providers for medicines and treatments covered under the benefits
package of the public health insurance schemes. As stated in the Law on Health Insurance, the VSS covers
100% of examination and treatment costs for children under the age of six, police and army forces, and
meritorious people, and all treatment at commune health centers; 95% of examination and treatment costs are
incurred by pensioners, beneficiaries of social allowances, the poor and people of ethnic minority. All remaining
populations are reimbursed 80% of examination and treatment costs when accessing health care services (See
Table 5). However, this has had limited impact on controlling private health expenditure. Patients still frequently
pay OOP cost if they do not have health insurance, if the doctor prescribes drugs not on the major drug list, or
if specific treatments are not fully reimbursable and require copayment. For example, patients who use certain
cancer drugs or immunosuppressive agents after transplant operations can claim reimbursement of up to 50%
of the cost if they have been under insurance for at least 36 months prior to the treatment or surgical procedure.
In 2009, drug reimbursements made up 50% of the total treatment reimbursement cost.
Table 11. Law on Health Insurance: Levels of Health Insurance Benefits

% of medical care cost
Groups reimbursement
Officers serving in the people’s security force; Meritorious individuals; Children aged 100
under 6 years
Cost of a check-up at commune hospital levela 100
Persons on pension; People on monthly social welfare allowance; Poor; Ethnic minority 95
people residing in areas of difficult socio-economic conditions
All other insured persons 80
a. Cost must also be below the level prescribed by the government
Source: DR/Decision Resources, LLC
Hepatitis C Treatment Inaccessible Due to Lack of Public Health Insurance Coverage

In Vietnam there is a growing concern among both the population and healthcare professionals over the
affordability of hepatitis B and C medicines. As per health ministry reports and hospital authorities it is estimated
that 10 million people are infected with hepatitis B and 1 million with hepatitis C in the country. The Department
of Preventive Medicine reported that 20,000 people die every year in Vietnam due to liv-er cancer and the
majority of them are not treated for hepatitis B and C viruses, which are considered the leading causes for
cirrhosis and liver cancer.
Many promising innovative medicines with nearly 95% cure rate are available in the market, but their high-cost
makes affordability a concern for patients. Hepatitis C patients represent 7% of the Vietnam-ese population,
of which only 0.1% have access to medicines, leaving a majority of patients without treatment. This is due
to non-inclusion of the hepatitis C medicines under the public health insurance list. The Health Ministry and
the Department of Health Insurance Policy Implementation are considering inclu-sion of new drugs into the
public health insurance list at the urging of healthcare professionals. [Vietnam News. HCV patients fail to
access drugs. August 15, 2018. Available at: https://vietnamnews.vn/society/health/463800/hcv-patients-fail-
to-access-drugs.html#dEgM7gAEd1KIwJFE.97.][VietnamPlus. Health insurance should cover new medicine
for Hepatitis C patients. July 25, 2018. Available at: https://en.vietnamplus.vn/health-insurance-should-cover-
new-medicine-for-hepatitis-c-patients/135267.vnp.]

Expansion of public health insurance coverage for hepatitis medicines would greatly improve patients’ ability
to afford treatments as they incur low co-pays (0 to 20%) or complete reimbursement (100%) based on
their eligibility (age, occupation and income group). It also improves patients’ accessibility for breakthrough
therapies, which provide significant improvement in treatment outcomes. However, the health agencies should
have adequate measures to monitor usage of the medicines in order to effec-tively manage health insurance
funds. Pharma companies (MNCs) can benefit by entering into negotia-tions with the government to supply
bulk drugs at discounted prices or they can enter into patent agree-ments with domestic companies allowing
them to manufacture and supply drugs for local needs and in turn receive royalty payments.

Drug Lists
Table 12. Key Questions for Understanding Drug Lists in Vietnam
What is the national formulary used National Reimbursement List or national formulary (http://apps.who.int/medicinedocs/
in this Country? documents/s19532vi/s19532vi.pdf?ua=1) and National List of Essential Medicines (NLEM)
What are the key characteristics of Major Drug List includes therapeutic drugs appropriate to prevailing disease
the national formulary? conditions in Vietnam which was developed by the Department of Therapy and
published by MoH in 2008
Major Drug List assists healthcare facilities to prepare their own formulary as per local
medical needs of the patients in their region
Major drug list highlights the drugs which will be reimbursed through insurance
schemes.
There are 900 active substances, 1,143 Western drugs, 57 radioactive substances,
127 traditional medicine substances, 300 traditional medicine drugs and also 57
cancer drugs on the reimbursable drug list.
Does this Country use an Essential Yes
Drug List (EDL)?
What are the key characteristics of Vietnam first adopted NLEM developed by DAV in 1985 to list the drugs that meet
the EDL? essential healthcare needs of the people.
NLEM mostly covers drugs used in national health programs such as leprosy and
tuberculosis (TB).
The list was last updated in December, 2013 and contains 466 western medicines.
Does this Country employ a No
negative drug list?
What are the key characteristics of N/A
the negative drug list?
Does this Country employ regional Yes, hospitals have their own formularies
drug lists?
What are the key characteristics of Hospital formularies refer to the major drug list to select drugs as per their local needs
these regional drug lists?
Source: Decision Resources Group. Based on data from WHO, International Pharmaceutical Federation (FIP), Health System Assessment.
Vietnam operates the National Reimbursement List and the Essential Drug List (NEDL) (see Reimbursement
Chapter for more information). These lists are reviewed and updated every three to four years.

