Medicine prices and pricing policies in vietnam

MEDICINE PRICES AND PRICING POLICIES
IN VIETNAM


Tuan Anh Nguyen

A thesis submitted in fulfillment of the requirements for the degree of
Doctor of Philosophy


School of Public Health & Community Medicine
Faculty of Medicine, University of New South Wales, Australia

April 2011


THE UNIVERSITY OF NEW SOUTH WALES
Thesis/Dissertation Sheet
Surname or Family name: Nguyen
First name: Tuan Anh
Other name/s:
Abbreviation for degree as given in the University calendar: PhD
School: Public Health and Community Medicine
Faculty: Medicine
Title: Medicine prices and pricing policies in Vietnam
Abstract 350 words maximum:
Availability of affordable medicines is one precondition to realizing the fundamental human right of
access to essential healthcare. Although Vietnam is progressing well with several health-related targets of

the Millennium Development Goals being achieved ahead of time, attaining equitable access to affordable
medicines remains problematic.
In this thesis, a mixed-method approach was adopted in the analysis of medicine prices and polices. The
literature was reviewed, followed by an analysis of Vietnam‘s pharmaceutical market and legislation. A
quantitative study of medicine prices, and a qualitative study on how and why high, unaffordable prices
occurred, were conducted. The findings were synthesized to form policy recommendations.
The studies demonstrated that medicine prices in Vietnam were unreasonably high. Adjusted for
Purchasing Power Parity in 2005, prices in the public sector were 46.58 times the international reference
price for innovator-brand medicines and 11.41 times for the lowest-priced generic equivalents. Monopoly
of supply was an important cause of high innovator-brand prices. More complex, intrinsic features of
Vietnam‘s healthcare system were also reported by key stakeholders as driving up prices. Economic
survival pressures, in an imperfectly competitive market, were said to force both pharmaceutical
companies and prescribers to be inextricably linked financially. Ethics and personal values however did
influence prescribers‘ behaviour and their response to corrupt procedures. Overall, intractable, systemic
features contributing to high prices included unrealistic low salaries for prescribers, poor economies of
scale in domestic production, inefficiencies in the local distribution network, malfunctioning pricing
policies and a general lack of transparency and accountability in administrative procedures.
A range of policy measures and changes are required to improve access to medicines in Vietnam. Short-
term recommendations include amendments to pharmaceutical policies, with better enforcement of
current regulations. Medium-term measures include the public health insurance system taking an active
role in price setting, pooling procurement through a national tendering procurement system and reform of
the domestic market through rationalization with appropriate capital and technological investment to
achieve improved efficiencies and economies of scale. Longer-term goals include health system
improvements to address poor governance, low remuneration of prescribers, with additional measures to
limit the scope for corrupt practices.
Declaration relating to disposition of project thesis/dissertation
I hereby grant to the University of New South Wales or its agents the right to archive and to make
available my thesis or dissertation in whole or in part in the University libraries in all forms of media,
now or here after known, subject to the provisions of the Copyright Act 1968. I retain all property rights,
such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of

this thesis or dissertation.
I also authorise University Microfilms to use the 350-word abstract of my thesis in Dissertation Abstracts
International (this is applicable to doctoral theses only).


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ORIGINALITY STATEMENT

‗I hereby declare that this submission is my own work and to the best of my knowledge
it contains no materials previously published or written by another person, or substantial
proportions of material which have been accepted for the award of any other degree or
diploma at UNSW or any other educational institution, except where due
acknowledgement is made in the thesis. Any contribution made to the research by
others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in
the thesis. I also declare that the intellectual content of this thesis is the product of my
own work, except to the extent that assistance from others in the project's design and
conception or in style, presentation and linguistic expression is acknowledged.‘



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COPYRIGHT STATEMENT
‗I hereby grant the University of New South Wales or its agents the right to
archive and to make available my thesis or dissertation in whole or part in the

