Decree No. 120/2004/ND-CP dated May 12, 2004 of the Government on management of prices of human-use preventive and curative medicines

DECREE

ON MANAGEMENT OF PRICES OF HUMAN-USE PREVENTIVE AND CURATIVE MEDICINES

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the July 11, 1989 Law on Protection of the People's Health;

Pursuant to the April 26, 2002 Price Ordinance;

Pursuant to the Junly 2, 2002 Ordinance on Handling of Administrative Violations;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree prescribes the management of medicine prices; posting up of medicine prices; stabilization of prices of a number of kinds of medicines; inspection, examination and handling of violations of the regulations on management of prices of human-use preventive and curative medicines.

Article 2.- Subjects of application

1. This Decree applies to domestic as well as foreign organizations and individuals that are licensed to produce, import and/or trade in human-use preventive and curative medicines as well as disease prevention and treatment establishments in Vietnam (hereinafter referred to as establishments).

2. In cases where the international treaties which the Socialist Republic of Vietnam has signed or acceded to contain the provisions different from those in this Decree, the provisions of such international treaties shall apply.

Article 3.- Human-use preventive and curative medicines prescribed in this Decree mean assorted finished medicines which are permitted for circulation and use in Vietnam by the Ministry of Health.

Article 4.- Medicine prices shall be managed on the following principles:

1. The State shall respect the right of the medicine-producing, -importing and/or trading establishments to set prices and to compete in prices strictly according to law, except for medicines with prices set by the State.

2. The State shall take necessary measures to stabilize the prices and set prices of a number of essential medicines in order to protect the rights and legitimate interests of the consumers, of the medicine-producing, -importing and/or -trading establishments, and the interests of the State.

3. To implement the national policy on medicines, enhance the capability to produce and supply medicines to meet domestic and export demands; create conditions for the development of Vietnam's pharmaceutical industry, contributing to the realization of the policy on protection and care of the people's health.

Article 5.- Interpretation of terms

The terms below are construed as follows:

1. Human-use preventive and curative medicines mean products originating from animals, plants, minerals, chemicals or biologicals, which are prepared for human use in order to prevent and treat diseases, to rehabilitate or regulate body functions, reduce ailment symptoms, diagnose diseases, recover or improve health, to desensitize part or whole of the body, to affect the reproductive process or create physical changes.

Finished medicines mean medicines which have gone through all stages of production under necessary processes and are permitted for use and circulation in Vietnam.

2. Price declaration means the exact record of, and report on, the import price as well as wholesale and retail prices of each medicine to functional agencies according to the provisions of this Decree and other relevant law provisions.

3. Retail surplus means reasonable expenditures and reasonable profits for the retail stage.

4. Wholesale surplus means reasonable expenditures and reasonable profits for the whole wholesale stage.

5. Retail price bracket means a permitted span of retail prices of a number of essential human-use preventive and curative medicines.

6. Posting up of medicine prices means the publicization of medicine sale prices by printing, affixing or inscribing the medicine sale prices on medicine containers or outer packings; publicization of their prices on boards or papers at drug stores.

7. Abnormal fluctuation of medicine prices means sudden increase or decrease of medicine prices due to natural disasters, epidemics or other abnormal circumstances, greatly affecting the socio-economic development.

Chapter II

MANAGEMENT OF MEDICINE PRICES

Article 6.- Groups of medicines with prices managed by the State

The State shall manage the medicine prices of the following 3 groups:

1. Group of medicines ordered and priced by the State;

2. Group of medicines purchased by medical establishments for supply free of charge to subjects enjoying social policies, for partial collection of hospital fees or medical insurance;

3. Group of medicines with prices set by establishments themselves.

Article 7.- Management of prices of a number of medicines ordered and priced by the State

1. The Minister of Finance shall prescribe:

a/ The specific prices of medicines ordered and paid by the State with the State budget source not in form of bidding or auction;

b/ The retail price brackets of essential human-use preventive and curative medicines suitable to each period according to the lists prescribed by the Minister of Health.