Supply Chain
Distribution
Under current Vietnamese law, foreign pharmaceutical companies are not permitted to distribute drugs.
However, they are permitted to establish trading companies within the country and sell their imported products
through local licensed distributors.
Drug distribution to consumers is similar between prescription drugs and over-the-counter drugs. To sell
prescription drugs, distributors must obtain a Good Pharmacy Practice (GPP) Certificate from the provincial
department of health, but distribution of over-the-counter drugs does not need to satisfy this requirement. The
owner/manager of distribution entities must be a holder of the Pharmaceutical Practice Certificate, and the seller
must have profession-al qualifications and training in the pharmaceutical field suitable for selling medicines.
Pharmaceutical distribution in Vietnam is complicated by the numerous channels through which patients can
obtain their drugs. According to the GSO in 2013, there were 13,562 healthcare institutions in Vietnam, of which
1,069 are hospitals and 11,055 are health station communes. In 2011, the MOH estimated over 10,200 private
pharmacies and 44,000 drug retailers operating in the country. Central to the drug distribution network are the
wholesale distributors. There are approximately 1,200 distributors in Vietnam, 300 of which are foreign companies
and the remaining 900 are domestic companies. The three largest wholesale distributors, Zuellig Pharma (Hong
Kong), DKSH (Switzerland), and Mega Products (Thailand), account for 40-50% of the market share. Uniquely in
Vietnam are the four physical wholesale pharmaceutical markets in Vietnam, two in each of the two largest cities,
Ho Chi Minh City (HCMC), and Hanoi. The most well-known To Hien Thanh market in HCMC hosts approximately
270 registered pharmacies, and more than 300 unofficial foreign and 800 domestic suppliers.
Pharmaceutical products supplied by manufacturers and wholesalers are then redistributed to pharmacies,
private clinics, and hospitals, while consumers can also directly purchase drugs at the market. It is also through
the wholesale markets that drugs of unknown origins, substandard quality, or counterfeit drugs enter the country’s
drug circulation system. It has been reported that drug distributors generally prefer to sell to the wholesale market
because it pays at the point of purchase, while private clinics, pharmacies and hospitals may have credit terms of
up to several months. Despite the many channels of drug supply, Vietnam’s drug distribution is disorganized and
poorly regulated, leading to high price and quality differentials across the distribution network. In some cases, the
drug retail price can be marked up to four times the ex-manufacturer price.
International Investment
The Vietnamese market remains a source of interest for industry, particularly in light of the Trans-Pacific
Partnership. In July 2016, Taisho Pharmaceutical Holdings of Japan acquired a 24 percent stake in DHG
Pharma from Vietnamese asset management firms. Following the purchase, the government still maintains
control in light of its 51 percent stake (Vietnam caps the percentage that can be owned by foreign entities at 49
percent). This rule is believed to be limiting international investment.

Procurement
Table 13. Key Questions for Understanding Procurement in Vietnam
Key Question Answer
How are drugs procured? Either through tender (bidding) process or through direct (negotiation) purchase
Procurement regulations mandate awarding contracts to bidders quoting lowest prices, but in
practice there are some irregularities resulting in procurement inefficiencies
Physicians’ requests and their perceptions of drugs’ quality and efficacy determine tender
selection, with strong influence from manufacturers
Who are the primary National Ministry of Health, health departments of provinces and districts and hospitals
stakeholders in drug
In March 2017, health ministry announced establishment of National Centralized Drug
procurement?
Procurement Centre (NCDPC)
Tasks of NCDPC include organizing bidding for procurement of drugs included in the national
centralized procurement list and organize price negotiation for drugs included in the price
negotiation list, both developed by the MoH.
How fragmented are drug Current procurement system is highly decentralized and complex involving more than 1000
procurement processes? entities. This results in large price differences for the same types of products (dosage and
formulation) across different hospitals. Public drug procurement consists of both centralized
tenders and individual state-owned hospital tenders
Centralized tenders will be organized at provincial level by respective health departments

(DoH) and all hospitals which come under that provincial DoH should use the tender results for
procuring drugs to be used in their establishments.
State-owned hospitals which are part of national MoH organize individual tenders, but
starting from 2016 there was a proposal to organize centralized tenders even at national level
under the responsibility of MoH. The objective of establishing NCDPC is to centralize drug
procurement at all 3 levels (national, provincial and state-run facilities)
How often is procurement Annually
conducted?
Does the method of Yes, the procurement differs by drug type as there are 3 main tender packages each for
procurement used differ branded drugs, generics and traditional herbal medicines.
by drug type?
How much emphasis is Lowest price bid wins the tender and the price quoted by the winning tender should not be
placed on cost during more than the price approved by the provincial health departments for competitive bidding.
procurement?
Drug prices in Vietnam are significantly higher than the international reference prices (IRPs)
and high price paid by the hospitals are passed on to the patients contributing for cost
escalation and high OOP payments.
To what extent is Tendering is widely used by all public health centers in the country to contain procurement
tendering used? costs, but prices are still high due to corruption, inefficient and poorly practiced tendering.
Government audits have found tender prices ranging from 47–357% higher than the actual
winning bids and that prices of the winning bids were often higher than the prices offered by
unsuccessful bids.
How fragmented are Between 2015-2016, there were 119 drug bidding councils across the country (56 councils
tendering processes? participated in centralized bidding, 3 councils employed representative bidding and 4 councils
implemented single bidding)
Source: Decision Resources Group. Based on data from World bank, VGPNews, VUFO-NGO Resource Centre, Tilleke & Gibbins and Lexology.

Tendering
Under Joint Circular No. 01/2012/TTLT-BYT-BTC and Joint Circular No. 11/2012/TT-BYT, public healthcare
facilities are required to plan their drug procurement through a competitive tendering process that occurs at
least once a year. Each drug category can have one bid winner that meets technical requirement specifications
at the lowest price. Generic drugs are given priority in assessing winning bids. The price of the winning drug is
not allowed to exceed the price approved in the competitive tendering plan.
By April 2013, ten of the country’s provinces reported that they had completed their drug procurement process
by competitive tendering. According to the MOH’s assessment, this new regulation for competitive tendering
has resulted in a 20-30% reduction in expenditures by participating healthcare facilities. The winning bid price
for drugs procured through this process declined in a range of 5.6 to 34.6%, which is even lower than the prices
being procured in China and Thailand.
Law on Tendering (2013) and the Law on Bidding (2014)
November 2013 proved to be a pivotal month for the regulation of drug procurement in Vietnam as a number
of key laws were passed. On November 26, 2013, the National Assembly enacted a new law on tendering
(Law No.43/2013/QH13) which came into effect on July 1, 2014. Superseding the previous tendering law
from 2005, the new law takes a stronger protectionist approach by providing clearer preferential conditions
for domestic businesses. Under the new rules for international bidding, bidders are prohibited from providing
drugs that are already domestically available and meet local technical, quality and price requirements. There
is also preferential treatment for tenders of which the cost of domestic production accounts for 25% or more
of the value. The newly issued Law on Bidding (Decree No.63/2014/ND-CP), which was enacted to guide the
bid selection process in Law on Tendering and came into effect in August 2014, further emphasizes domestic
favoritism by stating that amongst bids that rank equally after technical evaluation (discussed below), the bid
that incurs the highest domestic production cost and employs the highest percentage of local workers out of
the total work force will be favored.
Guidelines for Bid Packages of Generic Drugs
In November 2013, Joint Circular No.36/2013/TTLT-BYT-BTC was issued to supplement Joint Circular
No.01/2012 in regulating the drug bidding process of healthcare institutions. Effective from January 1, 2014,
the circular announces the categorization of generic drug bidding package into five groups based on quality and
technical criteria, a sign that signals the government’s increasing regard on drugs’ manufacturing standards
as much as the cost (See Table 6).
Table 14. Drug Bidding of Healthcare Institutions: Categorization of Generic Drugs

