You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 14, 2015

Pharmaceutical Parallel Imports: A Solution or a Problem?

Subscribe to Updates
Vietnam Pharma Update

As a developing country with a large population, Vietnam has long viewed parallel imports as an effective antidote to the high price of innovator drugs. The parallel importation of medicines for the prevention and treatment of human diseases is permitted, and even encouraged, under Vietnamese law. Many pharmaceutical manufacturers, however, are understandably concerned that parallel importation could lead to diminished profits, thereby reducing research and development efforts, and leading to a slowdown in the innovation of new drugs. Even worse, in certain situations, parallel imports could put the public health at risk.

A recent case brought these issues to the forefront. A major European pharmaceutical innovator learned that a Vietnamese company was importing diabetes drugs into Vietnam that the company had manufactured for the Turkish market. While these drugs were “genuine” products of the manufacturer, and drugs under the same brand name had been authorized for circulation in Vietnam, the markets were not truly “parallel.” Turkey requires different standards for storage than Vietnam, and the quality of the drugs could deteriorate more rapidly in Vietnam’s tropical climate. Understanding that this could negatively impact consumer health as well as the manufacturer’s reputation, the European company called on Tilleke & Gibbins to map out a creative strategy to crack down on the parallel importation.

At the outset, we conducted a mark survey to determine the prevalence of the products in the market, and located the major distributors. We also examined the products to identify any violations of other prevailing laws, such as those in the regulatory area. Based on the fact finding, we called on the competent authorities to  tackle the situation.

In December 2014, the Hanoi Market Control Department in cooperation with the Inspectorate of the Department of Health conducted a sweep action against two major distributors of the products. After the raid, the authorities seized hundreds of parallel import products. We raised the authorities’ attention to the quality of the goods and pointed out some violations of labeling regulations that could mislead consumers. Within a month, with a view to protecting the public health, the authorities decided to sanction the distribution of the parallel imports by relying on regulatory aspects, especially labeling regulations, including imposing a monetary fine and seizing the products.

The authorities then sent a letter to the Drug Administration of Vietnam (DAV), bringing the DAV’s attention to the violations in particular and the parallel import situation in general. This may lead the DAV to take further precautions in granting licenses for parallel importation. In its recent practice, when weighing the decision to grant a parallel import license, the DAV has focused on the price and the name of the drugs, but not the quality or any special characteristics of the original market.

The affordability of drugs that comes with parallel importation is an undeniable benefit. However, the health authorities must also take into account the risks and complications posed by grey-market drugs, especially in relation to public health. In the future, it is expected that Vietnam will lay down further regulations on parallel importation to guarantee the quality of the imported drugs as well as the post-sales responsibility.

