New Decree on the promulgation of the Law on Pharmacy in Vietnam

Issuance

The Government of Socialist Republic of Vietnam issued new Decree No. 54/2017/ND-CP on May 08, 2017 (“new Decree”) on detailing some articles and guiding implementation of Law on Pharmacy [[1]] (“new Law”). The new Decree will take effect as from July 01, 2017, and shall apply to domestic and foreign agencies, organizations and individuals involving pharmacy activities in Vietnam.

The new Decree consists of nine sections of General Provisions; Certificates of Pharmaceutical Practice; Pharmaceutical Business; Drug and Materials Export and Import; Registration for Raw Medicinal Materials, Expedient, Capsule Marketing Authorization and Evaluation on Foreign Drug Manufacturing Facilities; Authority, Form and Procedures to revoke raw medicinal materials, Treatment for revoked raw medicinal materials; Dossiers, Evaluation Procedures and Authority for issuing the confirmation on Drug Advertisements; Drug Price Management; and Implementation Provisions.

This update will focus on the key points which may be involved activities in Vietnam of foreign pharmaceutical companies and/or manufacturers.

Pharmacy Business

Pharmacy Business Activities

Under the new Law and the new Decree, the following activities should be considered as pharmacy business:

• Trading of drugs, raw medicinal materials;
• Providing services on storage of drugs, raw medicinal materials;
• Providing services on testing of drugs, raw medicinal materials;
• Providing services on clinical trial of drugs;
• Providing services on bioequivalence study of drugs.

Pharmacy Business Entities would be included:

• Manufacturing facilities of drugs, raw medicinal materials;
• Exporters, importers of drugs, raw medicinal materials;
• Providers of services on storage of drugs, raw medicinal materials;
• Wholesalers of drugs, raw medicinal materials;
• Retailers of drugs, namely drug shops, dispensaries of hospitals, medical stations of communes, retailers of herbal ingredients, herbal medicine, traditional medicine;
• Providers of services on testing of drugs, raw medicinal materials;
• Providers of services on clinical trial of drugs;
• Providers of services on bioequivalence study of drugs.

The Agents for selling/ distribution of drugs on behalf of other pharmacy business entities under the old regulations have not been mentioned and regulated in the new Law and the new Decree.

Certificate of Pharmacy Business Eligibility

Certificate of Pharmacy Business Eligibility (“Certificate”) is the prerequisites to operate in the pharmaceutical business sector in Vietnam. Department of Health under Provinces/ Central Cities should evaluate dossier and issue Certificate for only wholesalers and retailers of drugs. Meanwhile, Ministry of Health (“MOH”) must focus on the balance pharmacy business entities and grant the Certificate regarding manufacture, import, export, services on storage, testing, clinical trial and bioequivalence study of drugs.

License for foreign companies conducting operations in medicines and raw medicinal materials in Vietnam (“Trading License”) had been removed from the new Law. In case any foreign entity is only focused on getting Marketing Authorization for drugs (“Visa”), it can establish a Representative Office in Vietnam and then a certified copy of the valid Certificate of Representative Office can be enclosed for each Visa application dossier instead of the Trading License as previous regulations.

Import Rights for Foreigners

It is noteworthy that under WTO Commitments during the accession of Vietnam in the year of 2006, foreign pharmaceutical agencies, organizations and individuals do not conduct direct distribution of medicines in Vietnam in any way. The new Law is still kept this strictly regulation. However, the new Decree opens the door in which foreign entity has rights as an importer of drugs, raw medicinal materials in Vietnam.

In order to operate as an importer of drugs, raw medicinal materials directly from foreign countries into Vietnam, foreign pharmacy entity should get Certificate of Pharmacy Business Eligibility for importer.

The requirements for issuance of this Certificate include: the importer must have the proper location in Vietnam, drug storage, storage equipment, transportation, quality control system, technical documents and personnel in accordance with Good Storage Practice (“GSP”) requirements.

Under the new Decree, foreign importer whom can be considered as an entity has the right to import but cannot exercise the right to distribute drugs and medicinal materials in Vietnam shall have to notify in writing to the MOH of the wholesalers to distribute imported drugs and raw medicinal materials into Vietnam before selling drugs or stop selling drugs to that entity.