University libraries in all forms of media, now or here after known, subject to the
provisions of the Copyright Act 1968. I retain all proprietary rights, such as patent
rights. I also retain the right to use in future works (such as articles or books) all
or part of this thesis or dissertation.
I also authorise University Microfilms to use the 350 word abstract of my thesis
in Dissertation Abstract International (this is applicable to doctoral theses only).
I have either used no substantial portions of copyright material in my thesis or I
have obtained permission to use copyright material; where permission has not
been granted I have applied/will apply for a partial restriction of the digital copy
of my thesis or dissertation.'
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officially approved version of my thesis. No emendation of content has occurred
and if there are any minor variations in formatting, they are the result of the
conversion to digital format.‘
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iii

DEDICATION

This thesis is dedicated to my parents, Dinh Thiem Nguyen and Thi Lien
Doan, for nurturing me and teaching me to care about others.
iv

v

ACKNOWLEDGEMENTS

I would like to thank the Ministry of Education and Training of Vietnam, Vietnam
government for awarding me a PhD scholarship to study in Australia. I would also like
to acknowledge the Vietnam team who conducted the survey of medicine prices and
availability, and the Ministry of Health of Vietnam for giving me permission to use the
survey data in this thesis. I am grateful to all members of the Drug Price Management
Division, Drug Administration of Vietnam for sharing their views as well as their
cooperation and support when I conducted fieldwork in Vietnam. My project also rests
on the cooperation, generosity and courage of the sixty study participants who gave
their time and shared their valuable opinions and sensitive information in the interviews.
I owe a debt of gratitude to my supervisor, Associate Professor Rosemary Knight.
Without her mentorship, support, and depth of knowledge, this thesis would not have
been completed. Her calm, insights, compassion and elegant language were central to
the conceptualisation, design, analysis and reporting of this thesis, as was her vision and
ability to approach problems from a global perspective.
My co-supervisors, Associate Professor Andrea Mant and Dr. Quang Minh Cao were
patient, thoughtful and encouraging. Their critical comments and feedback were
invaluable along every step of this project. Their practical and consistent support has
kept me going to the end of my PhD journey.
Dr. Husna Razee was my qualitative co-supervisor, whose experience and knowledge in
qualitative research greatly contributed to the qualitative study for this thesis.
My special thanks go to Dr. Geoffrey Brooks for sharing his excellent knowledge of
economics and Australian pharmaceutical policy and practice, and for taking me under
his wing as my second father. His critical feedback greatly improved the quality of this
thesis.
Support was also received from Dr. Pat Bazeley who assisted me in developing the
qualitative coding schemes, steered me through the perils of NVIVO and mixed
methods research and fed me from her research farm.
vi

I am grateful to Mr. Martin Auton (Global project officer - Pricing, Health Action

International Global) and Ms. Alexandra Cameron (Coordinator medicine pricing
project, WHO) for their cross-analysis of the survey data and for giving me valuable
comments on the quantitative study for this thesis. Great thanks are also due to Mr.
Wayne Critchley (Former Executive Director, Patented Medicine Prices Review Board
Government of Canada) for providing critical feedback on the policy analysis
components of the thesis.
My colleagues in the School of Public Health and Community Medicine at UNSW also
provided great ideas and valuable comments, including Mr. Kevin Forde, Dr. Niahm
Stephenson, Dr. Ilse Blignault, Dr. Brahmaputra Marjadi, and Dr. Joanne Spangaro. I
would like to thank my former supervisor, Associate Professor Tessa Ho, for her warm
encouragement and caring, even when she was not able to supervise me due to her move
to another university. Sincere thanks to my fellow PhD students who shared with me
both my frustration and happiness, especially Dr. Keith Masnick.
My wife Thu Ha Dang, my daughter Thanh Mai Nguyen and my son Dang Nhat Minh
Nguyen are my life. Without their love, encouragement and support, I would not have
had the strength and determination to pursue my dream.









