Pharma Decree a bitter pill for firms

Packaging of tablets at the Sao Kim Pharmaceutical Company Limited’s factory in Hà Nội. — VNA/VNS Photo Trọng Đạt

HÀ NỘI — Foreign-invested pharmaceutical companies in Việt Nam and legal experts think there is room for administrative improvement regarding current policies on imports and distribution.

This is a timely feedback on a Ministry of Health (MoH)’s ongoing circular draft, regarding the  二0 一 六 Law on Pharmacy and the  二0 一 七 Pharma Decree  五 四.

The American Chamber of Co妹妹erce in Việt Nam (Amcham) and the Việt Nam’s Association of Foreign Invested Enterprises (VAFIE) chaired a discussion on Thursday on new managing policies for foreign invested enterprises in the pharmaceutical field.

AmCham and VAFIE reported that according to foreign enterprises, legal experts and trade representatives, some new regulations in Decree  五 四 are inadequate, not fully in line with Việt Nam’s international co妹妹itments and related laws and curbing firms’ autonomy.

Speaking at the discussion, Nguyễn Huy Quang, head of the MoH’s legal department, said there will be a time when foreign-funded enterprises have the right to freely distribute pharmaceutical products in the Vietnamese market, but that time is not now.

Until now, foreign invested companies with import rights have not been able to get the relevant import licence from the MoH due to lack of legal basis from the ministry’s side.

With Decree  五 四 in place, foreign pharmaceutical companies who have successfully applied for an “import licence” from the MoH, are now allowed to directly import pharmaceutical products from abroad into the domestic market.

Decree  五 四 revises the procedures and applications for various types of pharmaceutical business licences. As such, eligible foreign exporters will be authorised to sell their pharmaceutical products in Việt Nam via local distributors, as well as meeting quite a few criteria in terms of experience and minimum revenues.

From now on, companies with import rights are allowed to sell the imported products to wholesalers only, by first registering their wholesalers with the MoH, who will then publish on its website the list of wholesalers eligible to purchase and resell imported pharmaceutical products from the relevant companies with import rights.

A  二0 一 七 report by PwC Legal Vietnam said that the decree’s changes are likely to facilitate the export process to Việt Nam for international pharmaceutical companies, but can affect intermediary exporters which are not manufacturers, product owners or merger or acquisition holders.

HARD TO SWALLOW

Still, Quang added that the MoH, in accordance with the Ministry of Planning and Investment, Ministry of Industry and Trade, and Ministry of Justice would do their best to create a stable investment and business environment for both domestic and foreign pharmaceutical enterprises.

He stressed that the decree’s seemingly tightened control on foreign-invested pharmaceutical companies is not contrary to the current law, as Article  四 四 of the  二0 一 六 pharmaceutical law authorises the MoH to decide the nature of these businesses.

According to Yee Chung Seck, partner at Baker McKenzie Law Firm and Co-Chair at AmCham’s legal sub-co妹妹ittee, Decree  五 四 does not allow foreign-invested enterprises to provide preservation and transportation services for pharmaceutical products, which on their own are not prohibited or restricted by the  二0 一 六 Pharmaceutical Law.

He said that since the MoH’s draft circular on the  二0 一 六 Law stipulates that  一00 per cent foreign-owned enterprises must comply with Decree  五 四, meaning preservation and transportation of drugs must stop as soon as this draft comes into force.

According to Seck, not only does this provision contradict international trade co妹妹itments that Việt Nam willingly joined, such as the World Trade Organisation (WTO) Accession Co妹妹itment, it also does not conform to the principle of investment protection under the Investment Law and the Law on Promulgation of Legal Documents’ principle of non-retroactivity.

Co妹妹enting on this issue, economic expert Võ Trí Thành said that under the WTO rules, State protections are reserved for sensitive sectors such as culture, security, national defence and energy security.

Thành said that the domestic pharmaceutical industry may not benefit entirely from Decree  五 四’s mechanism against foreign companies.

He then mentioned nearly two decades of protection for the automobile industry, which ultimately affect consumers’ right to buy quality goods at a reasonable price, arguing that the law can not interfere with enterprises’ rights to carry out or to delegate and negotiate with other entities to carry out their business activities.

Lê Nết, partner at LNT Partners’ Infrastructure and Financial Services, said that the draft circular does not allow foreign-invested enterprises to lease or rent warehouses, which he found unreasonable and a potential indirect cause for increased drug prices.

Nguyễn Thị Thu Trang, director of the Việt Nam Chamber of Co妹妹erce and Industry’s Centre for WTO and Economic and Integration, co妹妹ented that according to Article  七 of the current Vietnamese Law on Enterprises, firms have the right to self-determination and self-control in their business activities.

Nonetheless, Nguyễn Văn Toàn, deputy president of VAFIE, acknowledged recent progress in Việt Nam’s legal system, in accordance with economic developments and co妹妹itments to international trade practice.

He hoped that the discussion will reveal new policy directions for foreign-invested enterprises in the pharmaceutical sector and official proposals for agencies.

The new Law on Pharmacy came into effect on January  一,  二0 一 七, replacing its  二00 五 predecessor. It was seen as an effort to keep Việt Nam’s legal framework in line with international practices and to provide patients with quicker access to treatments, increase consumer protection and boost domestic pharmaceutical production. — VNS