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Officials call for more regulation amid shady dealings between Docs and Drug Suits

Inpatients at Nguyen Trai Hospital in Ho Chi Minh City. Several experts and policymakers have said that Vietnamese hospitals are paying unreasonably high prices for medicine.

Vietnamese hospitals are paying unreasonably high prices for medicine, according to several experts and health policymakers.

Critics have alleged that backroom deals between drug manufacturers and hospitals have resulted in doctors prescribing drugs that patients don't need in exchange for kickbacks.

The recent dust up goes back to December of 2009 when inspections in public hospitals turned up irregularities and outright scams.

Officials and Ho Chi Minh City residents were outraged this spring when city inspectors revealed that doctors at the 115 People's Hospital had pushed outpatients to purchase medicines at the pharmacy for inflated prices. The hospital had not complied with laws requiring it to hold competitive bidding prior to purchasing pharmaceuticals.

In March, investigators from the Drug Administration of Vietnam found that a HCMC University Medical Center physician had received VND528 million ($27,687) in July last year in kickbacks from the US Schering Plough Pharmaceutical office for selling hepatitis medicine.

He was not alone.

Legislators have found that public hospitals have purchased pharmaceuticals, particularly imported drugs, at 150-300 percent mark-ups, said Nguyen Duc Thu, deputy head of the Social Affairs Section at the National Assembly Office.

"Some hospitals have spent more on medicines than one would at local retail outlets. Such high prices have badly hurt patients and health insurance companies," he said at a June 26 health policy seminar in the northern Vinh Phuc Province.

"Patients have not benefited from pharmaceutical promotions aimed at wholesalers and prescribing doctors," he added. Thu claimed to have evidence that many hospitals hadn't held competitive bids and that it was difficult to prevent backdoor deals.

In Vietnam, everything from unemployment to health insurance is regulated by a governmental body, Vietnam Social Insurance (VSI). Representatives from VSI are fuming about the rising costs of medicine.

The organization recently reported that drug costs account for 60 percent of its annual health expenditures.

"This is an unreasonably high proportion," said the agency director Le Bach Hong. "Several countries in the region spend far less. China pays 45 percent, Indonesia pays 38 percent and Thailand pays 35 percent."

Experts are concerned that health insurance policyholders are paying exorbitant prices for medicine due to poor management of public hospitals.

Hong said that many hospitals paid between 10-30 percent more than their retail value. "Wholesale prices are higher than retail. It is really unreasonable," he said.

In Vietnam, the government used to cover all health costs for those who could not pay their way. This included the nation's poor, children under six years old, orphans and those who contributed to the nation's fight for independence.

Early this year, a new health insurance law changed all of that. Several members of this group now have to cover between 5-20 percent of their health care costs.

Where's the bid?

In 2007 the ministries of Health and Finance passed a law requiring public hospitals to hold competitive bidding before purchasing a specific drug and prescribing it to patients.

Experts have charged that some hospitals have agreed to buy medicines at unreasonably high prices and have kicked back commissions from drug manufacturers.

Vietnam's state insurance provider is left footing the bill.

"The insurance agencies bought these medicines," said director Hong of VSI. "But the high prices were negotiated by the hospitals and pharmaceutical firms."

Critics have offered, as evidence, the lack of consistency in prices. Ta Van Bang, a senior official at VSI's Health Insurance Department, said that some public hospitals paid exponentially more for the same drug than others.

Experts also said certain doctors over-prescribe medicines in the hope of receiving large illicit dividends.

Hong said that, in a recent case, a 70-year-old man was prescribed nine different drugs"”some of which he did not need. "This means patients paid more for drugs that could do more harm than good," he said.

"The insurance agency could save VND1 trillion per year if hospitals cut 10 percent of [unreasonable] prescriptions. With that money, we could cover 2.5 million of the nation's poor," he said.

Poor management

In a recent report to the National Assembly, Vietnam's legislature, the Drug Administration of Vietnam committed to take action to control medicine prices. The agency vowed to establish maximum retail prices and promotion rates.