Bidding Package
Groups Manufacturing Standard Requirement
1 Drugs produced at manufacturing facilities meeting EU-GMP or PIC/s-GMP standards in countries participating in ICH.
Drugs locally produced at manufacturing facilities meeting WHO-GMP standards, certified by the MOH DAV,
and granted circulation permission by countries participating in ICH.
2 Drugs produced at manufacturing facilities EU-GMP or PIC/s-GMP standards but not in countries participating in ICH.
Licensed drugs from manufacturing facilities meeting EU-GMP or PIC/s-GMP standards and produced in
manufacturing facilities certified by the MOH DAV of meeting WHO-GMP standards.
3 Drugs produced at manufacturing facilities meeting WHO-GMP standards and certified by the MOH DAV.
4 Drugs with proven bioequivalence announced by the MOH.
5 Drugs that do not meet the criteria of groups 1-4.
Source: DR/Decision Resources, LLC. Based on Law No.36/2013/TTLT-BYT-BTC, Ministry of Health and Ministry of Finance, Vietnam.

Technical Evaluation Criteria of Invitation to Bid for Medicine Supply
In September 2014, the MOH issued Circular No.31/2014/TT-BYT (which replaces the previous Circular
No.37/2013/TT-BYT) for the technical evaluation criteria of bidding documents for medicine supply. Technical
evaluation will assess two main criteria using a points system up to a maximum score of 100; up to 70 for
medicine quality and 30 for packaging, preservation and delivery capabilities. A major component for assessing
medicine quality (up to 25 points) works in conjunction with the groupings in Joint Circular No.36/2013, while
assessment of packaging, preservation and delivery capabilities rewards for factors such as good business
practices and compliance (See Table 7).
Table 15. Technical Evaluation Criteria

Criteria: Medicine Quality Score: Max 70
1. Qualification of 1.1. Conformity a. From a member country of ICH 25
bidder with PIC/s-GMP,
b. Not from a member country of ICH, but granted 23
EU-GMP
Max Score: 25 certificate of WHO-GMP by the MOH DAV
c. Not a member country of ICH, not granted certificate 21
of WHO-GMP by the MOH DAV
1.2. Conformity a. Granted certificate of WHO-GMP by MOH DAV and 24
with WHO-GMP granted circulation permission by a member country
participating in ICH
b. Granted certificate of WHO-GMP by MOH DAV and 22
granted manufacturing permission by a member country
participating in ICH in facilities meeting PIC/s-GMP or
EU-GMP standards
c. Granted certificate of WHO-GMP by the MOH DAV 21
d. Not granted certificate of WHO-GMP by the MOH DAV 20
2. Violations 2.1. No violations over the past year 10
pertaining to 2.2. Violations over a. Level 3 violations 6
medicine quality the past year
Max Score: 10 b. Level 2 violations 0
3. Violations 3.1. No violations over the past year 10

pertaining to the
establishment 3.2. 1 violation over the past year 9
producing
medicines 3.3. 2 violations over the past year 6
Max Score: 10 3.4. ≥3 violations over the past year 0

4. Shelf life of 4.1. ≥3 years 10
medicine
4.2. 2-3 years 9
Max Score: 10
4.3. <2 years 8
5. Criteria for 5.1. Raw materials (active ingredients) are manufactured in a member country 5
evaluating raw participating in ICH
materials used
for producing 5.2. Raw materials (active ingredients) are not manufactured in a member 4
medicine country participating in ICH but granted Certificate of Compliance with the
Max Score: 5 European Pharmacopoeia (CEP)
5.3. Other cases 3
6. Criteria for 6.1. Documents are issued by MOH for medicine undergoing bioequivalence 5
bioequivalence testing to prove bioequivalence.
evaluation 6.2. The medicine is exempt from reporting bioequivalence data 5
Max Score: 5 6.3. No documents proving bioequivalence issued by the MOH 3
(continued)

