JOINT CIRCULAR

GUIDING THE STATE MANAGEMENT OF HUMAN DRUG PRICES

Pursuant to Pharmacy Law No. 34/2005/UBTVQH11 of August 9, 2005;
Pursuant to Price Ordinance No. 40/2002/UBTVQH10 of April 26, 2002;
Pursuant to the Governments Decree No. 79/2006/ND-CP of August 9, 2006, detailing the implementation of a number of articles of the Pharmacy Law;
Pursuant to the Governments Decree No. 170/2003/ND-CP of December 25, 2003, detailing the implementation of a number of articles of the Price Ordinance;
The Ministry of Health, the Ministry of Finance and the Ministry of Industry and Trade jointly guide the state management of human drug prices as follows:

I. GENERAL PROVISIONS

1. Governing scope

This Circular guides the state management of human drug prices, covering the drug price declaration and re-declaration; drug price listing; management of drug prices paid by the state budget and Health Insurance Fund; competence and responsibilities of agencies and establishments in the implementation of regulations on price management of drugs being finished products permitted by the Ministry of Health for circulation and use in Vietnam (below referred to as drugs); the inspection and examination of the observance of state regulations on management of drug prices in Vietnam.

2. Subjects of application

This Circular applies to Vietnamese and foreign organizations and individuals permitted to conduct activities of manufacturing, importing, wholesaling and/or retailing drugs (below referred to as establishments); medical examination and treatment establishments in Vietnam; agencies, organizations and individuals involved in the state management of drug prices.

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3.1. The State manages drug prices on the following principles: Drug-manufacturing, -importing, -wholesaling or -retailing establishments shall themselves set and compete in drug prices and submit to inspection and control by drug price state management bodies under the provisions of the Pharmacy Law, the Governments Decree No. 79/2006/ND-CP of August 9, 2006, detailing the implementation of a number of articles of the Pharmacy Law, this Circular and other relevant legal documents.

3.2. The State applies various measures to stabilize drug prices on the market in order to meet the demands for drugs in service of the care for, the protection and improvement of, peoples health.

3.3. Drug-dealing establishments must fully comply with the guidance on drug price declaration, re-declaration and listing, and take responsibility before law for their declared, re-declared and listed drug prices under the provisions of the Pharmacy Law and the Governments Decree No. 79/2006/ND-CP of August 9, 2006, detailing the implementation of a number of articles of the Pharmacy Law, this Circular and other relevant legal documents.

3.4. The drug price state management bodies (the Vietnam Drug Administration and provincial/ municipal Health Services) shall consider the reasonability of drug prices, not approving the drug prices declared or re-declared by establishments on their own initiative.

3.5. The drug price management is organized under the mechanism of decentralization between the central and local bodies performing the drug price state management according to geographical areas and domains.

4. Interpretation of terms

4.1. Assorted drug prices include:

a/ The import price is the price which includes the drug price calculated according to the sale price of the exporting country, the insurance expense, the freight for transportation from the exporting country to Vietnamese ports (called CIF price for short) and exclusive of import tax (if any);

The actual CIF price means the CIF price inscribed on the custom declarations.

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c/ The expected wholesale price means the wholesale price declared or re-declared to drug price state management bodies by domestic drug-manufacturing establishments, or -importing establishments;

d/ The expected retail price means the retail price expected for direct sale to users by domestic drug-manufacturing establishments, or -importing establishments;

dd/ The retail price means the price of drugs sold directly to users at retail establishments.

4.2. Drug price declaration means the reporting by drug-dealing establishments to state management bodies on the import price, the expected wholesale price and the expected retail price under the guidance in this Circular and relevant legal provisions on prices. The drug price declaration is carried out when establishments submit foreign drug registration dossiers and before they circulate in the Vietnamese market the imported drugs or domestically manufactured drugs. The declared drug prices are calculated on the smallest packing units.

4.3. Drug price re-declaration means the reporting by drug-dealing establishments to state management bodies on the import price, the expected wholesale price and the expected retail price upon demands for drug price increase over the preceding declared or re-declared price. The drug price re-declaration is carried out before the application of new prices. The re-declared drug prices are calculated on the smallest packing units.

