Inflated drug prices aggravating burden of healthcare

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A pharmacy in Hanoi. A recent investigation found the price of drugs in Vietnam has increased exponentially over production prices as a result of collusion within the pharmaceutical industry.

Media investigations reveal the price of medicines have been falsely inflated by up to 500 percent due to collusion between pharmaceutical companies and hospitals

Quynh paid VND70,000 (US$3.35) to have her epigastric pain diagnosed at Saint Paul Hospital in Hanoi last week.

The two medicines, including ten pills and ten sachets that the doctor prescribed cost her VND298,000, more than four times the fee to be examined.

Like Quynh, almost all patients in Vietnam are paying significant sums for medicine, often unaware that the price has sometimes been inflated by hundreds of times compared to the cost of production.

According to the Vietnam Social Insurance, payment for medicine accounts for 64 percent of treatment fees while this proportion in many other countries is below 50 percent.

A recent report by the Health Ministry's Drug Administration found Vietnam's per capita spending on medicine has increased markedly over the years.

The average Vietnamese spent $6 a year on medicine in 2001. The amount increased to $13.39 in 2007 and to $27.60 in 2011. The figure is expected to increase to $33.80 by the end of 2014, it said.

An investigation report by Tuoi Tre (Youth) newspaper last week found that pharmaceutical firm GlaxoSmithKline Pte Ltd Singapore (GSK) colluded with a local manufacturer to manipulate medicine prices, with the products eventually coming to customers at rates up to five times higher than their original cost.

During the period between October 2011 and May of this year, Savipharm was found selling six of the medicines it manufactures to GSK as part of an in-country export transaction, with the help of importer Phytopharma, at very low prices.

An in-country export is a transaction in which a Vietnamese company sells products to a foreign one but then transfers the goods to another company based in Vietnam, as assigned by the importer.

Specifically, Savipharm exported 103,963 boxes of medicine to GSK which it declared with customs officials as being worth VND3.1 billion (US$148,800). However, when Phytopharma imported the medicines, it declared their value to be more than $1 million, or nearly VND18.2 billion.

The processes of changing the designation of medicines from domestically manufactured products to imported ones rendered the price three to four times higher than their original cost and in turn, were sold to customers at even higher prices.

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For instance, Meloxicam GSK 7.5mg is exported at VND14,440 per pill, while it is imported at VND70,746 a pill, an increase of 490 percent. Then it is finally sold to customers for VND78,292, up 542 percent compared with the export price, the paper found.

Last week, GlaxoSmithKline was fined $3 billion by US authorities over charges it marketed drugs for unauthorized uses, held back safety data, and cheated the government's Medicaid program.

In a longstanding case that officials said bared the ugly underside of the US pharmaceutical industry, GSK was also accused of paying kickbacks to doctors to gain their support for the drugs the company was pushing, AFP reported July 3.

In Vietnam, Nguyen Tuan Anh, a researcher at Hanoi University of Pharmacy, believes the practice of drug companies paying commissions to doctors is "a dominant factor" in the high price of medicine.

Anh published a study in 2011 in which he interviewed doctors, pharmaceutical representatives, government officials and pharmacists in both the private and public sectors.

The study concluded that 40 to 60 percent of the final price went to inducing doctors to prescribe particular medicines, and to persuade hospital procurement officers to buy them for hospital pharmacies.

Doctors surveyed said they took cash and non-cash offers to make up for low salaries, and that it was common for commissions from the pharmaceutical industry to become the main source of income for some physicians.

Following media reports on inflated medicine prices, the Drug Administration of Vietnam conducted a survey of medicine prices in Vietnam, Thailand and China and concluded that medicines are being sold in China at prices 2.25 times higher than in Vietnam; in Thailand, drugs cost 3.17 times more than in Vietnam.

However, a pharmacist said it is an unfair comparison because of the small scale of the survey and based on Vietnam's production prices rather than retail prices.

The survey involved 23 products in China and 36 products in Thailand, while there are around 20,000 currently on the market in Vietnam, he said.

An investigation by the HCMC-based Phu Nu (Woman) newspaper found many medicines have been sold by up to 400 percent more than the import price although the maximum profit allowed by law is 90 percent.

A doctor in Hanoi, who wished to remain anonymous, said pharmaceutical companies have to pay hospitals around 40 percent in commission fees to distribute medicines to their pharmacies.

"The retail medicine prices have been multiplied through such a process and the Drug Administration should look into this issue to reduce drug prices instead of making a comparison based on the cost of production," the paper quoted the doctor as saying.

In a recent statement, the Vietnam Pharmaceutical Companies Association forecasted a slight increase in the prices of some imported medicines.

Meanwhile, many retailers said the prices of many antibiotics and medicines for treatment of heart and eye diseases have increased by between 7-10 percent.

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