Road for health funding must be clear

July 18, 2023 | 08:30
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Vietnam’s law on public-private partnerships, despite opening up numerous opportunities for the deployment of various projects, still consists of several obstacles that prevent investors from pouring capital into healthcare in this country.

Regarding the investment field, size, and classification of public-private partnership (PPP) projects, the law highlights five sectors. Of these, in the health and education-training sectors, projects should be worth at least VND100 billion ($4.16 million) in total funding.

Road for health funding must be clear
Nguyen Van De - Chairman, Vietnam Private Hospital Association

Specifically, to build a hospital, investors have to perfect procedures that must comply with the norm as prescribed by law (about VND1.5 million or $64 per hospital bed). But in fact, for the same size of hospital ventures, the total investments are too different. For example, for the same medical equipment, and the same type of bed, the buying prices will be different if the investor is a state agency using state budget capital, or a private-owned enterprise.

So if enterprises pour their own capital into PPP projects, it will be difficult to prescribe the above norms for them. Investors cannot declare fake value, but the true declaration is not in accordance with norms, so it is difficult to accept and settlement of projects, as well as explain to the auditor and inspection authorities.

If the PPP uses both private and state budgets to jointly invest, the process of using capital to buy equipment, and machinery, and develop medical infrastructure may contain some corruption that the law cannot cover.

Secondly, in addition to PPP projects proposed by the state, the law stipulates that investors can propose by themselves, in which the order, procedures, and conditions for implementation are basically the same as for those proposed by the state. However, the biggest concern is that, even if it is proposed by enterprises, they still have to organise an open bidding or competitive negotiation.

After announcing information on the National Bidding Network system, numerous businesses will apply and send a representative to raise unrealistic prices. So, we ask to abandon the bidding for PPP projects proposed by businesses, which is an unattractive and complicated point, including risks in the funding process of such ventures.

Thirdly, the mechanism of sharing revenues is new but important to minimise risks for PPP projects, especially risks due to changes from the government. In the health sector, this is seemingly a form of legalising the policy of joint ventures, facilitating and concretising public-private health initiatives and joint-venture programmes. However, without clear and transparent regulations, corruption could rise in these cases.

Article 82 of the PPP law, which stipulates revenue increase/decrease sharing between the state and enterprises when the annual revenues reach more than 125 per cent or less than 75 per cent of the revenues in the plan applying to the medical field, is completely unfeasible. Healthcare is very different from transportation, electricity, energy, and IT – it requires businesses to invest all profits to upgrade and maintain facilities, machinery, equipment, and human resources, and apply high technologies and new methods. So, it will be too difficult to gain profits to share with the state.

Because healthcare investment includes many challenges, most financiers have another business field to support their financial status. Moreover, the government is building a mechanism to tighten the prices of medical examination and treatment services in the private healthcare area, so too few investors are interested in this field.

Additionally, regulations on revenue increase/decrease sharing are fragile enough to cause negative activities in the process of accounting for revenue differences. Based on the requirement of continuous funding in the health sector, investors will often report an annual loss of less than 75 per cent to enjoy support from the state budget, arising in negative behaviour in managing PPP projects.

Moreover, there are numerous troubles between the public and private sectors in managing and making decisions related to the investment and expansion of health PPP projects, in terms of salary, bonus, and attraction policy of human resources.

Resolution No.20/NQ-TW targets that the rate of private-hospital beds must reach 10 per cent by 2025. As of 2022, there were only 318 private-owned hospitals and 38,000 clinics, equivalent to 5.16 per cent of the total number of hospital beds.

Therefore, in order to encourage businesses to invest in private hospitals, we recommend ministries and agencies to study and unify a regulation on attracting money into projects in the health sector, creating stronger conditions for businesses to invest and share the burden with the state budget. Especially, we should consider removing regulations on bidding and auctions in medical PPP projects.

Eunice Cho, Country manager Viatris Vietnam

Road for health funding must be clear

The presence of Viatris in Vietnam is a strategic for the company to achieve its mission of empowering people worldwide to live healthier at every stage of life. In addition to seeing good growth potential for the company, we understand that our performance in Vietnam is in line with our purpose of meeting health needs and ensuring access to quality medicines. We work to promote responsible and sustainable operations, and I am extremely confident of future opportunities and the value we expect our company to create for our patients, employees, customers, and Vietnamese society.

For example, our collaboration with Medochemie is intended to further fuel our efforts to support the Vietnamese government’s goal to enable technology transfer for strengthening local manufacturing capabilities, and helping achieve the vision of making Vietnam the ASEAN hub for pharmaceutical manufacturing in the next 10-20 years. Our relentless pursuit is to improve access to high-quality, trusted medicines.

This collaboration is another milestone in our efforts and our commitment to expand access to quality medicines to the people of Vietnam. We will continue to work and support the government’s vision to foster access to quality medicine through local manufacturing.

Darrell Oh, General director Pfizer Vietnam

Road for health funding must be clear

Similar to other global innovative pharmaceutical multinationals operating in Vietnam, Pfizer is delighted with Vietnam’s development roadmap that provides a clear emphasis on the vital role of innovation in the pharmaceutical sector.

Along with specific targets such as contribution to GDP, digitalisation development, and playing a key role in ASEAN in the 2030-2045 period, Resolution 29 has created a clear orientation for developing the National Strategy for Pharmaceutical Sector development in Vietnam to 2030 and beyond, as well as amending of the Law on Pharmacy that is currently being drafted by the Ministry of Health.

To actualise Resolution 29, we believe that in the long term, the national pharma strategy should provide a detailed plan with specific phases and priorities in research and development investment, clinical trial development, and digitalisation towards 2045 that help external stakeholders to collaborate with Vietnam in such areas. In the short and medium term, the amendment of the Law on Pharmacy could realise Resolution 29 by creating faster access and availability of new medicines, improving the business environment and avoiding introducing policy measures that pose more barriers for patient access.

By doing so, firstly patients in Vietnam will be able to access innovative medicines timely, and it will also allow the country to build a strong foundation to develop an innovative pharmaceutical industry. We believe that together we can successfully develop Vietnam to be a top ASEAN developed healthcare hub in 2045, which not only serves patients in Vietnam but also provide healthcare solutions to patients in the region and even globally.

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