4.4. Drug price listing means the publicity of drug sale prices by drug-dealing establishments by ways of printing, sticking, inscribing sale prices on drug packages or outmost drug packages or public notices on boards, papers or other objects placed or hung at drug sale or supply places under the guidance in Section III of this Circular.

5. Currency used for drug price declaration, re-declaration and listing

5.1. The CIF price is declared and re-declared in Vietnamese currency. Foreign currencies are converted into the Vietnamese currency at the average exchange rates on the inter-bank market, announced by the State Bank of Vietnam at the time drug price declaration or re-declaration dossiers are submitted.

5.2. The expected wholesale price and retail price in Vietnam is declared, re-declared and listed in Vietnamese currency. The declared, re-declared and listed prices are VAT-inclusive prices.

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1. Drug price declaration dossiers, order and procedures

1.1. Upon submission of foreign drug registration dossiers

An overseas drug-manufacturing establishment or an establishment authorized to register drugs shall:

- Declare CIF prices at Vietnamese ports;

- Supply the actual CIF prices of those drugs (of the same active substance, content or dose and packing specifications), which it has sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular.

For new drugs, drugs imported only for circulation in the Vietnamese market, foreign drug- manufacturing establishments shall make commitments and bear responsibility for their commitments on the non-availability of information on the actual CIF prices of those drugs which they have sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular.

1.2. Prior to circulation of drugs in the Vietnamese market

a/ Drug- importing establishments with or without registration numbers shall:

- Declare the actual CIF prices at Vietnamese ports.

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- Declare the expected wholesale price;

- Declare the expected retail price (if establishments register retail business).

The declaration time is the time from the import of the first lot of drugs to before the circulation of these drugs in the Vietnamese market, for drugs with or without registration numbers and newly granted registration numbers or import orders without registration numbers. For subsequent imports, the importing establishment shall not make declarations unless the drug price is adjusted to increase.

b/ Domestic drug-manufacturing establishments or establishments authorized to register drugs shall declare the following prices:

- The expected wholesale price;

- The expected retail price in Vietnam (if establishments register retail business).

The declaration time is the time from the production of the first lot of drugs with newly granted registration number to before their circulation in the Vietnamese market. For the subsequent lots, the domestic drug-manufacturing establishment shall not make declaration unless the drug price is adjusted to increase.

1.3. A price declaration dossier is made in 2 sets, one is sent to the Vietnam Drug Administration and the other kept at the establishment. A drug price declaration dossier comprises the following documents:

a/ For overseas drug-manufacturing establishment or the establishment authorized to make drug registration:

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- The actual CIF price of drugs sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular: Form No. 2-GT or the written commitment, if any (not printed herein).

b/ For drug-importing establishments:

- The drug-price declaration and declared price details: Form No. 3-GT (not printed herein);

- The supplied actual CIF prices of drugs sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular: Form No. 2-GT (not printed herein), for drug-importing establishments without registration number or the written commitment (if any).

c/ For domestic drug-manufacturing establishments or establishments authorized to register drugs:

- The drug-price declaration and declared price details: Form No. 4-GT.

2. Drug price re-declaration dossiers, order and procedures

2.1. Establishments shall re-declare drug prices when wishing to increase drug prices over the preceding declared or re-declared ones to drug price state management bodies.

2.2. A drug price re-declaration dossier is made in 2 sets, one is sent to the Vietnam Drug Administration or the concerned provincial/municipal Health Service, and the other kept at the establishment. It comprises the following documents:

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- The official letter on drug price re-declaration: Form No. 5-GT (not printed herein);

- The drug price re-declaration: Form No. 6-GT (not printed herein);

- The supplied actual CIF prices of drugs sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular: Form No. 2-GT (not printed herein).

b/ For drug-importing establishments:

- The official letter on drug price re-declaration: Form No. 5-GT (not printed herein);

- The drug price re-declaration and the re-declared drug price details: Form No. 7-GT (not printed herein).

c/ For domestic drug-manufacturing establishments or establishments authorized to register drugs:

- The official letter on drug price re-declaration: Form No. 5-GT (not printed herein);

- The drug price re-declaration and the re-declared drug price details: Form No. 8-GT (not printed herein).

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3.1. Drug price declaration or re-declaration dossier- receiving agencies:

a/ The Vietnam drug Administration shall receive:

- The drug price declaration dossiers under the guidance at Point 1.3, Clause 1 of this Section.

