Introduction

As of May 14, 2024, the Ministry of Health has implemented Circular 05/2024/TT-BYT (Circular 05) outlining the catalog of drugs, medical tools, and testing equipment acquired through price negotiation. This follows the enactment of the 2023 Law on Tendering, effective since January 2024, where price negotiation is one of the methods for contractor selection. This method applies to the procurement of original brand-name drugs or reference biologicals, as well as drugs, medical devices, or testing equipment manufactured by only 1 or 2 manufacturers.

Under Circular 05, over 600 drugs and 4 medical devices are eligible for price negotiation. The Ministry of Health will revise and supplement this list every two years, considering practical circumstances and established criteria. In case the drugs listed for centralized procurement meet the conditions for price negotiation, they can undergo this process.‍

Price negotiation proceeds as follows:

1.      The price negotiation unit publicly issues invitations to supply drugs, medical devices, or test equipment through price negotiation, along with requests for proposals (RFP) on the Ministry of Health's web portal;

2.      Tendering parties submit their proposals to the price negotiation unit within a minimum period of 18 days from the RFP issuance date;

3.      The price negotiation unit evaluates received proposals based on RFP requirements;

4.      Using the received proposals and expert team evaluation reports, the price negotiation unit constructs the negotiation scenario for approval by the head of the price negotiation unit;

5.      The price negotiation unit organize the meetings or send notices to the tendering parties for the price negotiation;

6.      Within 5 working days of approval, the price negotiation unit publishes the selection results;

7.      The price negotiation unit and the selected supplier finalize and sign the framework agreement;

8.      Health facilities contract with the selected supplier under the condition that the contractual price does not exceed the price specified in the framework agreement;‍

Principles guiding price negotiation include:

1.      Accepting the proposed price if it's equal to or lower than the expected price.

2.      Requesting adjustments from tendering parties if their proposed price exceeds the expected price, with a maximum of 3 adjustment requests.

3.      In instances where the proposed price surpasses the expected negotiated price, the interdisciplinary team will prompt the price negotiation unit to seek opinions regarding the substitution of the drug, medical device, or test equipment. This process follows the principle that the total quantity demanded by the health facilities providing opinions must constitute at least 50% of the total quantity demanded by all health facilities:

a)      If at least 70% of the health facilities providing opinions affirm that the drug, medical device, or test equipment is indispensable to meet treatment demands and should not be substituted, the interdisciplinary team will accept the supplier’s proposed price and conclude the price negotiation.

b)      If fewer than 70% of the health facilities hold such opinions, the interdisciplinary team will terminate the price negotiation.

In situations where price negotiation fails:

In the event of unsuccessful price negotiation, the price negotiation unit will inform health facilities about alternative solutions or procurement plans.

If negotiations for an original brand-name drug or reference biological fail, the following provisions come into effect:

a)       Health facilities are prohibited from procuring these drugs through original brand-name drug or reference biological packages, except in the following cases:

·         If a drug has special indications and is deemed necessary to meet medical examination and treatment demands as confirmed by the health facility.

·         If a drug is intended for resale to drug retailers located within the vicinity of a health facility.

b)      If generic drugs with the same active ingredient, dosage form, concentration, or content as the original brand-name drug or reference drug for which negotiation failed are available, the original brand-name drug or reference drug may be bid for in generic drug packages.

‍

Disclaimer: This Legal Update is intended to provide updates on the Laws for information purposes only, and should not be used or interpreted as our advice for business purposes. LNT & Partners shall not be liable for any use or application of the information for any business purpose. For further clarification or advice from the Legal Update, please consult our lawyers: Mr Ngo Thanh Hai at hai.ngo@lntpartners.com