Vietnam decree tries to curb drug price rises

Vietnam's Ministry of Health has issued a decree on drug prices, containing "several tough new regulations" that are designed to stabilize rising costs, according to the government-run Viet Nam News Agency. The report adds that the decree was issued "after a long delay" and splits the drug market into three pricing segments.

In all three areas, the government has announced its intention to intervene. First, the prices of drugs purchased by the government are to be set by the Health Ministry and the provincial People's Committees. Second, for products considered "essential" and dispensed in state-owned clinics, drug distributors will be invited to tender for contracts, with the lowest bid automatically winning, according to the VNNA. Finally, drugs sold on the open market will be regulated by government agencies, although the retailers will have the right to propose prices. As a control mechanism, drug vendors will be required to provide public listings of both a drug's retail price and cost.

Underscoring the Vietnamese government's problems in attempting to control drug prices, the Viet Nam Pharmaceutical Manufacturing and Trading Association also reported that locally-manufactured antibiotics and vitamins had become 30% more expensive on average in the latest price surge. Part of the problem is that Vietnam imports 95% of its pharmaceutical raw materials. A government spokesman argued that the two major problems are excessive layers in the distribution chain and a regulation that allows drugmakers to maintain prices for individual products for five years after registration with the country's Drug Administration.