Vietnam – Pharmaceuticals – 2015

1. Vietnam – Pharmaceuticals - 2015
Overview
Pharma Group [PG) - the Foreign Research-Based Pharmaceutical Manufacturers
Association in Vietnam - represents the voice of the innovative pharmaceutical sector in
Vietnam and has as its priority to cooperate and work closely with the relevant Vietnamese
agencies to ensure that Vietnamese people have sustainable and fast access to high quality,
safe, and innovative medicines. All of the below recommendations therefore take a patient-
centric approach, so that appropriate policies can be implemented to address both health and
trade matters.
Having a strong vision for the future of healthcare is key, and it is encouraging to see recent
Vietnamese health Pharma Group's priority is to ensure sector policies have set Vietnam out
on an ambitious that Vietnamese people have sustain-journey. As a result, there are many
mountains to climb including continued low-access to healthcare in many regions;
overburdened healthcare infrastructure; a local pharmaceutical industry that is not yet ready
to meet the nation's demand for affordable, high-quality medicine; and the challenge of
obtaining health sector- focused foreign investment inflows and development support as
Vietnam moves into the ranks of middle-income countries. But it is also a time of
opportunities, a time for shaping this healthcare vision with the drafting of a new Pharma
Law, the on-going EU-Vietnam FTA negotiations and the coming reality of an ASEAN
Economic Community.
Pharma Group remains committed to continuing this journey with Vietnam, and believes that
the Group’s experience from other markets may serve as a helpful compass in designing
holistic win- win' solutions. The perspectives and recommendations presented hereafter are
intended to help build on this growing constructive dialogue and collaboration, in order to
develop a high-standard healthcare sector and pharmaceutical industry in alignment with the
Prime Minister's vision.
Summary of chapter recommendations which require appropriate commitment within the EU-
Vietnam FTA:
1. Legal presence - Securing the long term investment of the innovative pharmaceutical
industry by implementing clear and practical guidelines for the establishment of a foreign
invested enterprise for pharmaceutical trading as allowed under Vietnam’s existing WTO
commitments and, furthermore - as part of the EU-Vietnam FTA - appropriate commitments
granting these foreign invested enterprises with full trading and distribution rights.
2. Equal access - Delivering universal access to safe medicine and healthcare for the
Vietnamese population through a holistic approach to tendering allowing FIEs to participate
on par with local companies and ensuring adequate protection of intellectual property rights.

2. 3. Fast access - Ensuring full, sustainable and fast access to innovative medicines for
Vietnamese patients within the same time as other ASEAN countries, through the elimination
of the local clinical trial requirement. Patients that cannot afford to travel suffer the most
from the years of delay compared to other ASEAN countries.
LEGAL PRESENCE
Securing the Long term investment of the innovative pharmaceutical industry by
implementing clear and practical guidelines for the establishment of a foreign invested
enterprise for pharmaceutical trading as allowed under Vietnam’s existing WTO
commitments and, furthermore, granting these foreign invested enterprises with full trading
and distribution rights.
Foreign Invested Enterprise Establishment
Relevant Ministries: Ministry of Health (MOH), Ministry of Industry and Trade (MOIT),
Ministry of Planning and Investment (MPI), Ministry of Justice (MOJ), Ministry of Finance
(MOF)
Issue description
Current regulations are unclear as to whether a Foreign Invested Enterprise (FIE) being a
pharmaceutical company can accomplish the fundamental functions that a pharmaceutical
company must be able to undertake. These functions are: 1) to import its products; and 2) to
market its products.
Clarifications and guidance for the pharmaceutical industry have been attempted by the
MOH since 2009, in the form of 13 different drafts of a Circular guiding the right to
import/export by FIE pharmaceutical companies. However, official regulations have never
been issued or enacted, and the industry therefore still has no certainty on this issue.
Decree 79/2006 detailing the implementation of a number of articles of the Pharmaceutical
Law (hereafter Decree 79), which specifies the implementation of the 2005 Pharmaceutical
Law, only covers regulations for local pharmaceutical companies and 'representative offices
of foreign businesses operating in the pharmaceutical sector in Vietnam’. These
representative offices, according to the law, are not allowed to import pharmaceutical drugs
and vaccines. Instead, foreign representative offices must rely on a complex set of
arrangements for their foreign parent companies to import pharmaceutical drugs and vaccines
into Vietnam, and the representative offices have a strictly limited role under Vietnamese
law. For instance, representative offices are forbidden from 'directly conducting profit-
generating activities in Vietnam’ and, as such, are not allowed to even issue invoices to
business partners in Vietnam - instead all business transactions are either offshore or cross-
border in nature.
Recommendations

