Potential FIE impacts through Law on Pharmacy adjustments

There are some noticeable points of the draft amendments to the law, which are expected to make impacts on businesses and investors in the industry in the future.

Ngo Thanh Hai, lawyer, LNT & Partners

The first aspect is implementing reference, recognition, and mutual recognition mechanisms for new drugs to reduce the appraisal time for marketing authorisation (MA). This involves using scientific evaluation results for new drugs, vaccines, and biological products.

This will shorten the appraisal time when the drugs have been registered and allowed for circulation in other countries around the world. When the MA issuance time is shortened, it will certainly have a huge impact on businesses being able to put their products into business soon. At the same time, it creates conditions for hospitals and consumers to have more drugs with quality and competitive prices.

The draft also establishes regulations that align with international practices for the automatic renewal of MA. The recent implementation of the LoP 2016 shows that some regulations are no longer appropriate. The recent shortage of drugs at medical facilities is partly due to the large amount of expired drugs remaining that have not yet been renewed, due to limited processing resources and disruptions from the recent pandemic.

To solve urgent problems, Resolution No.80/2023/QH15 was issued in early 2023 allowing a temporary extension of the validity of circulation registration of drugs with expired registration until the end of 2024. Implementing this means nearly 12,000 drugs and medicinal ingredients have been renewed. However, the extension is only a temporary measure, and there needs to be a specific regulatory mechanism in the law.

The current draft stipulates the case of renewing an already issued drug, extending the drug registration certificate to be valid for five years, without serious side effects, and the remaining cases of extension. It is understandable that in cases where the drug expires but does not have serious side effects during use, an automatic renewal mechanism may be applied (after submitting the application for renewal, it will be more simple) without having to go through the document appraisal and consultation mechanism of the advisory council as in the case of the remaining extension.

If this regulation is passed, it will shorten the time to renew MA, reduce the backlog of documents, thereby ensuring that there is no shortage of medicine to hospitals and pharmacies. At the same time, businesses with this mechanism will not have their business interrupted due to having to wait for a licence.

The draft also stipulates increasing incentives on taxes, land rental, capital loans, and administrative procedures for licensing if investors invest in production activities. This has been stipulated in the current LoP. However, the draft further emphasises increasing incentives to attract investors to invest in production activities.

This may influence foreign-invested enterprises (FIEs) and new investors to consider the possibility of shifting from importing and selling conventional drugs to drug manufacturing activities in Vietnam. On the basis of comparing the incentives achieved and the initial investment capital (which is considerable for production activities), if the incentives provided by the law are worth the trade-off, it will attract many investors to the production activities, and shift current business models.

Drug processing and technology transfer will also be a new trend in the near future when the production of high-tech drugs and brand-name drugs is encouraged.

Concerning the sale of drugs on e-commerce platforms, this content has sparked recent debate on social media and in newspapers, with discussions about whether it should be banned or allowed, and if both over-the-counter and ethical drugs should be included or only the former.

To implement this sales method, after the amended LoP takes effect, guiding regulations must be issued for implementation. If drug sales are allowed through e-commerce platforms, it will create conditions for pharmacies and retail drug distributors to reach more customers, thereby increasing revenue for pharmacies.

However, the question is how to manage drug sales through the e-platform, ensuring there are no fake or poor quality drugs, or how to protect personal information when sharing prescriptions to buy. At that time, the management agency needs to stipulate additional conditions for sellers on such platforms in terms of business licences and drug origin, and the e-commerce owner must check and appraise before allowing to open shops on the e-platform. They must also have a mechanism to protect personal information when sharing personal information through the platform.

One of the issues that pharmaceutical FIEs are concerned about is that the scope of their rights and obligations is not specifically stipulated in the current LoP, other than Article 91.1 of Decree No.54/2017/ND- CP. That stipulates that FIEs will not be allowed to carry out distribution activities and other activities related to distribution.

The current draft has expanded the rights of such enterprises. Accordingly, FIEs can transport drugs from its warehouse to the warehouse of a domestic distributor, as well as transport for aid and drug sponsorship programmes. Regarding drug processing, the draft solves the problem that FIEs are allowed to resell drugs that have been ordered for processing to domestic distributors.

If it is passed, this regulation will have a huge impact, especially helping to facilitate the circulation and sale of drugs. At the same time, processing and technology transfer activities can also develop when FIEs can sell drugs that have been processed.

Vietnam's pharma sector shows potential Prof. Nguyen Hai Nam, rector of the Hanoi University of Pharmacy, recently asserted the potential strength of human resources in Vietnam's pharmaceutical sector, suggesting it could be the underpinning element for attracting global investment.

New pharma rules to offer direct and indirect gains The draft amendments to the Law on Pharmacy 2016 is expected to create a new driving force for the industry. Dr. Le Viet Dung, deputy director of the Ministry of Health’s Drug Administration of Vietnam, spoke with VIR’s Tung Anh about how legal improvements can benefit businesses.