vii

TABLE OF CONTENTS

DEDICATION III
ACKNOWLEDGEMENTS V
LIST OF PUBLICATIONS ARISING FROM THIS RESEARCH XIV
LIST OF TABLES XV
LIST OF FIGURES XVII
GLOSSARY/ACRONYMS XVIII
ABSTRACT XX
CHAPTER 1. INTRODUCTION 1
1.1 BACKGROUND 1
1.2 AIM AND OBJECTIVES 3
1.3 RESEARCH DESIGN AND METHODOLOGICAL CONSIDERATIONS 5
1.3.1 Overall research design 5
1.3.2 The rationale for a mixed methods approach 6
1.3.3 Researcher background and orientation to the study 6
1.3.4 Currency used in this thesis 7
1.4 FLOW OF RESEARCH AND INTERCONNECTION OF CHAPTERS 8
CHAPTER 2. MEDICINE PRICES, PRICING POLICIES AND PATIENT
ACCESS: A REVIEW OF THE INTERNATIONAL LITERATURE 11
2.1 INTRODUCTION 11
2.2 NATIONAL MEDICINES POLICIES AND ACCESS TO MEDICINES 12
2.2.1 Rational selection and use of essential medicines 14
2.2.2 Sustainable financing 15
2.2.3 Reliable health and supply systems 16
2.2.4 Affordable prices 17
2.3 MEDICINE PRICES AND THEIR DETERMINANTS 18
2.3.1 The pharmaceutical market 18
2.3.1.1 A market with unique features 18
2.3.1.2 A market with conflicting objectives 19
2.3.1.3 A heterogeneous market 20
2.3.2 Pharmaceutical expenditure 22

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2.3.3 The determinants of medicine consumption 22
2.3.3.1 Physicians‘ prescribing behaviour 23
2.3.3.2 Patient demand 24
2.3.4 The determinants of medicine prices 25
2.3.4.1 The costs of research and development, manufacturing and marketing 26
2.3.4.2 Degree of market competition 28
2.3.4.3 Pharmaceutical market intelligence 30
2.3.4.4 Market size and economies of scale 30
2.4. POLICY OPTIONS FOR COST CONTAINMENT OF MEDICINES 30
2.4.1 Overview of price controls 30
2.4.1.1 External price benchmarking 33
2.4.1.2 Internal reference pricing 35
2.4.1.3 Cost plus pricing 36
2.4.1.4 Pharmaco-economic evaluation 37
2.4.1.5 Price negotiations 39
2.4.1.6 Profit ceilings 39
2.4.2 Price controls along the supply chain 40
2.4.2.1 Price controls at ex manufacturer/ex importer level 40
2.4.2.2 Price controls at wholesale and pharmacy retail level 41
2.4.3 Reimbursement measures 42
2.4.3.1 Positive list or formulary systems 43
2.4.3.2 Reference price systems 44
2.4.3.3 Index pricing systems 46
2.4.3.4 Co-payments 46
2.4.3.5 Generic substitution 49
2.4.3.6 Other measures influencing demand 50
2.4.4 Evaluation of pricing and reimbursement policies 51
2.5 STUDIES ON MEDICINE PRICES IN DEVELOPING COUNTRIES 53

2.5.1 International studies 53
2.5.2 Vietnam studies 56
2.5.3 Conclusions 60
CHAPTER 3. VIETNAM’S HEALTH CARE AND PHARMACEUTICAL
SYSTEM, AND ITS IMPACT ON MEDICINE PRICES 63
ix