3. We recommend the full and complete implementation of Vietnam’s existing WTO
commitments allowing foreign investors to establish Foreign Invested Enterprises (FIEs).
Under Vietnamese domestic law, such FIEs should - in application of Vietnam’s WTO
commitments - be able to perform the following activities:
i. Independently import pharmaceutical drugs and vaccines into Vietnam;
ii. Build (or use third-parties’) warehouses to meet Good Storage Practice (GSP)
requirements in Vietnam to store, deliver and otherwise conduct logistics related to the
imported pharmaceutical drugs and vaccines;
iii. Sell imported pharmaceutical drugs and vaccines to either: (a) pharmaceutical
wholesalers; or (b) companies with pharmaceutical distribution rights in Vietnam;
iv. Freely negotiate contracts with distributors allowing the FIEs to monitor the
distribution process for issues of pharmaceutical quality and drug safety;
v. Fully engage in the delivery of medical education activities to HCPs, including
doctors and pharmacists, as this is essential to enhancing the ability of HCPs in Vietnam to
use the FIE’s medicines and vaccines in the right way to ensure patient safety and
pharmaceutical efficacy in the treatment of medical conditions;
vi. Directly employ medical representatives to enact point (v) above to fulfil the medical
educational requirements; and
vii. Perform clinical research/trials to ensure pharmaceutical drugs and vaccines suit
Vietnamese people.
The above activities should be allowed as a package, or independently, without any one or
more of them - or any other activities - being a prerequisite of another. Furthermore,
conditional business licence requirements must be granted to FIEs to conduct the above
business activities (i-vii). This should be undertaken in a reasonable time period; 0-6 months
from proper application to the issuance of the relevant licence or Investment Certificate (IC).
Potential gains/concerns for Vietnam
The implementation of international commitments and norms increases the level of trust of
companies, which in turn leads to increased investment. Investment by PG members over the
last three years amounts to a total of VND 2.6 trillion. However, if companies were to enjoy
an increased sense of legal certainty, through the implementation of a simple and clear FIE
regulation, this amount could significantly increase in the years to come. Additional
investment would also lead to the creation of more high-end jobs, increased tax revenue, and
a more competitive healthcare sector overall.
Regulation to be updated
• Latest draft MOH Circular regulating the implementation of the right to import/export
drugs by enterprises with Foreign Direct Investments in the pharmaceutical sector in Vietnam

4. • Circular 34/2013/TT-BCT publicising the roadmaps for goods trading and activities
directly related to goods trading of foreign-invested enterprises in Vietnam (hereafter
Circular 34)
• Decree 79/2006/ND-CP detailing the implementation of a number of articles of the
Pharmaceutical Law
Distribution Rights
Relevant Ministries: Ministry of Health (MOH), Ministry of Industry and Trade (MOIT),
Ministry of Planning and Investment (MPI), Ministry of Justice (MOJ), Ministry of Finance
(MOF)
Issue description
Another obstacle for pharmaceutical companies stems from an overly broad definition of the
term 'distribution' in the pharmaceutical sector, which includes marketing and re-sale
activities. As a matter of law, under Circular 34, drugs and vaccines are listed under the
goods which FIE enterprises are specifically prohibited from distributing. The results of this
broad definition of distribution mean that FIEs cannot undertake marketing activities and re-
sale to licensed distributors. Therefore, foreign investors and their parent companies are
forced to turn to local distributors to import and sell their products on the Vietnamese market,
which implies relying on those partners to ensure the quality and safety of product delivery to
patients, which complicates the ability to control the quality and safety of product delivery to
patients. This is particularly challenging as the foreign pharmaceutical company (as the
product registration licence holder and proud of the quality of the products), are liable for any
adverse events caused by their pharmaceutical drugs and vaccines.
Recommendations
In addition to Vietnam’s above-mentioned WTO commitments, Pharma Group requests that
adequate commitments, leading to the full liberalisation of distribution services, are made in
the EU-Vietnam FTA. This request is made in order to enable a level playing field with other
economic agents and ensure enhanced access to safe and innovative, high quality medicines.
Consequently, any restriction under domestic law, like those under Circular 34, needs to be
removed, and, furthermore, new regulations implementing full distribution rights for FIEs
need to be enacted.
Potential gains/concerns for Vietnam
In addition to the above-mentioned benefits, distribution rights for FIEs would lead to greater
control of the safety of medicine as it moves down the supply chain to the patients.
Regulation to be updated
• Circular 34/2013/TT-BCT publising the roadmaps for goods trading and activities
directly related to goods trading of foreign-invested enterprises in Vietnam

