Vietnam to Replace Brand-name Drugs with Generic Drugs to Cut Cost

Vietnam will give priority to generic drugs in substitution of brand-name drugs to reduce medicine costs for patients, the Vietnam Investment Review reported in its March 20-26 publication. According to the Government Office’s Document No. 1649/VPCP-KGVX, the Ministry of Health (MoH) is asked to replace original brand-name drugs whose patent protections have expired with generic drugs of Group 1, which meet the highest standards. The Vietnam Social Insurance (VSI) is tasked with working with the MoH on the structure of purchase and use between original brand-name drugs and generic drugs of Group 1. The MoH and VSI will jointly revise the regulations on purchase of original brand-name drugs with expired patent protections via open bids together with generic drugs of Group 1. A generic drug is a pharmaceutical drug that is equivalent to a brand-name product in dosage, strength, route of administration, quality, performance, and intended use. In most cases, generic products become available after the patent protections afforded to a drug’s original developer expire. In recent years, important improvements in medicine bids at state-run hospitals have helped reduce prices of generic drugs by 35%, according to the Government Office. However, bids and management of brand-name drug prices have still lacked efficiency. Currently, hundreds of original brand-name drugs in Vietnam have seen their patent protections expired, while generic drugs with similar make-ups and treatment effects have cheaper prices. “The move is expected to ease burdens on medicine spending for local patients and increase their medicine access,” an official of MoH’s Drug Administration of Vietnam told VIR, declining to be named. With a young and densely-located population and an increasing middle-class demographics, Vietnam’s pharmaceutical market has become a magnet for foreign investors. In the market, brand-name drugs that cost from several million to tens of million Vietnamese dong are very popular. For instance, according to the price declaration list of imported drugs as of February 28, 2017 on the Drug Administration of Vietnam’s website, Aclasta 5mg/100ml of Novartis Pharma Stain AG at over VND7.09 million ($322.27) while made-in-Argentina Belipex-ade 500mg is priced at VND9.45 million ($429.5). In the local pharma market, according to Pham Thi Viet Nga, general Director of Hau Giang Pharmaceutical (DHG) – Vietnam’s largest publicly traded drug maker, the main distribution channel is the hospital system. So-called ethical drugs (ETC) account for 70% while the rest of the market is in over-the-counter drugs. However, the ETC portion of the revenue structure of leading local drug makers has gone down due to stiff competition from imports. Foreign players hold the most profitable part of the ETC market due to ownership of brand-name drugs. Which operate under monopolies and are sold at high prices. Even for the generic drugs, foreign pharma firms have more advantages than their local rivals as their products are more favored by Vietnamese people than domestically-made ones. (VIR Mar 20-26 P2)