Download Full Article
Related Professionals

Industries

Life Sciences

Practices

Intellectual Property

Regulatory Affairs

Location

RELATED INSIGHTS​ 

March 7, 2023
According to the Ministry of Health of Vietnam, many healthcare facilities in the country are facing a shortage of drugs, medical devices, and materials/chemicals. To address the urgent needs of medical examination and treatment in public healthcare facilities, on March 4, 2023, the government of Vietnam promulgated Resolution No. 30/NQ-CP on continuing to implement solutions to ensure the availability of drugs, medical equipment, and healthcare supplies (“Resolution 30”). Resolution 30 amends item 4 of Resolution No. 144/NQ-CP dated November 5, 2022, allowing medical examination and treatment expenses to continue to be covered by health insurance for technical services carried out with medical devices supplied by contractors after winning tenders to supply materials and chemicals. The new mechanism brings more benefit to patients by removing the previous ending date of November 5, 2023, and will be applicable until there is further guidance from the government. Resolution 30 also allows the use of medical devices that were donated or gifted by domestic and foreign entities (including those that were provided under now-expired joint ventures or cooperation contracts) regardless of whether those entities have fulfilled the procedures for ownership establishment. Technical services that are performed by such devices will be covered by health insurance. This provision will help address the shortage of medical devices used in public hospitals. The determination of bid price is also a highlight of Resolution 30, which pilots a simpler price determination procedure for the purchase of drugs and medical devices. Instead of requiring purchasers to obtain quotations from three suppliers, Resolution 30 allows them to compare prices based on the quotations actually received, even from only one or two suppliers. Alternatively, price determination can be based on the winning bid price for a similar medical device procurement package that was awarded within the last 120 days. This
Read More
February 21, 2023
On December 28, 2022, the Ministry of Health of Laos issued Decision No. 3789/MOH on the Control of Hemp for Medication and Products (the “Decision”). The Decision approves the regulated cultivation, extraction, production, processing, storage, distribution, utilization, import-export, and transport of hemp. The Decision also authorizes the use of hemp and hemp-related products by the general population, although use of certain products is limited to those with medical prescriptions. Background In 2019, the Lao government established an ad hoc committee to consider the legalization of cannabis, as reported previously. The government permitted certain local companies to grow cannabis in specific zones under pilot programs, although it continued to strictly prohibit the use and commercialization, as well as consumption, of cannabis-related products, regardless of the level of psychoactive tetrahydrocannabinol (THC) in the products. Overview of the Decision The Decision was issued by the Ministry of Health (which led the ad hoc committee) and permits authorized companies to engage in certain activities involving the use of hemp and the consumption of hemp and hemp-related products. The Decision defines hemp (“porkeo” in Lao) as a “plant that belongs to the same family as ganja and bears the scientific name Cannabis Sativa L. (Cannabis sativa L. subsp. sativa var. sativa) which is a subspecies of ganja (Cannabis Sativa L.).” This definition aims at differentiating hemp from the general definition of ganja or marijuana, which continues to be listed as a prohibited narcotic in Laos. The Law on Narcotics (2007) and the Penal Code (2017) still prohibit the production, trade and use of all types of cannabis. These laws will need to be amended to ensure that they are aligned with changes set out in the Decision.  Authorized Hemp Activities The Decision allows approved companies to engage in the cultivation, extraction, production, processing, storage,
Read More
February 9, 2023
Vietnam’s Ministry of Finance is drafting a circular on determining the origin of imported and exported goods. This circular, a draft version of which has been released for public comment (“Draft Circular”), consolidates prevailing regulations and guidelines on determining the origin of imported and exported goods that are stipulated in the following legal documents, which the Draft Circular would replace when it comes into effect: Circular No. 38/2018/TT-BTC dated April 20, 2018, of the Ministry of Finance regulating the determination of origin of imported and exported goods, as amended by Circular No. 62/2019/TT-BTC dated September 5, 2019, of the Ministry of Finance; Circular No. 47/2020/TT-BTC dated May 27, 2020, regulating the time to submit documents proving the origin of goods and form of the documents proving the origin of imported goods applied during the Covid-19 pandemic; and Circular No. 07/2021/TT-BTC dated January 25, 2021, regulating the time to submit documents proving the origin of imported goods under the EU-Vietnam Free Trade Agreement (EVFTA). Generally speaking, the Draft Circular does not increase the administrative procedures for importers and exporters, but rather seeks to codify the recent practices implemented by the customs authorities. The Draft Circular focuses on providing comprehensive guidance for importing/exporting companies when carrying out administrative procedures to certify the origins of imported and exported goods to be in line with current trade practices and international commitments under new-generation free trade agreements. In particular, the Draft Circular supplements guidelines on declaring origins and submitting Certificates of Origin (C/Os) of imported goods under the EVFTA and the Regional Comprehensive Economic Partnership Agreement (RCEP). The Draft Circular also provides some new guidelines to facilitate exports (and imports) and overcome some obstacles and issues when implementing the prevailing regulations. For example, the submission of C/Os online, which was only applicable during the
Read More
January 27, 2023
The opening weeks of 2023 have already seen a sharp increase in enforcement against violations of product labeling and advertising rules in Cambodia, in line with a notice issued by the country’s Directorate-General for Consumer Protection, Competition, and Fraud Repression (CCF) last year. Since the Law on Consumer Protection was adopted in 2019, a major legislative push has been seen, with general rules coming out focusing on providing consumers with sufficient information on products and services, for example via product labeling or advertising rules. Then, more detailed regulations were adopted for specific product categories, for example for food products and cosmetics. Khmer language requirements have been a key feature of the recently adopted rules on advertising and labeling. Despite the Khmer language mandates in consumer protection laws and regulations, enforcement and compliance was low. Most products on the market—especially imports—did not comply with the language requirement. In line with the revamped regulatory framework, the CCF has increased its enforcement, enabled by recent substantial budget increases. They have adopted clear implementing regulations for their officers to enforce in a practical yet effective manner, and they have been issuing notices reminding companies to comply with the new rules. A September 2022 notice announced that increased CCF enforcement of product labeling rules would start on January 1, 2023. As noted above, this has already proven to be true, and enforcement is now proceeding in earnest. Companies should take heed of this notice and ensure compliance with the Khmer language requirements (detailed below), as the CCF has shown that it readily acts against violators, from small retailers to large conglomerates. Khmer Language Requirement A sub-decree issued November 4, 2022 requires all commercial advertising of products and services—by any channel—to use Khmer as the primary language. If foreign-language text is used in advertisements, it
Read More