Centralised bidding system to reduce price of drugs in Vietnam

In Vietnam, the Ministry of Health has regulated that competing pharmaceutical companies must sell their products to state hospitals through tender. The lowest price offered wins the bid and the company gets the right to provide the drug for a year.

However, due to inadequate bidding management, in many cases the same drug product has sold for different winning prices in different provinces. Some companies even worked with hospitals to greatly push up the price of drugs in order to force patients to spend more money on their medicine.

Health Minister Nguyen Thi Kim Tien admitted at a recent conference that research had uncovered many problems in the price management system. However she said that local drug prices were not higher than in other countries in the region.

Nguyen Thi Yen, deputy head of the Pharmaceutical Department at the Vietnam Social Insurance Agency, confirmed that the price of drugs has been known to differ greatly between provinces.

She said in an interview with Hai Quan (Customs) newspaper that the same brand of Paracetamol sold for 16 different prices across Vietnam, from 85 to 900 dong per pill. She also cited the example of Perabact, an Indian-made medicine that is available for just 18,000 (US90 cents) in Mekong Delta Dong Thap province, but costs 30,000 ($1.50) in nearby Can Tho.

She said that drug prices could be increased to an unreasonable level because the bidding process goes through several different brokering stages.

Tien suggested many pharmaceutical companies collaborate with doctors to prescribe imported medicine in order to raise the price.

According to the newly enforced regulations, drug bidding will be conducted centrally by health departments in provinces and cities.

Hospitals will negotiate contracts basing on drug bidding results provided by provincial health departments.

The winning price of each drug product will not be allowed to exceed the ceiling price approved by the health department in their bidding plan.

Representatives from the health sector have revealed that the drug price makes up 60 per cent of the total treatment expenses of the average patient. As a result, the proper control of drug prices will play an important role in reducing treatment costs.

Nguyen The Dung, CEO of the Minh Dan Pharmaceutical Company, said the new regulation would lead to a reduction in price of some drugs by up to 30 per cent.

Nguyen Ngoc Hien, deputy director of Ha Noi-based Bach Mai General Hospital said his hospital’s drug prices would remain cheaper than private hospitals and others, despite Bach Mai bidding for about 1,200 drug items every year. 

The new regulations were officially announced a year ago.