3.1 INTRODUCTION 63
3.2 VIETNAM‘S TRANSITIONAL HEALTH CARE SYSTEM 63
3.2.1 Vietnam‘s health performance 63
3.2.2 Historical background 64
3.2.3 The ―Doi Moi‖ economic reforms 64
3.2.4 Health insurance and subsidization for the poor 65
3.2.5 National Medicines Policy 66
3.2.6 Administrative health care structures 67
3.2.7 An emerging private health sector 69
3.3 DEMAND FOR MEDICINES 70
3.3.1 Epidemiological patterns and lifestyle changes 70
3.3.2 Health care financing 71
3.3.3 Use of medicines 73
3.4 SUPPLY OF MEDICINES 74
3.4.1 Importation of medicines 75
3.4.2 Domestic medicine production 76
3.4.3 Medicine distribution 79
3.4.3.1 Vietnam‘s pharmaceutical importers 81
3.4.3.2 International pharmaceutical distributors and their foreign direct investment
logistics companies 82
3.4.3.3 Private pharmaceutical wholesalers and distributors 82
3.4.3.4 Retail medicine outlets and hospital pharmacies 83
3.4.3.5 Hospital tender procedures and practices 85

3.4.3.6 Supply of medicines by medical practitioners 86
3.5 IMPLICATIONS FOR MEDICINE PRICES 86
3.5.1 Ineffective governance 87
3.5.2 A poorly organized and internationally dependent market 87
3.5.3 Market imperfections 88
3.5.4 The role of public health insurance in containing medicine prices 89
3.6 CONCLUSIONS 90
CHAPTER 4. AVAILABILITY AND AFFORDABILITY OF MEDICINES IN
VIETNAM 93
4.1 INTRODUCTION 93
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4. 2 METHODS 93
4.2.1 Sampling 93
4.2.2 Medicines surveyed 94
4.2.3 Data collection and entry 96
4.2.4 Data analysis 96
4.3 RESULTS 98
4.3.1 Medicine availability 99
4.3.2 Medicine prices 99
4.3.3 Affordability 101
4.3.4 Variation across regions 102
4.3.5 International comparison 103
4.3.5.1. Medicine availability 103
4.3.5.2. Medicine prices 104
4.3.5.3 Affordability 107
4.4 DISCUSSION 107
4.5 CONCLUSIONS 111
CHAPTER 5. MEDICINE PRICING POLICIES IN VIETNAM 113
5.1 INTRODUCTION 113

5.2 METHODS 113
5.3 RESULTS 114
5.3.1 Context of medicine pricing regulations in Vietnam 116
5.3.2 The price declaration and publication of medicine pricing policies 118
5.3.2.1. The reasonableness of declared prices and published prices 118
5.3.2.2 Other declaration and publication provisions 121
5.3.3 Other pricing provisions 122
5.4 DISCUSSION 123
5.4.1 The reasonableness of declared prices and published prices 123
5.4.2 Declaration and publication provisions 125
5.5 RECOMMENDATIONS 127
5.6 CONCLUSIONS 128
CHAPTER 6. ROOT CAUSES OF HIGH MEDICINE PRICES IN VIETNAM 129
6.1 INTRODUCTION 129
6.2 METHODS 129
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6.2.1 Method selection 129
6.2.2 Participant recruitment 130
6.2.3 Interview instruments 131
6.2.4 Ethical issues 134
6.2.5 Data collection and analysis 135
6.2.5.1 Data collection 135
6.2.5.2 Data analysis 136
6.2.6 Data presentation 137
6.3 RESULTS 138
6.3.1 Participant characteristics 138
6.3.2 Factors influencing medicine prices 139
6.3.2.1 Patent and monopoly 139
6.3.2.2 Market intelligence 140

6.3.2.3 Market size and economies of scale 140
6.3.2.4 Source and quality of medicines 141
6.3.2.5 Informal payments 142
6.3.2.6 Other components of the final price of medicines 144
6.3.2.7 Ineffective control by government 146
6.4 DISCUSSION 147
CHAPTER 7. WHY AND HOW INFORMAL PAYMENTS OCCUR 151
7.1 INTRODUCTION 151
7.2 OPPORTUNITY FOR CORRUPTION 151
7.2.1 Discretion 152
7.2.2 Transparency 153
7.2.3 Accountability 155
7.2.4 Enforcement 157
7.3 PRESSURES FOR CORRUPTION 160
7.3.1 Pharmaceutical market related factors 160
7.3.1.1 Product related factors 160
7.3.1.2 Sales representatives related factors 162
7.3.1.3 Regulation related factors 162
7.3.1.4 Survival in the market 163
7.3.2 Healthcare processes and structures 166
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7.3.2.1 The tender system 166
7.3.2.2 The information system 168
7.3.2.3 The taxation system 168
7.3.2.4 The role of the private and public sectors 170
7.3.2.5 Remuneration systems and financial pressure 170
7.3.2.6 Workplace pressures 172
7.4 RATIONALIZATION OF CORRUPTION 174
7.4.1 The normalization of corruption 174