5. EQUAL ACCESS
Delivering universal access to medicine and healthcare for the Vietnamese population
through a holistic approach to tendering as well as adequate protection of intellectual
property rights
Tendering
Relevant Ministries: Ministry of Health (MOH), Ministry of Planning and Investment (MPI),
Ministry of Industry and Trade (MOIT)
Issue description
As mentioned above, FIEs do not have distribution rights. As a consequence, they are not
allowed to directly attend pharmaceutical tenders in Vietnam. Also, according to the
regulations of the New Bidding Law (effective as of 01 July 2014)when drug purchasing
tenders are being conducted (paid by national budget, medical insurance fund, etc.), if a local
drug meets the treatment need and price and supply requirements of the tender, then the
tenderer is not allowed to offer imported pharmaceuticals as parts of its tender package.
Recommendations
There is an inherent need to ensure a level playing field and non-discrimination in the
participation of public tenders - replicating the level playing field offered in other countries.
Transparency and non-discrimination should be key pillars where both fully owned and joint
venture enterprises should be allowed to participate in drug supply tenders. FIEs should be
enabled to tender on par with Vietnamese enterprises, through the eradication of all technical
barriers differentiating between tenderers based on nationality. Adequate commitments
should be undertaken in the EU-Vietnam FTA negotiations (Government Procurement
chapter) to successfully address these issues.
Potential gains/concerns for Vietnam
This will provide procurement agencies with more choice in terms of price and quality,
contributing to the improvement and efficiency of expenditures on state budgets and the
health insurance funds. Furthermore, the current level of local Vietnamese pharmaceutical
manufacturers in hospital tenders is about 30% and therefore, not addressing this issue could
risk creating a supply gap in the future.
Regulation to be updated
• The new Law on Bidding 4-3/2013/QH13
• Decree 63/2014/ND-CP dated 26 June 2014 guiding the Implementation of the Law
on Bidding regarding the selection of contractors.
Intellectual Property Rights (IPR)

6. Relevant Ministries: Ministry of Science and Technology [MOST), Ministry of Industry and
Trade (MOIT), Ministry of Health (MOH), Ministry of Justice (MOJ), Ministry of Public
Security (MOPS), the National Assembly (NA)
Issue description
Protection of IPR is of great concern to Pharma Group, in particular as it relates to the
protection of research data and trademarks.
1. Protection of research data
Research data are the fruit of significant investments made by research-based
biopharmaceutical firms and represent the majority of Research and Development (R&D)
expenditures. Without adequate safeguards, other firms could receive significant competitive
advantage by relying on innovator-created regulatory data. This explains the need for
substantive Regulatory Data Protection (RDP). As part of the implementation of Vietnam’s
obligations under TRIPS, Vietnam currently allows for five years of RDP. However, a
number of issues persist:
1. The 'burden of proof’ is on the company and an applicant’s data will not be 'kept
secret’ unless the applicant expressly requests the Drug Administration of Vietnam (DAV) to
do so when submitting the drug registration form. Vietnam is the only country in the world to
require this procedural step and thereby to impose this extra burden on innovative
pharmaceutical companies.
2. It is left to the discretion of the DAV whether to grant data protection - to our
knowledge none of our member companies, has received the approval letter for Data
Protection.
3. Data disclosure is a common industry practice and is at times required by law (e.g. in
the European Union and the United States). However, to qualify for data protection in
Vietnam, it is a requirement that the data is undisclosed, putting Pharma Group companies in
a difficult position.
2. Trademarks
Pharmaceutical companies' IPR - especially trademarks - are exposed to infringement in
Vietnam, and given their value remain a target for counterfeiting:
1. Again, the burden is on the IPR holder to monitor the marketplace and alert the
relevant authorities of IPR violations. However, it should be noted that there has been
praiseworthy cooperation from law enforcement agencies and from the National Institute for
Drug Quality Control (NIDQC) through increased testing.
2. There is no authority clearly responsible for enforcement: several Government
authorities enforce these rights with varying degrees of resources and expertise, following
different procedures and endowed with a varying level of powers. Furthermore, most of these

