Vietnam infant formula companies reach consumers' pockets through doctors, nurses

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A woman checks a can of Insulac baby formula at supermarket. Photo courtesy of Tuoi Tre

Imported infant formulas are sold at three or four times the import prices since distributors have to pay doctors and nurses for recommending their products to pregnant women and new mothers, an investigation by Tuoi Tre (Youth) newspaper has found.

Ho Chi Minh City-based Hung Phuong Commerce Company, which imports and distributes US-made formula Insulac, has close links with hospitals, Tuoi Tre said.

The commissions it pays chief midwives, for both their recommendations and providing women's contact information to the company, account for around 32 percent of retail price, it said.

Insulac has various products for infants, children, pregnant women, older people, and patients.

Last year to market its infant formula, which cost VND217,000 (US$10) for a 400-gram can, it gave monthly shopping vouchers worth VND500,000 to heads of obstetrics departments and VND200,000 to chief midwives.

It also gave four chief midwives at an obstetrics hospital VND3.9 million in cash and ceramic gifts in exchange for names, ages, addresses, and phone numbers of women giving birth there.

The company has acquired information about thousands of women from that hospital alone.

A dairy company in Binh Duong Province near Ho Chi Minh City imports formula at VND119,000 for a 900-gram can, and sells at VND308,000.

Insiders say the differences between import and retail prices are even bigger for famous brands like Abbott and Mead Johnson.

A dairy industry insider, identified only as M., says sometimes the difference is enormous.

Importers not only pay doctors for recommending or prescribing their formulas but also for them to attend conferences, he was quoted by Tuoi Tre as saying.

Government officials say dairy companies are using doctors to circumvent regulations to get at consumers' pockets.

Vietnamese regulations ban advertisement of formulas as the main nutrition for children under two in an effort to advocate breastfeeding.

They also limit advertising expenses for a product to 10 percent of its production cost, but importers and distributors list their foreign parent companies as being responsible for all advertising, a Ministry of Finance official says.

Officials from the ministry's Price Management Department say most formula products evade price regulations, and criticize the health ministry for enabling this.

They say the ministry's regulations define formula products as those with a protein content of at least 34 percent, turning many foreign formulas into food supplements when they enter Vietnam and leaving them out of the ambit of formula regulations.

But Ngo Tri Long, an economist and expert in dairy prices, also blames the finance ministry for giving in on the "impractical" regulations on protein levels.

Most of the formulas, which are treated as supplements, have 13-17 percent protein, the standard level in many countries, he says.

Calling formula "a necessity" for children below six, he says the finance ministry should make every effort to bring the industry under control.

"I think they can do it; they just won't, or have not done it.

"Is there some benefit (for the ministries) behind all these things?"

Long also says there are signs that some foreign formula makers are controlling the market and manipulating prices.

Government agencies should step in to check this, he says.

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