- The imported drug price re-declaration dossiers under the guidance in Items a and b, Point 2.2, Clause 2 of this Section.

b/ The provincial/municipal Health Services shall receive the drug price re-declaration dossiers under the guidance in Item c, Point 2.2, Clause 2 of this Section.

3.2. The drug price state management bodies shall not approve the drug prices declared by establishments on their own initiative but supervise the drug price declaration and re-declaration as follows:

a/ For drug price declaration cases:

In the period from the time of drug price declaration to the time of expiry of registration numbers or drug import permits without registration numbers, if detecting that the declared drug prices are unreasonable, the Vietnam Drug Administration shall give its written opinions, clearly stating the reasons and requesting establishments to reconsider the declared drug prices.

b/ For drug price re-declaration cases:

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c/ Grounds for examination of the reasonability of declared or re-declared drug prices:

- Expenses for drug import, manufacture and circulation, determined undercurrent legal provisions;

- The domestic and regional drug price levels. For drugs imported into and circulated in the Vietnamese market, their prices at the time of declaration or re-declaration must not be higher than the average actual CIF prices of those drugs (of the same active substance, content or dose and packing specifications), which the overseas drug-manufacturing establishments have sold to a number of countries of which drug prices should be referred to under the guidance at Point 1.2, Clause 1, Section VI of this Circular.

- The cost fluctuation of input elements such as raw materials, materials, exchange rates.

d/ If domestic drug-manufacturing establishments, overseas drug-manufacturing establishments or establishments authorized to register drugs fail to comply with the guidance on declaration or re-declaration, the Vietnam Drug Administration shall consider and settle as follows:

- To temporarily cease granting the registration numbers, for overseas drug-manufacturing establishments which, pending the grant of registration numbers, have declared unreasonable drug prices but declined to re-adjust those prices after the drug price state management bodies give their written opinions.

- To temporarily cease granting the registration numbers and stop receiving the dossiers on drug information and advertisement in cases where the prices of drugs already circulated in the market by establishments have been declared or re-declared unreasonably but the establishments have failed to re-consider and re-adjust those prices after obtaining the written opinions of drug price state management bodies or in cases where drugs are sold at prices higher than those already declared or re-declared and currently applied.

- The Vietnam Drug Administration shall consider the cessation of grant of import drug orders without registration numbers for drugs of those importing establishments which are detected as having declared unreasonable drug prices but decline to reconsider and re-adjust those prices after obtaining the written opinions of drug price state management bodies or as having sold the drugs at prices higher than those already declared or re-declared and currently applied.

3.3. When necessary, the Ministry of Health shall set up inter-branch working groups to examine the drug price declaration or re-declaration by establishments and propose the handling of cases of unreasonable declaration or re-declaration. An inter-branch working group is composed of representatives of the Ministry of Health (the Vietnam Drug Administration - the responsible body, and the Planning-Finance Department) and of the Ministry of Finance (the Price Management Department, the Enterprise Finance Department).

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3.5. Competence and responsibilities of establishments:

a/ Drug-manufacturing, -importing, -wholesaling or -retailing establishments have the right to set their drug prices and at the same time have the responsibility to fully comply with the guidance on drug price declaration and re-declaration in this Circular and relevant legal documents; bear responsibility before law for the declared or re-declared prices as well as the supplied data, documents, reports and information.

b/ Establishments may petition to the Vietnam Drug Administration or provincial/municipal Health Services about drug price state management bodies opinions on their drugs declared or re-declared prices.

c/ In the drug-dealing course:

- Drug-importing establishments and domestic drug-manufacturing establishments must supply their customers with information on currently effective expected wholesale prices they have declared or re-declared in form of written notices or notification on sale invoices.

- Drug-wholesaling establishments shall base on expected wholesale prices notified by drug-supplying establishments or found on the Vietnam Pharmacy Management Departments website to set by themselves prices of drugs they sell, which are not higher than the currently effective expected wholesale prices declared or re-declared by domestic drug-manufacturing establishments or -importing establishments.

- Where establishments sell drugs at prices lower than the declared or re-declared prices, they must abide by the anti-dumping law.