(continued)
Table 15. Technical Evaluation Criteria

7. Medicine 7.1. Medicine is manufactured from domestically produced aseptic raw 5
manufactured materials
from domestic/
imported aseptic
raw materials 7.2. Medicine is manufactured from imported aseptic raw materials 4
Max Score: 5
Criteria: Packaging, Preservation and Delivery Capabilities Score: Max 30
9. Medicine 9.1. The bidder is the producer of the medicine 5
supplied by bidder 9.2. The bidder is the direct importer of the medicine 4
Max Score: 5 9.3. The bidder is not the producer/direct importer of the medicine 3
10. Bidder 10.1. The bidder has supplied medicine to medical facilities for ≥3 years 5
experience
in supplying 10.2. The bidder has supplied medicine to medical facilities for <3 years 4
medicine
10.3. The bidder has no supplied medicine to medical facilities previously 3
Max Score: 5
11. Bidder’s ability 11.1. Delivery terms in the bid invitation are met 3
to satisfy delivery
terms 11.2. Delivery terms in the bid invitation are not met 0
Max Score: 3
12. Reputation of 12.1. Bidder has a. Has won supply contracts and met the schedule 8
bidder no violations b. Has won supply contracts but failed to meet the schedule 7
of contracts to
Max Score: 8 supply medicines c. Has not won supply contracts 6
13. Bidder has GPP 13.1. Bidder has a GPP pharmacy chain 3
pharmacy chain
13.2. Bidder does not have a GPP pharmacy chain 2
Max Score: 3
14. Bidder 14.1. Bidder has a medicine distribution center 3
has medicine
distribution center
Max Score: 3 14.2. Bidder does not have a medicine distribution center 2
15. Distribution 15.1. Bidder has distribution system for medicines to whole provinces (See 3
capabilities to note 2)
highlands and
disadvantaged 15.2. Other cases 2
areas
Max Score: 3
Total Score 100
Note 1: Technical evaluation for oriental and herbal medicines (criteria 8) is omitted.
Note 2: Applicable only to the provinces of Ha Giang, Cao Bang, Bac Kan, Lao Cai, Yen Bai, Bac Giang, Phu Tho, Dien
Bien, Lai Chau Son La, Thanh Hoa, Nghe An, Quang Binh, Quang Tri, Quang Nam, Quang Ngai, Binh Dinh, Ninh Thuan,
Kon Tum, Lam Dong, Quang Ninh, Ha Tinh Gia Lai Phu Yen, Peace, Tuyen Quang
Source: DR/Decision Resources, LLC. Based on Law No.31/2014/TT-BYT, Ministry of Health, Vietnam.
In order for a bid to be considered ‘technically satisfactory,’ it must fulfill the following conditions:
1. The sum score of each criterion (medicine quality, and packaging, preservation and delivery
capabilities) must not be lower than 60% of the maximum score.
2. The total score is not lower than 80.
The bids that are technically satisfactory are then qualified to undergo the general evaluation of bid selection
as prescribed by the Law on Bidding (Decree No.63/2014/ND-CP).

Hospital Sector Drugs and Reform Recommendations
Data cited by EuroCham points to 93 percent of government procurement is being met by generics that are either
locally produce or imported into the country. Branded generics, with 60 percent of the drug volume in the hospital
sector, represented the largest percentage of drug share. Government rules prevent foreign-invested enterprises
from directly attending pharmaceutical tenders, which EuroCham suggests limits the ability to implement
proposed initiatives. As a result, the organization has recommended transparent regulatory framework in the new
Tender Circular that includes decisions based on innovation, quality and technical standards.
Centralized Procurement
On December 11, 2017, the Vietnamese Health Ministry conducted its first ever centralized drug procurement
to procure 5 active substances (levofloxacin, meropenem, ceftriaxone, cefepime and cefoperazone-sulbactam
combination) and 22 drugs (5 specialized drugs and 17 generics) to supply public hospitals and healthcare
centers. [Drug Administration of Vietnam. Dự thảo Thông tư ban hành Danh mục thuốc đấu thầu tập trung cấp
quốc gia do BHXH Việt Nam tổ chức đấu thầu. June 16, 2017. Available at: http://www.dav.gov.vn/Default.asp
x?action=detail&type=3&newsid=1556.] The government will spend VND2.269 trillion (USD100 million) for 2
years to procure these drugs. The health ministry stated that the centralized bidding process accounted for
a saving of VND477 billion (USD21 million) to the government as the decentralized system would have cost
VND2.746 trillion (USD121 million).
In 2015, pharmaceutical expenditure of Vietnam Social Security (VSS) was VND26 trillion (USD1.14
billion), which was 48.3% of the health insurance fund. The deputy health minister noted that drug prices
were expensive and differed greatly for the same products across the country, when left to hospitals and
regional health authorities to organize individual tenders. The recently established National Centralized Drug
Procurement Centre (NCDPC) is responsible for organizing the centralized tendering system for drugs on the
procurement list and it also negotiates prices for drugs listed on the price negotiation list. Further, NCDPC will
oversee the bidding process conducted at national, provincial and community level public health centers for
drugs which are not part of the centralized procurement list.
Implementing a centralized drug procurement system has multiple benefits to healthcare and pharmaceutical
stakeholders as a whole. For pharma companies, it provides a common platform to participate in the bidding
process thus foregoing repeated and multiple administrative processes with different health authorities.
Securing a tender in the centralized process ensures a high value drug contract for pharma companies
within specified timeframes. On the other hand, the advantage to the government is it reduces high public
expenditures on pharmaceutical procurement and at the same time managing drugs’ cost, quality and supply
will be easier for authorities. This ensures supply of drugs at more affordable prices to the public, more
effective utilization of health insurance funds for other medical treatments and increased ability to balance
funds. [Vietnam News. First centralized drugs bid saves $21 million. December 13, 2017. Available at: http://
vietnamnews.vn/society/419259/first-centralised-drugs-bid-saves-21-million.html#HCC9QUxvMaYZL5Rt.97.]

Cost Containment
Vietnam’s cost containment measures in the healthcare system are relatively modest. While some efforts have been
made, the cost of healthcare for most people remains high and tends to escalate over time due to poor cost control.
Case-Mix Payment Mechanisms
As mentioned earlier, the MOH and VSS would like to transition away from a fee-for-service payment
mechanism to a capitation method as a way to improve resources utilization and better control costs. A
capitation mechanism has encouraged healthcare facilities to take an active approach in financial management
and planning for effective use of its budgets, though the implementation of capitation has been difficult. Some
facilities cannot sustain its balance solely on capitation rates, and pressures of fund management deter some
from its implementation.
Common Price for Active Ingredients
The VSS has published a common price for five active pharmaceutical ingredients that are found in widely used
medicines and account for a high share of VSS’ reimbursement costs.
Generics
In 2012, approximately, 51% of Vietnam’s total drug sales were from generic drugs, although imported branded
generics account for the majority of this total. The government encourages the rational use of drugs and prefers
the use of generics wherever possible. The drug industry is encouraged to increase its domestic production
output, and the government is prepared to provide subsidies for local manufacturers. In December 2013, the DAV
initiated a program designed to raise awareness of hospital workers and the medical community on the use of
domestically produced pharmaceuticals. Generic drugs are often prioritized in the competitive tendering process
for medical facilities. However, domestic pharmaceutical production is limited, and branded drugs are generally
perceived to be safer and more effective, leading to greater demand for imported medicines from foreign-based
multinationals. The exemption of local generic manufacturers from the requirement to conduct bioequivalence
studies prior to applying for regulatory approval further justifies physician’s greater trust in foreign drugs.
Parallel Imports
Parallel importing of pharmaceuticals with the same brand name, active ingredient, pharmaceutical form and
content as drugs registered for circulation in Vietnam is permitted when there is an insufficient supply of a drug
within the country, or if the drug is currently being sold at a price that is higher than the retail price in the host
country or in countries with similar economic conditions as Vietnam. This rule gives importers the option of
purchasing from licensed overseas sources at lower prices instead of local manufacturers, a mechanism that
encourages price stabilization and prevents sole producers or distributors of a drug from taking a monopolistic
pricing approach. The price of the parallel imported drug is set by the importer, but it must be lower than the
local retail price in the country. Under MOH regulations, parallel importers are responsible for the quality of the
drugs they are importing, which will not be used if it is found to be deficient. The country’s allowance of parallel
importing also helps prevent price escalation by sole producers or distributors of a drug.
Price Ceilings
The government is also piloting price ceilings for a number of drugs typically used in large quantities and whose
price varies within its own drug class.