7.4.1.1 The prevalence of corrupt practices 174
7.4.1.2 Other social norms 175
7.4.2 Self-interest maximization 176
7.4.2.1 Professional ethics 176
7.4.2.2 Personal values 177
7.4.2.3 Knowledge and skills 178
7.4.2.4 Advancement opportunity 178
7.4.2.5 Reputation 179
7.4.2.6 Employment 180
7.5 DISCUSSION 180
CHAPTER 8. DISCUSSION AND POLICY RECOMMENDATIONS 185
8.1 INTRODUCTION 185
8.2 REVIEW OF THE RESEARCH OBJECTIVES 185
8.3 SYNTHESIZED RESULTS OF THE RESEARCH 187
8.3.1 Vietnam‘s medicine prices and availability problems 187
8.3.2 Reasons for unaffordable medicine prices in Vietnam 188
8.3.2.1 Selection of medicines 188
8.3.2.2 Use of medicines 188
8.3.2.3 Pharmaceutical pricing regime 189
8.3.2.4 Pharmaceutical procurement system 191
8.3.2.5 Patent and monopoly issues 192
8.3.2.6 Government taxes and duties 193
8.3.2.7 Financing 194
8.3.2.8 Pharmaceutical distribution network 194
8.3.2.9 Corrupt Practices 198
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8.4 POLICY RECOMMENDATIONS 200
8.4.1 Rational selection and use of essential medicines 200
8.4.1.1 Rational selection 200

8.4.1.2 Rational use 201
8.4.2 Affordable prices and sustainable financing system 201
8.4.2.1 Strengthening the current pricing regime 201
8.4.2.2 Adoption of a national generic medicines policy 205
8.4.2.3 Improvement of public sector procurement of medicines 206
8.4.2.4 Reduction or elimination of duties and taxes 207
8.4.2.5 Use of WTO/TRIPS flexibility 207
8.4.3 Supply and distribution system 208
8.4.4 Systems improvement to minimize the opportunity for corruption 208
8.5 CONTRIBUTION OF THE THESIS 210
8.6 CONCLUSION 211
REFERENCES 215
APPENDIX 1: MEDIAN PRICE RATIO OF INDIVIDUAL INNOVATOR BRAND
MEDICINES IN THE PUBLIC PROCUREMENT SECTOR, PUBLIC SECTOR,
PRIVATE SECTOR, AND OTHER SECTOR (NOT-FOR-PROFIT PUBLIC
SECTOR) IN VIETNAM IN 2005 239
APPENDIX 2: MEDIAN PRICE RATIO OF INDIVIDUAL LOWEST-PRICED
GENERIC MEDICINES IN THE PUBLIC PROCUREMENT SECTOR, PUBLIC
SECTOR, PRIVATE SECTOR, AND OTHER SECTOR (NOT-FOR-PROFIT
PUBLIC SECTOR) IN VIETNAM IN 2005 241
APPENDIX 3: MEDICINE PRICING POLICY IN VIETNAM: DOCUMENTARY
ANALYSIS FRAMEWORK 243
APPENDIX 4: SAFETY AND RISK MANAGEMENT STRATEGY 246
APPENDIX 5: INFORMED CONSENT 247
xiv