3.6. Periodical reports on drug price re-declaration

Before the 10^th every month, provincial/municipal Health Services shall report to the Ministry of Health (the Vietnam Drug Administration) in writing and emails (to the email address: quanlygiathuoc@moh.gov.vn) on the drug price re-declaration by domestic drug-manufacturing establishments in their localities (Form No. 9-GT, not printed herein).

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1. The drug-wholesaling establishments shall list the wholesale price of every kind of drug by way of public notices on boards, papers or other means placed, hung or stuck at transaction, drug sale places convenient for customers observation and must not sell them at prices higher than the listed prices. The drug-wholesaling establishments listed wholesale prices must not be higher than the expected wholesale prices already declared to drug price state management bodies by drug-manufacturing or -importing establishments.

2. Drug-retailing establishments shall list the retail price of every kind of drug by way of printing, inscribing or sticking the retail prices on drug packages or outmost drug packages, and must not sell drugs at prices higher than the listed prices.

3. Drug-price listing at retail establishments in medical examination and treatment establishments:

3.1. Drug-retailing establishments in medical examination and treatment establishments shall list the drug retail prices under the guidance in Clause 2 of this Section. The drug retail prices listed by establishments must not be higher than the common retail prices of those drugs (of the same active substance, content or dose and packing specifications) in the same localities and at the same time.

3.2. Medical examination and treatment establishment directors are responsible for the observance of guidance on drug price listing by retail establishments located in the medical examination and treatment establishments under their respective management.

Where retail establishments are located in medical examination and treatment establishments owned by business establishments, the directors of the medical examination and treatment establishments and the business establishments shall jointly bear responsibility for the observance of guidance on drug price listing by retail establishments in the medical examination and treatment establishments.

IV. MANAGEMENT OF DRUG PRICES PAID BY THE STATE BUDGET AND HEALTH INSURANCE FUND

1. Management of prices of drugs ordered by the State and paid by the state budget

1.1. The Ministry of Finance shall set drug prices to be paid by the central budget after obtaining the written appraisal of the Ministry of Health; provincial/ municipal Finance Services shall submit to provincial-level Peoples Committees drug prices to be paid by local budgets after obtaining the written appraisal of provincial/municipal Health Services.

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2. Management of drug prices to be paid by the state budget and Health Insurance Fund:

2.1. Drugs on the list of essential drugs used in public, medical examination and treatment establishments and non-public medical establishments signing with the Social Insurance contracts for medical examination and treatment covered by health insurance, and drugs covered by the state budget must be opened for bidding in accordance with the bidding law. The bid-winning drug prices must not be higher than the current maximum prices promulgated by the Ministry of Health at the nearest time.

2.2. Once every six months, for drugs subject to bi-annual bidding, and once every year, for drugs subject to annual bidding and within 15 working days as from the date the bidding results are available, hospitals and institutes with hospital beds under the Ministry of Health and general hospitals of provinces or centrally run cities shall send reports on bid-winning drug prices of the preceding bidding to the Vietnam Drug Administration. Reports are made in forms of document and email to be addressed to: quanlygiathuoc@moh.gov.vn (Form No. 10-GT, not printed herein).

V. INSPECTION, EXAMINATION, AND HANDLING OF VIOLATIONS

1. Inspection and examination of the realization of guidance on state management of drug prices

1.1. The Ministry of Health, the Ministry of Finance and the Ministry of Industry and Trade shall, within the ambit of their respective tasks and powers, organize inspections and examinations or coordinate inspections, examinations and handling of violations of the state regulations on drug price management at drug-manufacturing, -importing, -wholesaling or -retailing establishments as well as medical examination and treatment establishments nationwide according to provisions of law.

1.2. Ministries or branches with drug-importing, -manufacturing, -wholesaling or -retailing establishments and medical examination and treatment establishments shall periodically or extraordinarily inspect or examine and handle violation cases according to their respective functions and tasks.

1.3. Peoples Committees of all level shall, within the ambit of their respective tasks and powers, direct functional agencies in their respective localities to organize inspections and examinations or to coordinate inspections, examinations and handling of violations of the state regulations on drug price management by drug-manufacturing, -importing, -wholesaling or -retailing establishments as well as medical examination and treatment establishments in their respective localities according to provisions of law.