Intellectual Property
Table 16. Key Questions for Understanding Intellectual Property in Vietnam
Key Question Answer
Which authority issues patents? National Office of Intellectual Property (NOIP)
For how long are patents valid? Two types of patents are granted in Vietnam, such as Invention patent and Utility patent.
Invention patent is valid for a period of 20 years from the date of filing
Utility patent is valid for a period of 10 years from the date of filing
Does patent length vary by drug type? N/A
Under what circumstances can patents There is no procedure for extending patent term after expiry
be extended?
Is the data submitted through patent Clinical trial data submitted by the patentee to the regulatory authority (DAV)
applications protected or can others is protected and the data exclusivity lasts from the date the trial data is filed to
use it to start their own operations? the date of expiration of the 5 year validity of the MA granted, but it is not very
effective in practice
Is there a linkage between patents and There is no linkage between patents and the launch of generics as companies can
when generics can launch? apply for MA of generics 2 years before patent expiry of branded product
Is the country on any sort of watch list Vietnam is on PhRMA 2017 special 301 submission watch list for weak IP environment
for what are considered to be unfair IP which include restrictive patentability criteria, draft circular on Compulsory Licenses,
practices? patent backlogs, weak patent enforcement, failure to protect regulatory data
Are counterfeit drugs a notable Counterfeiting is a serious concern
concern?
Most common counterfeit drugs found in the country are antibiotics and products
to treat erectile dysfunction, though medicines for HIV, malaria and tuberculosis
also circulate, some through online channels.
What notable actions have Actions would be seizure of counterfeit drugs and imprisonment for nearly 20 years
governments taken to combat
There is a need to strengthen existing cooperation between Vietnamese law
counterfeiting?
agencies and ASEAN countries to tackle distribution of counterfeits.
To what extent is compulsory licensing Compulsory licenses are issued by MoH in consultation with Ministry of Science
relied upon? and Technology (MOST) based on circumstances such as:
If the invention patent is used for public interest, non-commercial use, national
defense, prevention and treatment of disease, people’s nutrition, or to meet urgent
demand or need of public
If the drug is deemed to address serious public health issue at national level such
as disease outbreak, epidemic or pandemic, disease with high contraction rates
Drug is not readily available or is unaffordable for patients and insurance providers
If patent holder fails to use the invention in 4 years since the date of patent
applicant filed and 3 years from the grant of patent
Applicant who intends to use the invention has failed to reach an agreement with
the patent holder within a reasonable amount of time on reasonable commercial
terms and considerations
If patent holder violates anti-competition laws

What are some prominent instances of In 2005, H1N1 outbreak prompted Ministry of Science and Technology (MOST)
compulsory licensing? to issue Compulsory License for use of oseltamivir (Tamiflu), but negotiations
between Roche AG and the authorities led to an agreement that the company
would supply the ingredients to Vietnam and allow the country to produce the drug,
thus avoiding the need for a compulsory license
Source: Decision Resources Group. Based on data from Thomson Reuters Practical Law, Baker & McKenzie, PhRMA 2017 Special 301
Submission, United Nations Office on Drugs and Crime (UNODC), World Health Professions Alliance (WHPA), Lexology and Tilleke & Gibbins
Consultants Limited

Vietnam is part of a number of conventions and treaties related to IP protection:
■■ Since 1949, Vietnam has been a member of the Paris Convention for Protection of Industrial Property, and
the Madrid Agreement Concerning International Registration of Marks.
■■ It has also been a member of the World Intellectual Property Organization (WIPO) since 1976, and
acceded to the Patent Cooperation Treaty in 1993.
■■ As a member of the Association of Southeast Asia Nations (ASEAN), the country complies with the
ASEAN Framework agreement on IP Cooperation, conforming to the Trade-Related Aspects of Intellectual
Property Rights (TRIPs) Agreement.
■■ Signed a bilateral agreement on copyright protection in June 1997 with the United States.
■■ Signed a bilateral trade agreement in July 2000 with the United States, committing to most obligations of
the World Trade Organization (WTO)-TRIPS Agreement.
■■ Signed the Berne Convention for the Protection of Literary and Artistic Works in October 2004.
■■ Accession to the Madrid Protocol in 2006
■■ Acceded to Permanent Normal Trade Relations (PNTR) in December 2006 with the United States.
■■ Became a member of the WTO in 2007. Membership required Vietnam’s IP laws to meet a minimum
standard such that they do not differ greatly from other member nations.
Vietnam has sought to improve its IP protection system in recent years. In February 2012, Vietnam’s National
Office of Intellectual Property (NOIP) signed a Memorandum of Cooperation with the Japanese Patent Office. It
is hoped that the two nations can facilitate greater trade and investment as Japan assists the NOIP in improving
the effectiveness of Vietnam’s IP protection system. Some of the areas of focus include consolidating IP
policies, automating the administrative system, training personnel, and raising public awareness. As of March
2013, NOIP had digitalized all patent specifications filed before 2010, and a digital patent library was launched
as a pilot search engine and database.
However, the country still struggles with a number of IP issues that have kept it on the Watch List for the 2014
Special 301 Report published by the Pharmaceutical Research and Manufacturers of America (PhRMA).
Key Decision Makers
Since the early 1980s, Vietnam has had a National Office of Inventions. In 1993, Vietnam re-established this
government agency to become called the NOIP, responsible for intellectual property issues. The country also
has the Copyright Office of Vietnam handling issues of copyright.
Compulsory Licensing in Vietnam is granted by the Ministry of Science and Technology (MOST) in Vietnam.
Compulsory Licenses
Patents in Vietnam do not protect the holder from the issuance of a compulsory license upon the decision of
the State. The government may issue a compulsory license under four circumstances:
■■ If the use of the invention is for public interest, national defense, prevention and treatment of disease,
people’s nutrition, or meeting an urgent need;
■■ The patent holder fails to use the invention in four years since the date of filing of the patent application and
three years from the granting date of the patent;

