New drug decree may cure swelling prices

New drug decree may cure swelling prices

VietNamNet Bridge – A decree on drug prices issued by the Ministry of Health last Friday contains several tough new regulations which are likely to stabilise prices, a ministry source said. The new decree, issued after a long delay, divides the administration of drug prices into three sections: The first involves the prices of drugs procured and paid for by the government - they will be fixed by the health ministry and provincial people's committees. The second involves essential drugs that will be used in State-owned clinics. They will be bought through tenders with the lowest bidders winning. The third involves drugs to be distributed in the open market. Their prices will be determined by dealers but controlled by government agencies. Besides, the drug companies will be required to make the prices public and apprise the authorised agencies of the costs of the drugs. Penalties for gouging The new policy also provides for penalties in case of violations of these regulations. The health ministry will temporarily suspend import licences for new drugs if a trading company is caught selling a drug at unreasonable prices. Analysts have hailed the proposed decree, saying it will help crack down on drug distributors demanding exorbitant prices. But they admit its effectiveness will depend on how well it is enforced in various places. Rising cost of materials The Viet Nam Pharmaceutical Manufacturing and Trading Association investigations reported that drug prices soared again last month for the third time this year following similar jumps in March and May. Drugs whose prices had risen the most included locally-made antibiotics and vitamins, it said. They became 30% more expensive on average. The prices of other imported antibiotics too had risen by between 5 and 40%, the association said. Pharmaceutical companies blamed the price hike on rising raw material prices, the report said. The Ministry of Industry and Trade admitted that the prices of many imported raw materials had risen steeply. In particular, the price of Cefaclor imported from India went up by 12%, and Ampicilin compacted by 4.7%. The cost of Trimethoprim imported from China had risen by 4%, paracetamol by 8%. Vitamin B6 by 7%, and Vitamin B1 by 3.5%, it added. Pharmaceutical experts say the fact that domestic manufacturing of drugs still relies heavily on imported raw materials is an important factor in destabilising drug prices. Drug Administration of Vietnam data shows that 95% of the raw materials used by the domestic pharmaceutical industry is imported. Deputy Minister of Health Cao Minh Quang says five factors contributed to increasing drug prices, with two of them being the most important. "There are so many layers of distribution between production and retailing." he says. The other major reason is "the high cost of promotional activities and commissions for retailers and doctors," Quang says. "In fact, these costs make up a considerable portion of the price." Existing regulations that allow traders to maintain prices they registered with the Drug Administration for five years are also a major problem, he says. "Many traders take advantage of this regulation," he says.