By law, pharmaceutical companies and importers are required to report a product's price to authorities before it goes on the market. Manufacturers are required to announce all rate increases. Authorities reserve the right to demand that manufacturers lower prices that are deemed unreasonable.

The Drug Administration has admitted, however, it could not tackle such a Herculean task.

Vietnamese authorities oversee more than 22,000 pharmaceutical products. They have not, thus far, established maximum prices for all of these drugs, much less established a definition for "unreasonable cost."

Some members of the government are suggesting that VSI should assume control of negotiating purchases.

Dang Nhu Loi, deputy head of the NA's Social Affairs Committee, said the Health Ministry should prevent unreasonably high drug prices at public hospitals "at the root of the problem by allowing the insurance agencies to hold open bids before public hospitals buy medicines."

He said the arrangement could eliminate the risk of doctors favoring certain medicines for the wrong reasons.

Doctor Tran Van Ban, a member of the NA's Social Affairs Committee, argued that the Drug Administration should be able to obtain information on the production costs of imported drugs rather easily. Based on that information, he said, they should be able to establish "reasonable" prices inside Vietnam.

Ban added that India dealt with a similar problem in 1975. Costs were reduced by making the purchasing process more transparent, he said.

Reducing drug prices benefits all: WHO official

The Vietnamese government and its people, particularly the poor, would all equally benefit from policies aiming to reduce drug prices, Dr. Jean-Marc Olivé (photo), the World Health Organization Representative for Vietnam told Thanh Nien Weekly in a phone interview.

Thanh Nien Weekly: How do drug costs in Vietnam rank, regionally


Dr. Jean-Marc Olivé: I think that there are very limited surveys [on drug prices] that have been done in Vietnam. [My] recommendation would be to continue to do surveys. It is important to analyze the insurance  claims of the expenditure on medicines, and all of this should be monitored by the government as well as the price of the top 20 medicines reimbursed by health insurance. The idea is that the government should adopt a general policy for drugs and monitor prices of medicine. That is what it is all about.

But in a recent report sent to the National Assembly, the Drug Administration of Vietnam pointed out many difficulties in monitoring the drug prices in Vietnam. Do you think the job of monitoring drug prices will be tough for Vietnam?

To adjust and monitor the price of medicine and ensure the price is affordable is a challenge faced by many countries like Vietnam that are growing very fast.  One of the recommendations that we have made to the government is to monitor drug prices. I think many of the instruments are in place, and should be used to monitor and find ways to reduce prices, as other countries have done. Just by monitoring you can achieve a lot.

Is the WHO aware of any untoward or illicit activity on the part of pharmaceutical companies selling medicines to Vietnamese public hospitals?

No, the WHO has not done any study in this area. We are giving support to the Ministry of Health, developing guidelines and regulations for appropriate drug use in hospitals. That's the only thing we are doing. This is the business of the government, we are not involved.

We are just technical advisors. It is up to the government to implement laws and guidelines. It is not the role of the WHO.

What should the Vietnamese health authorities do to better protect poor and vulnerable patients?

I think the big challenge for the government is covering 100 percent of the Vietnamese population. One easy way would be to reduce the price of drugs seeing as they total 60 percent of reimbursement. [But] this is still far more than most developed countries where the proportion of drugs that are reimbursed overall is 10-15 percent.

It will be difficult to sustain this because of the cost of healthcare that increases regularly, and the higher proportion of drugs to be reimbursed by health insurance in the future.

One very good way to ensure sustainability and reduce costs of medical expenses would be to reduce the costs of drugs.

From what I understand, the government is trying very hard to address this issue; one of the priorities of the government is [to] increase access to healthcare for all Vietnamese while giving priority to the poorer ones. They have dramatically increased the coverage and now they are trying to ensure that the poorer people have the same access to healthcare as the wealthy. This is easier said than done. Many poor people are in remote regions and there are difficulties to do with transport and accessing healthcare. But we are on the right track. By increasing access to health insurance, you will include all the strata of the population, particularly the poor. (Reported by An Dien)

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