The new Decree also stipulates strict prohibition of the distribution rights of foreign pharmacy entities. Accordingly, entities having the right to import but not being permitted to distribute drugs and raw medicinal materials in Vietnam MUST NOT carry out the FOLLOWING ACTIVITIES directly related to the distribution of drugs and raw medicinal materials in Vietnam (except for drugs and raw medicinal materials produced by themselves in Vietnam):

• selling drugs, raw medicinal materials, delivery of drugs, raw medicinal materials for healthcare facilities (hospital, clinics), retailers and end-users that are not wholesalers of drugs and raw medicinal materials,
• receiving order and payment from healthcare facilities (hospital, clinics), retailers and end-users,
• delivering, storing of drugs and raw medicinal materials,
• establishing price policy of distributors,
• determining distribution and trading pathway of distributors,
• building supply plan of drugs and raw medicinal materials of hospital and clinics,
• providing financial support under any form to manipulate the distribution of drugs and raw medicinal materials,
• other activities related to drugs distribution.

General requirements for Export and Import of Drugs

Export

Drugs and raw medicinal materials may be exported without being licensed by the MOH, except for herbal ingredients on the List of controlled rare and special herbs, controlled drugs, medicinal ingredients that are psychotropic, narcotic ingredients, or precursors defined by the MOH, or radioactive substances on the List promulgated by the Government.

Import

Drugs, raw medicinal ingredients that already granted Visa in Vietnam, may be imported without import permit licences from MOH, except for the special controlled drugs.

The Decree also stipulates requirements and procedures for import permit licenses (“Quota”) for drugs that are without Visa, or under special control and have other special purposes, such as parallel import.

For drugs including active ingredients without Visa or drugs containing substances to be first-time used in Vietnam, it may be granted the Quota if the following conditions should be met:

• Drugs must be licensed for circulation (Visa) in one of the following countries: the manufacturing country, reference country is a member country of The International Council for Harmonization of Technical Requirements for Human Use (ICH) or Australia;
• Drugs must be used for life-threatening disease, social disease, dangerous and emerging diseases promulgated by the MOH;
• Drug must have full clinical trial on safety and efficacy; vaccine must undergo local clinical trial as being set out in registration regulations.

Regarding drugs containing active ingredients already granted Visa in Vietnam but not meeting the demand for treatment yet and drugs containing substances already used as drug in Vietnam but does not meeting the demand for treatment yet, the Quota may be granted for that drugs if it meets the following requirements:

• Belong to the list of drugs which have not met the treatment demands yet promulgated by the MOH;
• To be licensed for circulation (Visa) in one of the following countries: the manufacturing country, the reference country is a member country of ICH or Australia.

For drugs having similar brand name, active ingredients, content or concentration, dosage forms compared with the original medicines already granted Visa in Vietnam, produced by the original manufacturer or by the authorized manufacturer, and having price lower than the original patent medicine used in Vietnam (“parallel import”), the Quota may be issued for that drugs in case the following criteria should be satisfied:

• That drugs serves a health program of the State of Vietnam;
• The expected wholesale price of that drugs should be at least 20% lower than the tender price of the original patent medicine granted Visa in Vietnam;
• Licensed for circulation of that drugs and export to Vietnam from the country of production or reference country which is ICH member or Australia;
• Not being radioactive drug, vaccine or biological product.

Remaining Self-Life of Drugs at Custom Clearance

Drugs granted the Quota under all kinds as mentioned above must have the minimum remaining self-life at the time of customs clearance as follows:

• 18 months for drugs or raw medicinal materials with the use duration of more than 24 months;
• Half of the use duration for drugs or raw medicinal materials with the use duration of 24 months or less.

Sale Contract signed between a foreigner and an entity having the right to import in Vietnam

In case the entity supplying drugs, raw medicinal materials is the foreign entity (“Supplier”) to be signed a sale contract with an entity having the right to import in Vietnam (“Importer”). The Supplier must belong to one of the followings:

•    I)  the manufacturer of that imported drugs, raw medicinal materials,
•    II)  the holder of that product or of circulation license of imported drugs, raw medicinal materials whom mentioned in details on the Certificate of Pharmaceutical Products (“CPP”),
•    III)  the application entity of Visa in Vietnam which is still valid at the time of customs clearance but not the entity as prescribed at item i) and ii) above,
•    IV)  the entity has been granted Trading License in Vietnam,

In case the entities are mentioned at items iii) and iv) above, they must be authorized in writing by the entities as defined at items i) and ii) above in order to supply drugs into Vietnam.

The authorization documents may be a power of attorney or a sales permit or partnership certificate. The authorization documents must be in Vietnamese or English and have at least the following information: name and address of the authorizer and the authorized entity; scope of authorization including the supply of drugs and raw medicinal materials into Vietnam; duration of authorization or time limit for sale; the responsibilities of the parties to ensure the quality and origins of drugs and raw medicinal materials supplying into Vietnam; signature of the parties.