■■ The person who wants to use the invention has made efforts but fails to reach an agreement with the patent
holder within a reasonable amount of time on reasonable commercial terms and considerations;
■■ The patent holder violates anti-competition laws.
Upon receiving a request for granting a compulsory license, MOST may set up a meeting with the patent
holder and the proposed compulsory licensee to negotiate in the direction of a voluntary license. If negotiation
fails and the patent holder refuses to grant a voluntary license, then MOST may consider the need to use the
compulsory license and within three months of the date of proposition, grant a compulsory license. In 2005, an
outbreak of H1N1 infection prompted the Vietnamese government to consider issuing a compulsory license
for oseltamivir (Tamiflu), an antiviral drug for influenza virus. Negotiations with Roche AG led to the agreement
that Roche would supply the ingredients to Vietnam and allow the country to produce the drug, thus avoiding
the need for a compulsory license.
Counterfeit Drugs
According to the Pharmaceutical Security Institute, an organization of pharmaceutical manufacturers that

tracks pharmaceutical crime, Asia ranks first in the world for incidents of counterfeiting, theft, and illegal
diversion of drugs.
In 2008, Vietnam had the second highest volume of counterfeit drugs in circulation in Southeast Asia. The most
common counterfeit drugs found in the country are antibiotics and products that treat erectile dysfunction, though
medicines for HIV, malaria and tuberculosis also circulate, some through online channels. Despite efforts by the
MOH and NOIP to prevent the manufacturing and distribution of counterfeit products in the country, fake drugs
continue to circulate. Low awareness of IP issues, the lack of trained personnel and resources at the Department
of Health, and the lack of qualified pharmacists in the country are cited as reasons for the ineffectiveness in
reducing the circulation of counterfeit drugs. Since a sizable portion of the population tend to purchase medication
from nearby pharmacies and self-medicate, patients often cannot differentiate between branded generics and
lookalike counterfeit products. The lack of efficacy and safety from using the counterfeit may harm the reputation
of foreign-based multinational companies whose product the counterfeit imitates.
Figure 4:

In 2017, VN Pharma, a Ho Chi Minh City (HCMC) based pharmaceutical company, was accused of smuggling
and forgery related to importing counterfeit cancer medicines from Canada. The company won a contract to
supply cancer drugs for HCMC’s health department in May 2014. It was found that the company imported
H-Capita and advertised it as a cancer medicine supplied at very low prices. Custom’s declarations suggest
that the drug was manufactured by a non-existent company. Investigators also found that VN Pharma forged
documents such as drug quality certificate and Vietnam embassy’s signature and stamp. Drug tests revealed
that H-Capita contained low-quality capecitabine which was considered to be unsafe for human use. [VN
Express International. Vietnam’s health ministry under scrutiny over cancer drug scam. August 30, 2017.
Available at: https://e.vnexpress.net/news/news/vietnam-s-health-ministry-under-scrutiny-over-cancer-drug-
scam-3634997.html.]
Further investigation revealed that doctors received VND7.5 billion (US$0.33 million) as a bribe from the
company to prescribe specific drug brands. In order to cover these additional costs, the company admitted
that it had spiked the price of many imported medicines causing economic burden for patients. [VN Express
International. Bribes continue to dictate Vietnam’s medicine prices, trial uncovers. August 23, 2017.
Available at: https://e.vnexpress.net/news/news/bribes-continue-to-dictate-vietnam-s-medicine-prices-trial-
uncovers-3630926.html.]
Importing and distributing fake cancer medicines risks increasing private out-of-pocket spending and to
some extent also straining public health budgets. Incidents like these also break public trust in local pharma
companies who do business with quality compromised, ineffective and unsafe medicines. This will have greater
impact on growth of domestic pharma industry, but will benefit foreign companies as people prefer their high-
quality and effective products.
These incidents have led to calls for strengthened regulatory processes (discussed under “Market Authorization).
Laws
The main law governing IP protection in Vietnam is Law No.50/2005/QH11.
Vietnamese patents are regulated by Law No. 50/2005/QH11 and Law No. 36/2009/QH12.
Patents
Law No.50/2005/QH11 outlines three types of patents: inventions, utility solutions, and industrial design.
Vietnamese patents give protection to the invention in the country. In order for an invention to be granted a
patent, it must satisfy three main criteria: it must be globally novel, it must possess an inventive nature, and it
must be capable of industrial application. Preventative, diagnostic and therapeutic methods of health treatment
are not patentable.
For invention patents, the patent is effective from the date of issuance to the end of 20 years after the filing date,
without any renewal term. Patent holders for inventions must pay annuity fees to maintain the patent validity.
Annuity fees increase every two to four years during the 20-year term, from VND 348,729/claim/year (USD
$16.7) in the first two years, up to VND 4,873,859/claim/year (USD $233.4) for the last four years. For generic
manufacturers, an application for the circulation of a generic version of a drug can be made two years before the
expiry of the patent protected original drug. Unfortunately, there is currently no patent linkage system in Vietnam.
In Article 15 of Circular No. 22/2009/TT-BYT, the MOH encourages patentees to provide legal documents to
the DAV, who may then notify drug regulators to review the patent when deciding whether to grant marketing
authorization for drugs from other applicants. The DAV, however, has no responsibilities in reviewing patent
infringements or settling disputes, but only to rescind or refuse market authorization. Ongoing negotiations for the
Trans-Pacific Partnership (TTP) may accelerate the introduction of a linkage system in the country.