LIST OF PUBLICATIONS ARISING FROM THIS
RESEARCH

Nguyen AT, Knight R, Mant A, Cao QM, Auton M (2009). Medicine prices,

availability, and affordability in Vietnam. Southern Med Review, 2 (2): 2-9
(Chapter 4)
Nguyen AT, Knight R, Mant A, Cao QM, Brooks G (2010). Medicine pricing policies:
Lessons from Vietnam. Southern Med Review, 3 (2): 12-19
(Chapter 5)
Nguyen AT, Knight R, Razee H, Mant A, Cao QM (2010). Root causes of high
medicine prices in Vietnam – A qualitative study. Pharmacy Practice (Internet), 8
(Suppl.1): 50-51
(Chapter 6 and Chapter 7)
xv

LIST OF TABLES
Table 2.1 Factors influencing prescribing behaviour by level of analysis 24
Table 2.2 Prices of 100 tablets of Zantac 150mg in 1998 (in US dollars) 57
Table 4.1 Basket of 42 medicines surveyed in Vietnam in 2005 94
Table 4.2 Mean availability and ranges for IBs and LPGs by sectors for 42
medicines surveyed in 2005 in Vietnam 99
Table 4.3 Median price ratio of IBs, LPGs in public procurement sector,
public sector, private sector, and other sector (not-for-profit
public sector) in Vietnam in 2005 100
Table 4.4 Median price ratio of IBs, LPGs on the current Essential Medicine
List in the public procurement sector, public sector, private sector,
and other sector (not-for-profit public sector) in Vietnam in 2005… 101
Table 4.5 Mean percentage availability of individual lowest-priced generic
medicines in Vietnam, in comparison with the average of country-level
mean percentage availability of individual lowest-priced generic
medicines in the WHO Western Pacific Region…………………… 104
Table 4.6 Median price ratios of the public procurement prices, public patient
prices, private patient prices for LPG medicines, and private
patient prices for IBs in Vietnam in comparison with those

in the Western Pacific Region in 2004 106
Table 4.7 Number of days‘ wages of the lowest-paid unskilled government
worker needed to purchase a course of treatment in Vietnam
in comparison with those in the Western Pacific Region in 2004 107
Table 5.1 Legislative and sub-legislative documents from January 1989 to
March 2008 influencing medicine prices in Vietnam 115
Table 5.2 Price declaration provided to the Drug Administration of Vietnam
by the registrant Company A for medicine X 121
Table 5.3 Summary of preconditions of declaration and publication
mechanism used in Vietnam pricing regulations 122
xvi

Table 6.1 Characteristics of participants 138
Table 7.1 Matrix of intervening factors for corrupt practices in the model 183




xvii

LIST OF FIGURES
Figure 1.1 Overall research design 5
Figure 2.1 WHO‘s access framework 14
Figure 2.2 Marketing costs in comparison with other costs in the OECD
pharmaceutical industry, 1973-89 27
Figure 3.1 Structure of the health care system of Vietnam 68
Figure 3.2 The pharmaceutical supply chain in Vietnam 74
Figure 4.1 Differences in affordability of a treatment for an acute respiratory
infection and a one-month treatment for a chronic peptic ulcer between
therapeutic classes, types of medicines and sectors in Vietnam 102

Figure 4.2 Mean percentage availability of lowest-priced generic medicines in
Vietnam, in comparison with the average of country-level mean
percentage availability of lowest-priced generic medicines in the
World Bank low-income group and the WHO Western Pacific
Region (WPR)……………………………………………………… 103
Figure 4.3 Median price ratio in public procurement for LPG medicines in
Vietnam in comparison with those in the World Bank low-income
group and the WHO Western Pacific Region 105
Figure 6.1 The staged approach to price components 133
Figure 6.2 The pharmaceutical management cycle 134
Figure 6.3 Example of the component price structure of an imported medicine
sold in the hospital market 144
Figure 6.4 Model of interaction of factors causing high medicine prices in
Vietnam 149
Figure 7.1 A new theoretical framework of corruption in Vietnam‘s health
sector 181
Figure 7.2 The Trade-off model of corrupt behaviours in the collusion between
prescribers and pharmaceutical companies in Vietnam 182
xviii