2. The presidents of the provincial/municipal People's Committees shall prescribe the specific prices of a number of medicines supplied free of charge to subjects entitled to price-subsidy or freight-subsidy policies according to the Government's regulations.

3. Adjustment of State-set prices

When the price-forming elements fluctuate, greatly affecting the establishments' production and/or business activities, the State agencies competent to determine prices must adjust in time the set prices. In cases where they do not adjust the prices, they may apply financial, monetary and other necessary measures according to their respective competence; if such cases fall beyond their competence, they must report thereon to the Prime Minister for decision.

Article 8.- Management of prices of medicines purchased by medical establishments for supply to subjects enjoying free-of-charge supply, social policies, partial collection of hospital fees or medical insurance

1. Medicines purchased by medical establish-ments for supply to subjects enjoying free-of-charge supply, social policies, partial collection of hospital fees or medical insurance must go through bidding according to law provisions. The bid-winning medicine prices must be lower than the current common retail prices of such medicines on the market and uniformly apply to all public medical establishments in the provinces.

2. The Ministry of Health shall assume the prime responsibility for, and coordinate with the Ministry of Planning and Investment and the Ministry of Finance in, providing specific guidance on bidding of medicines prescribed in Clause 1 of this Article.

Article 9.- Management of medicine prices set by establishments themselves

1. Establishments shall themselves set prices of medicines permitted for circulation on the Vietnamese market, except for medicines ordered and priced by the State and medicines purchased by medical establishments as prescribed in Articles 7 and 8 of this Decree.

2. Medicine-producing establishments shall base themselves on production costs and budget remittances to set by themselves their selling prices of medicines suitable to the market, which must, however, not be higher than the selling prices of medicines of the same kinds in the countries with medical and commercial conditions familiar to those in Vietnam. The medicine-producing establishments must declare the wholesale prices of such medicines when registering medicine circulation with competent State management agencies.

3. Medicine-importing establishments shall base themselves on import prices and budget remittances to set by themselves the selling prices of medicines suitable to the market and fully declare the import prices and prices sold by suppliers in a number of countries in the region and the planned retail prices of such medicines in Vietnam when submitting their dossiers of registration for circulation of foreign-made medicines (including medicine-importing establishments which have not yet obtained the registration numbers in Vietnam) to competent State management agencies.

4. Medicine-wholesaling establishments shall base themselves on the purchased medicines' value inscribed in the invoices issued by the Ministry of Finance and the wholesale surplus prescribed by the Ministry of Finance to set the wholesale prices of medicines. The medicine-wholesaling establishments must fully observe the competent State agencies' regulations on the use of invoices and vouchers for goods circulated on the market.

5. Medicine-retailing establishments shall base themselves on the purchased medicines' value inscribed in invoices issued by the Ministry of Finance and the retail surplus prescribed by the Ministry of Finance to set the retail prices of medicines suitable to the market. The medicine-retailing establishments must fully observe the competent State agencies' regulations on the use of invoices and vouchers for goods circulated on the market and shall be entitled to sell curative medicines only at doctors' prescriptions, except for medicines not subject to prescription as provided for by the Ministry of Health.

Article 10.- Stabilization of medicine prices

When the market prices of a number of essential medicines abnormally fluctuate nationwide or in some area or region, affecting the patients' interests, the competent State agencies shall take measures to stabilize the prices according to the provisions of the Government's Decree No. 170/2003/ND-CP of December 25, 2003 detailing the implementation of a number of articles of the Price Ordinance.

Chapter III

POSTING UP OF MEDICINE PRICES

Article 11.- Posting up of wholesale prices

1. Establishments producing, importing and/or wholesaling medicines must post up the wholesale price of each kind of medicine at the places where medicines are wholesaled and must not sell medicines at prices higher than the posted-up ones.

2. Medicine prices shall be posted up by inscribing them on boards or papers, which are put up at convenient places at drug stores.

Article 12.- Posting up of retail prices

1. Medicine-retailing establishments must post up the retail price of each kind of medicine and must not sell medicines at prices higher than the posted-up ones.