Patent applications are made to the NOIP in Vietnamese. Vietnamese entities or foreign entities with
establishments based in the country can apply directly to NOIP or through a licensed IP agency, but foreign
entities without establishments in Vietnam must apply through a licensed IP agency. Manufacturers applying
for patent protection for pharmaceutical products should also expect a protracted evaluation process due to a
growing backlog of applications at the NOIP; an average approval time of 37 months in 2009 has lengthened to
50 months in 2013. This process can reportedly be expedited if the product has a corresponding patent under
another major jurisdiction (such as EU, US, or Japan patent office) and the applicant requests the examiner to
conform the Vietnamese application to claims under existing foreign patents.
Trans-Pacific Partnership Negotiations
Vietnam is among the four ASEAN member nations (Malaysia, Brunei, and Singapore) currently in negotiations
to join the TPP agreement. Aiming to reduce trade barriers for goods and services amongst member countries,
recent TPP negotiations have also raised issues of intellectual property rights protection and pharmaceutical
pricing. While the United States continues to encourage low- and middle-income countries to adopt and adhere
to a strict set of intellectual property rights regulations that exceeds the minimum obligations under the TRIPS
agreement, Vietnamese government officials and experts have expressed serious concerns that, under these
new rules of the TPP agreement, Vietnam’s ability to manage pharmaceutical prices will be constrained. The
price of medicines may further escalate, increasing the government’s burden to afford public healthcare and the
household’s burden to pay for medicines not covered by public health insurance. In particular, the TPP agreement
would require the country to maintain data exclusivity, which does not allow drug regulators to approve generic
alternatives to original drugs using clinical trial data from the originator until a period of exclusivity expires. This
data exclusivity period, typically lasting at least five years, may not begin until closer to the end of the twenty year
patent term, which effectively prolongs the exclusivity period and prevents generic competition.
Implications of the Trans-Pacific Partnership

While Vietnam is projected to benefit from overall economic growth, TPP proposals regarding intellectual
property rights protection and pharmaceutical pricing may seriously constrain the country’s ability to control
drug price escalation. In particular, Vietnam would be required to maintain data exclusivity, which, when
coupled with a 20-year patent term, potentially extends the monopolistic term of a drug by prolonging the
exclusivity period and preventing generic competition.

Government Activities
Improving Grassroots-Level Healthcare Services
The Vietnamese government is focusing on improving primary healthcare services at the grassroots or local
level (districts, communes and villages). Nguyen Thi Kim Tien, Health Minister, speaking at a conference in
Hanoi on December 20, 2017, acknowledged the need to improve healthcare centers in terms of their quality
and operational efficiency to increase patient visits. Medicine shortages, low quality services and less staff are
the main challenges to be addressed at grassroots healthcare centers. During 2018-2020, the health ministry will
focus on developing healthcare network at the local level and therefore has planned to implement a pilot project
in medical clinics of 26 wards and communes of 8 cities and provinces to enhance their capacity. The project will
focus on improving professional skills, human resources, infrastructure, financial supply and IT application system
at the healthcare centers. [VietnamPlus. Vietnam increases grassroots health care services. December 20, 2017.
Available at: https://en.vietnamplus.vn/vietnam-increases-grassroots-health-care-services/123650.vnp.]
In order to address these issues, the Vietnamese government has approved an investment policy with the
WHO on health cooperation program for the 2018-2019 fiscal year. The program will be funded by both the
Vietnamese government [VND6.5 billion (USD287,950)] and the official development assistance (ODA),
but primarily from ODA (non-refundable amount of USD21.1 million). This program helps the government to
address pressing issues of the healthcare system in the long run through a strategy on improving public health
care (2016-2020) and to a pilot project developing a local healthcare network (2016-2025). In addition, the
program aims at decreasing household expenditure by strengthening institutions, human resources, public
funding, pharmaceuticals and healthcare services. Supply of pharmaceuticals will be strengthened through the
expansion of universal healthcare coverage to the people and through the centralized drug tendering system to
procure and supply essential drugs to the health centers. Also, it will increase the number of physicians working
at commune level medical centers. Further, the program aims at decreasing the risk of communicable and
non-communicable diseases in the country. [Vietnam Net Bridge. Vietnam cooperates with WHO to address
health priority issues. January 15, 2018. Available at: http://english.vietnamnet.vn/fms/society/193980/vietnam-
cooperates-with-who-to-address-health-priority-issues.html.]
Smart Healthcare System
With an aim to improve quality of healthcare services and medical examinations offered to the popula-tion, the
Vietnamese health ministry is on its path to implement a smart healthcare system in the country. The system
uses technologies such as big data to collect and manage patients’ health information and artificial intelligence
to prescribe personalized treatment suitable for the patients with complex diseases such as cancer. The ministry
has issued a set of criteria for IT applications to be employed under the smart health system and according to
this a hospital will be considered smart only if it has the necessary technology infrastructure (AI and database to
store and manage information related to patients’ EHR, medical tests and information kiosks) in place. This has
been implemented in Ho Chi Minh City hospitals and the city’s health department has instructed the hospital
authorities to develop a shared database for effective management of patients’ information.
The smart health system digitalizes patients’ health records (EHR) which helps the care providers to ac-cess
patient details from any hospital or health center. Patients will also be relieved from maintaining hardcopies of
their records. Also, the system helps patients to locate specialized care providers in their area and it facilitates
appointment making to limit hospital waiting times. Stakeholders such as health authorities, care providers
and sponsors can access numerous health records to conduct research or to observe disease trends and
prescription medicine usage to draw patient based insights. Further, tech-nology enables specialists to assist
doctors in providing care for patients at remote hospitals, thus re-ducing overcrowding at central level hospitals.
[Viet Nam News. MoH smart healthcare system uses AI, Big Data. April 4, 2018. Available at: http://vietnamnews.
vn/society/425643/moh-smart-healthcare-system-uses-ai-big-data.html#XKHkEJB4rum2Rke8.99.]