7. authorities have discretion on whether or not to take action and can avoid doing so by
referring complaints to another agency.
3. Monetary fines imposed for infringement are not sufficient or appropriate.
Potential gains/concerns for Vietnam
The adoption of patent protection, a strong enforcement system, Regulatory Data Protection
(RDP), and other intellectual property protections that conform to international standards, as
this would enhance the country’s healthcare system, create a more predictable environment
for investment, promote innovation, and help address the critical health issue of counterfeit
medicines. In particular, counterfeit medicines represent a serious public health risk for
patients, who may purchase medicines of questionable or unknown quality and waste limited
healthcare resources. Recommendations
Vietnam should commit to an RDP mechanism consistent with international standards, in
particular putting in place a procedure that would provide for the automatic granting of RDP
upon approval of a drug without further requirements.
Vietnam should also improve IPR enforcement standards and related procedures, by
encouraging training of both judges and enforcement authorities. Pharma Group looks
forward to working with health officials to raise awareness on the dangers of counterfeit
medicine, and on how to combat them. Finally, penalties for criminals manufacturing,
supplying, or selling counterfeit medicines should be increased. Pharma Group strongly
advocates the resolution of the above issues in the EU-Vietnam FTA negotiations.
Regulation to be updated
• Article 128 of Vietnam's Law on Intellectual Property, to be updated in line with
TRIPS article 39.3 requiring WTO members to protect proprietary test data submitted to
marketing authorisation bodies against ‘use’ and against ‘disclosure’.
FAST ACCESS
Ensuring full, sustainable and fast access to innovative medicines for Vietnamese patients
within the same time as other ASEAN countries, through the elimination of the local clinical
trial requirement.
Clinical Trials
Relevant Ministries: Ministry of Health (MOH), Ministry of Industry and Trade (MOIT), the
National Assembly (NA)
Issue description
Before a pharmaceutical company is able to introduce a new drug or vaccine to patients, the
new drug must go through a very rigorous process of testing, which in its final stages
includes clinical trials. Only once the drug has been satisfactorily scrutinised will it receive a

8. market authorisation in the country of origin. In general, the time from the discovery of a
new molecule to the arrival in the pharmacy takes around 10-15 years (please see the chart
below for more details). Yet, as medicine does not have the same impact on patients across
the world, pharmaceutical companies undertake so-called ethnicity tests, meaning that the
medicine will be tested on different ethnic races around the world (four ethnicities are
established from a medical perspective), in order to ensure that the medicine works in the
desired way across the different populations. Vietnam qualifies under the Asian ethnicity,
meaning that a clinical trial undertaken in any Asian country is satisfactory from a medical
standpoint. However, in Vietnam there is a further requirement to do additional clinical trials;
according to current regulations, pharmaceutical companies have two options to register their
pharmaceutical drugs and vaccines in Vietnam:
(i) Conduct clinical trials in Vietnam (average of 2.5 additional years of delayed patient
access); or
(ii) Patients have to wait for five years after the pharmaceutical drug or vaccine has been
approved by the regulatory body in the country of origin.
In other words, Vietnamese patients get access to innovative medicines much later than
patients in other countries - in fact Vietnam is the only ASEAN country that requires a local
registration study. Furthermore, since February 2012, the clinical requirements were
extended to also include new indications, new pharmaceutical forms, and new routes of
administration for already approved drugs. In practice, this means that for instance a change
from a tablet to a syrup for the same drug would require new clinical trials and additional
delay in getting medicines to the patients. Patient safety and producing safe medicines is the
foundation of the pharmaceutical companies’ global mission. Hence, duplicative clinical
trials that do not add additional safety protections, but impede or delay access to medicines,
do not serve the best interest of the patients. Given the high costs of undertaking clinical
trials, it is expected that the number of clinical trials undertaken by PG members in Vietnam
will decrease by 13% in the coming years.
Potential gains/concerns for Vietnam
Amending the clinical trial regulation could quickly improve the efficiency of the healthcare
system (reducing the administrative burdens for the DAV) and improve patient access to
new, life-saving medicines. It would also be in line with the standard applied in other
ASEAN countries, and which will eventually be adopted by the ASEAN Economic
Community. Finally, an estimated USD 2 billion is spent on medical services overseas. If
innovative medicines were available in Vietnam at the same time as in other countries,
Vietnam might be able to return some of that money to the Vietnamese economy. Finally,
removing the local clinical trial requirement would also be in line with the Prime Minister’s
vision, as the patients who are suffering most from this lack of access are those that cannot
afford to travel abroad, where new medicines are available sooner.
Recommendations

9. Pharma Group welcomes the proposal in the draft Pharma Law to exempt non-vaccine
pharmaceuticals from this requirement, and would strongly encourage to extend the
exemption to also cover vaccines. In order to address the perceived issues relating to
vaccines, one could propose to replace the clinical trials for vaccines with:
o The submission of a dossier proving the ethnicity (leveraging the existing clinical data from
other markets with similar racial elements); o Undertaking a post-marketing surveillance
study in parallel with the introduction of vaccines to the Vietnamese market.
To encourage European companies to increase their presence in Vietnam, appropriate
commitments should be undertaken in the EU-Vietnam FTA, covering both drugs and
vaccines.
Regulation to be updated
• Draft No. 4 of the Pharmaceutical Law of 16 April 2014
• Circular 03/2012/TT-BYT guiding clinical trials
Please contact Oliver Massmann under Uomassmann@duanemorris.comU if you have any
questions.