2. Medicine prices shall be posted up by printing, inscribing or affixing the retail prices on medicine containers or outer packings.

Chapter IV

INSPECTION, EXAMINATION AND HANDLING OF VIOLATIONS

Article 13.- Inspection and examination of the observance of regulations on management of medicine prices

1. The Ministry of Finance, the Ministry of Health as well as the concerned ministries and branches shall, within the ambit of their respective tasks and powers, inspect or examine, or coordinate with one another in inspecting, examining and handling violations of the State's regulations on management of medicine prices at establishments producing, importing, wholesaling and/or retailing medicines and at medical treatment establishments nationwide according to law provisions.

2. The People's Committees of all levels shall, within the ambit of their respective tasks and powers, inspect or examine, or coordinate with one another in inspecting, examining and handling violations of the State's regulations on management of medicine prices at establish-ments producing, importing, wholesaling and retailing medicines and at medical treatment establishments in their respective localities according to law provisions.

Article 14.- Sanctioning administrative violations in the field of management of medicine prices

1. A fine of between VND 500,000 and VND 2,000,000 shall be imposed on acts of violating the regulations on declaration of medicine prices for the volume representing less than 10% of kinds of establishments' medicines.

A fine of between VND 2,000,000 and VND 5,000,000 shall be imposed on acts of violating the regulations on declaration of medicine prices for the volume representing 10% or more of kinds of establishments' medicines.

Remedial measures: Forcible implementation of the competent agencies' regulations on declaration of medicine prices shall apply to violation acts prescribed in this Clause.

2. A fine of between VND 5,000,000 and VND 10,000,000 on acts of falsely prescribing price brackets or surplus prescribed by competent agencies.

Additional sanctioning forms: Definite depri-vation of the right to use practicing permits or certificates shall be imposed on establishments and individuals that commit acts of violating the provisions of this Clause once a year. Indefinite deprivation of the right to use practicing permits or certificates shall be imposed on establishments and individuals that commit acts of violating the provisions of this Clause twice or more a year.

3. A fine of between VND 10,000,000 and VND 20,000,000 for acts of associating with one another for price monopoly.

Additional sanctioning forms: (Definite or indefinite) deprivation of the right to use practicing permits or certificates shall be imposed on establishments which commit acts of violating the provisions of this Clause twice or more a year.

4. Other administrative-violation acts in the field of management of medicine prices shall be administratively sanctioned according to the provisions of the Government's decree prescribing sanctions against administrative violations in the price domain.

5. The specific sanctioning competence, order and procedures shall comply with the provisions of the 2002 Ordinance on Handling of Administra-tive Violations and relevant legal documents.

Chapter V

IMPLEMENTATION PROVISIONS

Article 15.- Implementation effect:

This Decree takes implementation effect 15 days after its publication in the Official Gazette.

Article 16.- Organization of implementation:

1. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Health as well as the concerned ministries and branches in, guiding the implementation of this Decree.

2. The Ministry of Health:

a/ To assume the prime responsibility for, and coordinate with the Ministry of Planning and Investment as well as the concerned ministries and branches in, elaborating a scheme on solutions to restrict and get rid of foreign pharmaceutical companies' monopoly and submit it to the Prime Minister for approval.

b/ To provide specific guidance for prescription according to generic names of medicines.

c/ To assume the prime responsibility for elaborating and implementing a scheme on reorganizing the network for domestic distribution of human-use preventive and curative medicines.

d/ To study and elaborate mechanisms and policies to create conditions for Vietnam Pharmaceutical Production and Trading Association and Vietnam Pharmacy Society to base themselves on the pharmaceutical branch development strategy orientations in each period to guide their members in drawing up plans on organizing medicine production and trading, ensuring the adequate supply of medicine volumes and kinds to the market, avoiding over-redundancy or over-shortage of medicines, thus destabilizing the medicine market.

Article 17.- Implementation responsibilities

The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies and the presidents of the provincial/municipal People's Committees shall have to implement this Decree.