2. Sanctioning of administrative violations in the field of drug price management

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2.2. The sanctioning of administrative violations in the field of drug price management shall comply with the provisions of the Governments Decree No. 169/2004/ND-CP of September 22, 2004, defining administrative sanctions in the field of price; Clause 1, Article 14 of the Governments Decree No. 120/2004/ND-CP of February 12, 2004, on management of prices of preventive and curative medicines for human use; the Governments Decree No. 45/2005/ND-CP of April 6, 2005, defining administrative sanctions or the field of health, and other current legal provisions.

2.3. The specific sanctioning competence, the sanctioning order and procedures shall comply with the 2002 Ordinance on Handling of Administrative Violations and relevant legal documents.

VI. ASSIGNMENT FOR COORDINATION IN PERFORMANCE OF THE STATE MANAGEMENT OF DRUG PRICES

1. The Ministry of Health shall assume the prime responsibility for, and coordinate with the Ministry of Finance, the Ministry of Industry and Trade and relevant ministries and branches in:

1.1. Directing and guiding provincial/municipal Health Services and drug-manufacturing, -importing, -wholesaling or -retailing establishments as well as medical examination and treatment establishments to realize the guidance in this Circular and other legal documents related to drug price management.

1.2. Once a year, making and notifying the list of countries of which drug prices should be referred to so that establishments declare and re-declare drug prices under the guidance in this Circular.

1.3. Once a year, promulgating the maximum drug prices paid by the state budget and Health Insurance Fund; promulgating reference prices of previous bid-winning drugs of medical examination and treatment establishments. In case of abnormal changes in drug prices, promulgating the maximum drug prices in order to stabilize the drug market.

2. The Ministry of Health, the Ministry of Finance and the Ministry of Industry and Trade shall, according to their respective competence, direct the Health, Finance and Market Management Agencies of all levels to regularly coordinate the inspection and examination of the observance of legal provisions on drug circulation, export and import and legal provisions on drug price management;

3. The Ministry of Health shall authorize the Vietnam Drug Administration

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3.2. To update and publicize drug prices declared or re-declared by establishments on the Vietnam Drug Administrations website, specialized journals and other appropriate mass media.

4. The Ministry of Finance shall authorize

4.1. The General Department of Customs to supply information on actual CIF prices of drugs imported into and circulated in the Vietnamese market (on the 25^th of every month at the latest) and send to the Vietnam Drug Administration information on the preceding months import prices (Form No. 11-GT, not printed herein). Information is sent in forms of document and email to be addressed to quanlygiathuoc@moh.gov.vn

4.2. The General Department of Taxation to direct local tax bodies to examine the implementation of regimes on invoices and vouchers by drug-dealing establishments in geographical areas under their respective management.

5. The Ministry of Industry and Trade shall

5.1. Coordinate with branches and localities in fighting the market manipulation to boost drug prices for illicit profits.

5.2. Examine and supervise activities of competition, anti-manipulation and acts of violating the competition law.

VII. IMPLEMENTATION PROVISIONS

1. Implementation effect

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2. Organization of implementation

2.1. Drug-manufacturing, -importing, -wholesaling or -retailing establishments and medical examination and treatment establishments immediately apply necessary measures for strict implementation of the guidance in this Circular.

2.2. For drugs already granted registration numbers before this Circular takes effect, establishments shall make additional declarations of drug prices under the guidance in this Circular and send them to the Vietnam Drug Administration before December 31, 2007. They will be sent in forms of document and email to be addressed to quanlygiathuoc@moh.gov.vn

2.3. Professional associations, societies and branches thereof shall, within the ambit of their respective responsibilities, propagate for, and disseminate the regulations on drug price management to, and supervise the implementation thereof by, their members, and report in time on the drug price fluctuations, give their comments and proposals on drug price- stabilizing measures to drug price state management bodies.

2.4. In the course of implementation, if problems arise, establishments and localities are requested to promptly report them to the Ministry of Health for joint study and solution by the Ministry of Health, the Ministry of Finance and the Ministry of Industry and Trade.

FOR THE MINISTER OF INDUSTRY AND TRADE
VICE MINISTER





Nguyen Cam Tu

FOR THE MINISTER OF FINANCE
VICE MINISTER





Tran Van Ta

FOR THE MINISTER OF HEALTH
VICE MINISTER





Cao Minh Quang