Tender on pharmaceutical drugs procurement for health insurance

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Better control of drug prices will improve the efficiency of the largest expenses in health insurance payment structure.

Unsustainable risk

According to Public Property Management Department – Ministry of Fiance, the current procurement process for pharmaceutical drugs has serveral problems. The obvious shortcoming is that Vietnam Social Insurance is responsible for all payments related to medical expenses but is not involved in the drug procurement process as well as medical supplies. It means that the health insurance fund is passive and more risky in managing the fund. Furthermore, Vietnam Social Insurance is not involved in the cost control process leading to unestablished cross-management control mechanisms amongst agencies.

The second problem is the trend of using foreign drugs in health insurance payment structure. Doctor prescribe foreign medicine is tend to increase while the internal medicine is going down. It cause major impact to local business production and supplier to medicine market. Moreover, the drug selection is follow the trend of choosing less competivitve brands rather than the drug has more supplier with reasonable price. As a result, it break the market principles as well as does not promote competition among suppliers.

Another shortcoming is drug procurement. Currently, the activity is performed in accordance with the provision of Circular No. 09/2016/TT-BYT of Ministry of Health issued a list of tender drugs, drug procurement focus catalog and list of drugs applied form of price negotiation. With the Circular, there are 5 types of ingredient are procured at national level by Ministry of Health directly organize bidding; 106 ingredients are procured at local level by Department of Health and provinacial authorities organize bidding; 8 ingredient are bought by price negotiation methods with pharmaceutical companies and other 800 ingredient will be procured by health clinics. Althought the Circular is valid on 1-7-2016, so far, the implementation of Circular No.09 has not been comprehensive.

In fact, the centralized procurement for 5 ingredients by Ministry of Health bidding have not been implemented yet. During this time, if the health clinics have needs to use drugs which contain one of these 5 ingredient, they have to self-determine for purchasing. Centralized procurement at the provincial level have been implemented and brings some certain positive result. However, it did not work for 1069 ingedients that mentioned in the regulation. Hence, it lead to the amount of ingredients in the centralized procurement list “move down” to the list of drug order of health clinic. When many entities involve in purchasing, it will lead to uncontrollable public transparency of proceurement activities. As a result, it create a big gap in pricing of the same drug, unable to reflect market reality. Inevitable consequence iss the cost of health care rising, detrimental to the sustainability of health insurance fund.

Saving costs up to trillion

To overcome these shortcoming above, the Ministry of Finance in collaboration with the Ministry of Health and Vietnam Social Insurance build up tender project at national level for drug using in health insurance. This proposal has been submitted to the Government and recently get consensus at the regular meeting that was held on 1-7.

Sharing the opinion about drug procurement mechanism in the scheme, Mr. La Van Thinh, Deputy Director of Public Property Management Department, Ministry of Finance, said: “If we follow the traditional method, the Health sector will be the unit of general buying drugs. While following the scheme, Vietnam Social Insurance will bid some common drugs used in health insurance payments. According to the timeline, Vietnam Social Insurance will propose the list of subscribed drugs to the Ministry of Finance for approval. Then, base on the proposal, Ministry of Health will issue the list in accordance with procurement law. The list will be the official drugs to be used in Health Insurance payment for all subject matter insured. Additionally, Vietnam Social Insurance also propose 14 original ingredients and medicines to cure HIV which will no longer receive from foreign aid till 2017. Also, the medical clinics across the country will begin receiving the purchasing drugs from the wining supplier and available to use from 1-1-2017.

According to Mr Thinh, centralized drug procurement for health insurance has been piloted in Vietnam in the period 2014-2015. In fact, the pilot has brought encouraging results such as drug prices decrease by 25-30% compared to traditional procurement thereby saving cost around 1.370 billion in 2015. In the structural bill of medical insurance costs, drugs expense take 60%. Hence, the control of drugs price will improve the efficiency of the largest expensese in the payment structure.

In particular, the control of drug price in health insurance not only save the health insurance fund but also help agencies become more active in management, reduce pressure on State budget and support to expand the health insurance coverage to the people, promote social security especially for low-income people. “Instead of State budget have to spend money to buy health insurance for the poor, the application of this method will save money and Vietnam Social Security will take the additional amount of money to buy insurance for the poor.” – Thinh said,

In other words, the centralized procurement of drug used in health insurance payment will bring double effect, not only change the relation of drug market but also change the management method of State for health sector and contribute to accelerate the road map “national coverage” of the Government.