GLOSSARY/ACRONYMS
API Active Pharmaceutical Ingredient
ARV Antiretroviral
ATC Anatomical Therapeutic Chemical classification system
ASEAN The Association of Southeast Asian Nations
BE Bioequivalent
CI Consumers International
CIF Cost Insurance and Freight
CPI Consumer Price Index
CHS Commune Health Station

DTC Drug and Therapeutic Committees
EML Essential Medicines List
EU European Union
FDI Foreign Direct Investment
DAV Drug Administration of Vietnam
GDP Gross Domestic Product
GMP Good Manufacturing Practice
GP General Practitioner
GPP Good Pharmacy Practice
GSP Good Storage Practice
HAI Health Action International
IB Innovator Brand
INN International Non-proprietary Name
IP Intellectual Property
LPG Lowest-Priced Generic
IRP International Reference Price
MOF Ministry of Finance
MOH Ministry of Health
MOIT Ministry of Industry and Trade
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MPR Median Price Ratio
MSH Management Sciences for Health
NDP National Drug Policy
NMP National Medicines Policy
NPB National Pricing Bureau
NSAID Non-steroidal anti-inflammatory drug
OECD Organization for Economic Co-operation and Development
OTC Over – The – Counter
PBS Pharmaceutical Benefit Scheme

PPP Purchasing Power Parity
PPRI Pharmaceutical Pricing and Reimbursement Information
PPRS Pharmaceutical Price Regulation Scheme
QALY Quality Adjusted Life Years
R&D Research and Development
TRIPS Trade Related Intellectual Property Rights
UK United Kingdom
UN United Nations
US United States of America
USD United States Dollar - Currency
VAT Value Added Tax
VCAD Vietnam Competition Administration Department
VND Vietnam Dong – Currency
VHW Village Health Worker
VSS Vietnam Social Security
WHO World Health Organization
WPR Western Pacific Region
WTO World Trade Organization



xx

ABSTRACT
Availability of affordable medicines is one precondition to realizing the fundamental
human right of access to essential healthcare. Although Vietnam is progressing well
with several health-related targets of the Millennium Development Goals being
achieved ahead of time, attaining equitable access to affordable medicines remains
problematic.
In this thesis, a mixed-method approach was adopted in the analysis of medicine prices

and policies. The literature was reviewed, followed by an analysis of Vietnam‘s
pharmaceutical market and legislation. A quantitative study of medicine prices, and a
qualitative study on how and why high, unaffordable prices occurred, were conducted.
The findings were synthesized to form policy recommendations.
The studies demonstrated that medicine prices in Vietnam were unreasonably high.
Adjusted for Purchasing Power Parity in 2005, prices in the public sector were 46.58
times the international reference price for innovator-brand medicines and 11.41 times
for the lowest-priced generic equivalents. Monopoly of supply was an important cause
of high innovator-brand prices. More complex, intrinsic features of Vietnam‘s
healthcare system were also reported by key stakeholders as driving up prices.
Economic survival pressures, in an imperfectly competitive market, were said to force
both pharmaceutical companies and prescribers to be inextricably linked financially.
Ethics and personal values however did influence prescribers‘ behaviour and their
response to corrupt procedures. Overall, intractable, systemic features contributing to
high prices included unrealistic low salaries for prescribers, poor economies of scale in
domestic production, inefficiencies in the local distribution network, malfunctioning
pricing policies and a general lack of transparency and accountability in administrative
procedures.
A range of policy measures and changes are required to improve access to medicines in
Vietnam. Short-term recommendations include amendments to pharmaceutical policies,
with better enforcement of current regulations. Medium-term measures include the
public health insurance system taking an active role in price setting, pooling
procurement through a national tendering procurement system and reform of the
xxi

domestic market through rationalization with appropriate capital and technological
investment to achieve improved efficiencies and economies of scale. Longer-term goals
include health system improvements to address poor governance, low remuneration of
prescribers, with additional measures to limit the scope for corrupt practices.