Evaluation of Foreign Manufacturing Facilities

Cases to be evaluated

The new Decree stipulates the following cases should be submitted the documents for assessment of foreign manufacturing facilities of drugs and raw medicinal materials when filing application dossiers for Visa in Vietnam:

• For drugs and raw medicinal materials not granted Visa, during submission of the application dossier, the application company must submit the documents for assessment of foreign manufacturing facilities in accordance with GMP in the following cases:
  1. first-time foreign manufacturing facilities that have drugs to be submitted for Visa in Vietnam;
  2. drugs manufactured on the production lines not yet evaluated by the MOH;
  3. raw medicinal materials are first-time active ingredients to be submitted for Visa in Vietnam;
  4. first-time foreign manufacturing facilities that have pharmaceutical preparations to be submitted for Visa in Vietnam.
• For drugs and raw medicinal materials already granted Visa prior to the effective date of this Decree but manufacturing facilities of drugs and raw medicinal materials have not been assessed by the MOH, the application company must submit the documents for assessment of manufacturing facilities in accordance with GMP in the following cases:
  1. When submission of application dossiers for extension of Visa for drugs and raw medicinal materials;
  2. When submission of application dossiers for Visa for drugs and raw medicinal materials due to relocation of manufacturing facilities.

Methods of Evaluation

When a foreign application company and/or manufacturer submits an application dossier for Visa of drugs or raw medicinal materials in Vietnam, its foreign manufacturing facility must be evaluated the GMP requirements by using any of the following methods:

• Assessing documents on manufacturing conditions for manufacturing facility except for case mentioned in item 2 or item 3. b) below;
• Mutual recognition of inspection results given by pharmacy authorities regarding the fulfilments of GMP requirements shall apply to the following cases:
  1. Manufacturing facilities belonging to countries that are promulgated by the MOH in the list of countries where Vietnam has signed international treaties on mutual recognition of results of GMP’s inspection, except for cases specified in item 3 below;
  2. Manufacturing facilities belonging to ICH member countries, Australia and are monitored and assessed by one of thepharmaceutical management agencies of US (US Food and Drug Administration, USFDA), European Union (European Union, European Medicines Agency (EMA)), Australia (Therapeutic Goods Administration, (TGA)), Japan (Pharmaceuticals and Medical Devices Agency, PMDA) or Canada (Health Canada) on compliance with good manufacturing practices, except for cases specified in item 3 below.
• On-site inspection at manufacturing facilities shall apply to the following cases:
  1. Manufacturing facility has application dossiers for Visa of drugs and medicinal materials which are found out to have signs of tampering or doubts about the truthfulness of the document's information and data;
  2. Manufacturing facilities has drugs which violated in level 1 on quality according to the MOH’s conclusion;
  3. Manufacturing facilities has documents for evaluation of production conditions which has insufficient grounds to prove that these establishments satisfy GMP requirements according to the MOH conclusion.

Duration for Evaluation

The MOH shall receive documents for evaluation of GMP for the foreign manufacturing facilities, and make evaluation reports and notify the results of evaluation of the satisfaction of GMP within the following time limits:

1. 30 days from the date of receipt of complete documents in the case of evaluation in the form of recognition or recognition of the inspection and examination results of the pharmaceutical state administration agency for requirements of satisfaction of GMP;
2. 60 days from the date of receipt of complete documents in the case of evaluation in the form of appraisal of documents relating to production conditions;
3. 90 days from the date of receipt of full documents in the case manufacturing facilities has drugs which violated in level 1 on quality according to the MOH’s conclusion.

Control of Drug Price

Under the new Circular, pharmacy business entities cannot sell drugs if the prices declared or re-declared by drug manufacturers or entities ordering the drug-processing or drug-importing entities are not published on the Web Portal of the MOH.

The new Circular also provide stricter requirements in case of increasing drug price: Manufacturer/importer/distributor must provide justification on drug efficacy, comparison between cost and effectiveness, technology evidence and cost breakdown of the drug price.

Some key points for price declaration of drugs imported from foreign countries to Vietnam are as follows:

• First of all, the drugs importer should make declaration for the estimated wholesale price and retail price (in case it’s necessary to declare the retail price) before introducing the first batch of drugs of this institution to Vietnam’s market. For the continuing import shipments, the importer would not be required to make declaration if there is no adjustment for the estimated wholesale and retail price of drugs declared by that institution;
• The drugs importer must re-declare the estimated wholesale and retail price when there is the demand for increasing the estimated wholesale and retail price of drugs declared by that institution, re-declare the previous drugs published on the Web Portal of the MOH.

Conclusion

The MOH is currently drafting a considerable number of Circular related to guideline the implementation of the new Decree. As such, the information contained in this material will be updated by Duong & Partners whenever any new legal regulation is issued. This material and all updated materials thereof are available in the firm website.

Author: Bui Ngoc Duong. He can be contacted at email: This email address is being protected from spambots. You need JavaScript enabled to view it.