Trans-Pacific Partnership Agreement
In October, 2015, 12 nations bordering the Pacific Ocean reached a final deal on the Trans-Pacific Partnership,
marking the largest regional trade deal for that area and covering an estimated two-fifths of the global economy.
Among its various features, the TPP may have a sizeable impact on the development of biosimilars in some
countries. Prior to the TPP agreement being reached, countries like Vietnam had the ability to set their own
time frames for how long biologic therapies enjoyed data exclusivity. During negotiations, the United States
pushed for 12 years of data protection for biologics, which is similar to data exclusivity rules currently in place
in that country. In contrast, other nations had shorter timeframes that resulted in biosimilars reaching the
market more quickly. Among this group, Australia and Peru pushed for a maximum 5 years of protection. As
part of the final agreement, the period of exclusivity for signatory countries was set at 5 to 8 years. Specific
countries can choose either 8 years of full exclusivity or 5 years of full exclusivity, followed by three years of
partial exclusivity for pharmacovigilance. In response to the deal, the United States’ Biotechnology Industry
Organization announced its opposition the reduction in data exclusivity duration, which the trade group argues
is necessary for attracting companies to develop high-cost therapies.
The signatories of the TPP include the following countries: Australia, Brunei, Canada, Chile, Japan, Malaysia,
Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
Foreign Invested Enterprise Establishments
Within Vietnam, foreign manufacturers complain about unclear regulations regarding a Foreign Invested
Enterprise in the pharmaceutical sector, particularly around its ability to import products and to market them.
Despite 13 different drafts of a Circular regarding importing/exporting by FIE pharmaceutical companies since
2009, no official regulations have been enacted. Moreover, the current definition of the term “distribution”
includes marketing and re-selling activities. Circular 34/2013/TT-BCT as of Dec. 24, 2013 includes drugs and
vaccines as goods that foreign companies cannot distribute, meaning drug companies cannot market or resell
their therapies to distributors.
Industry wants the ability to import pharmaceutical products into Vietnam, build warehouses to store them,
and sell imported drugs to pharmaceutical wholesalers or other companies with distribution rights in Vietnam.
Government Health Priorities
The Vietnamese government has listed out specific priorities it would like to address. The table below
outlines those priorities.

Table 17. Vietnam: Government Health Priorities

Source Ministry of Health
Description The Ministry has formulated a plan for the health sector covering the period 2011-2015
Specific priorities A five-year health sector plan was formulated for the period 2011-2015 by the Ministry of Health under
the direction of the Vietnam’s prime minister. The document outlines the following as the key areas:
Consolidating and completing the healthcare delivery network, especially grassroots health
Strengthening preventive medicine and the national target programme for health
Consolidating, developing and improving the quality of health examination and treatment
Strengthening population— family planning and reproductive health care
Developing health human resources
Developing a health information system
Renovating health service operation and financial mechanism
Pharmaceuticals and bio-medical products
Medical equipment and infrastructure
Strengthening health sector management and capacity
In 2011 the US government created a Global Health Initiative (GHI) strategy, which is in alignment
with the long-term health and development goals outlined in the above five-year plan. The
objectives of the initiative concentrate on the following areas:
HIV/AIDS
Tuberculosis
Pandemic Preparedness and Response

Relevant links http://www.wpro.who.int/health_services/VTN_2011-2015.pdf
http://www.ghi.gov/wherewework/docs/VietnamStrategy.pdf

Glossary of Names and

Abbreviations
Table 18. Vietnam: Names and Abbreviations
Short form English name
ASEAN Association of Southeast Asia Nations
CEP Certificate of Compliance with the European Pharmacopoeia
CIF Cost, Insurance, and Freight
DAV Drug Administration of Vietnam
GPP Good Pharmacy Practice
GSO General Statistical Office
HITAP Health Intervention and Technology Assessment Program (Thailand)
HCMC Ho Chi Minh City
HTA Health Technology Assessment
ICH International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for
Human Use
MA Marketing Authorization
MOH Ministry of Health
MOST Ministry of Science and Technology
NLEM National List of Essential Medicines
NOIP National Office of Intellectual Property
OOP Out-Of-Pocket
PhRMA Pharmaceutical Research and Manufacturers of America
PNTR Permanent Normal Trade Relations
SHI Social Health Insurance
TPP Trans-Pacific Partnership
TRIPS Trade-Related Aspects of Intellectual Property Rights
VHEA Vietnam Health Economics Association
VHLSS Vietnam Household Living Standards Survey
VSS Vietnam Social Security
WHO World Health Organization
WIPO World Intellectual Property Organization
WTO World Trade Organization

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Global Market

Updated: September 2018

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18 Pharmaceutical Market 43 Cost Containment

HAVE A QUESTION? CORPORATE OFFICE

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Table of Contents (Cont.)

Tables and Figures

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Updates: Key Market Events

September 2018 - Lack of health insurance coverage makes hepatitis C

treatment inaccessible in Vietnam

April 2018 - Ministry of Health aims to modernize healthcare into a “smart

February 2018 – Centralized drug procurement generates savings

© 2018 DR/Decision Resources, LLC. All rights reserved. 4

November 2017 - New key insight tables highlighting essential

September 2017 - Major investment from government to improve

August 2017 - New key insight tables highlighting essential questions

July 2017 - New key insight tables highlighting essential questions

© 2018 DR/Decision Resources, LLC. All rights reserved. 5

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Public is through mandatory Social Health Insurance (SHI) and private

Voluntary Health Insurance (VHI) acts as a supplementary health insurance

Vietnam Social Security (VSS) reimburses health services providers for

Key Decision Makers

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Source: DR/Decision Resources, LLC.

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Source: DR/Decision Resources, LLC.

Social Health Insurance

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Table 2. Vietnam’s National Poverty Line (2011-2015)

Revision of the Health Insurance Law in 2014

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Table 3. SHI Premium Rates for a Household in Vietnam (2014)

Voluntary Health Insurance

Strategies to Curb Health Insurance Fund Expenditures

■■ Expansion of health insurance coverage for more people in rural areas

■■ Increasing costs of healthcare services offered in hospitals

■■ Prescription of high-cost drugs by physicians over low-cost generics

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Public Healthcare System

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Source:DR/Decision Resources, LLC.

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Health Service Delivery Network

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Classification of Private Healthcare Providers

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Market Size and Growth

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Defining health services packages with focus on grassroots level

Developing HTA methods and process guidelines to educate different

Relying extensively on pharmacoeconomics to assist drug procurement

Vietnam Health Economics Association (VHEA): http://vhea.org.vn/News.

By 2016, HSPI completed assessment of a total of 17 health technologies,

In 2015, HSPI assessed cost-effectiveness of peginterferon (peg-IFN

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Health Technology Assessment

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