Generic drug prices drop sharply thanks to national drug bidding

On January 5, Vietnam Social Security signed a framework agreement for drug supply from January 2018. This package includes 5 active ingredients with a total value of over one trillion VND, including 5 original drugs and 19 generic drugs divided into 3 packages: North, Central, and South. The approved planned price is 5-15% lower than the items that won bids in the provinces and cities in the previous 12 months.

As a result, 20 drugs won the bid. On average, 5 generic drugs reduced their prices by nearly 14% compared to the winning bid prices of hospitals and provinces in 2017. The type with the smallest reduction of 9.8%; the largest reduction of 15% was the active ingredient Meropenem 500 mg and 1 g. The price of generic drugs decreased by an average of nearly 34%. In particular, group 1 drugs (just expired copyright), the active ingredient decreased the most by nearly 43%. Some domestically produced drugs decreased by nearly 55%.

"The biggest concern when setting a low planned price is that there will be no winning bidders. However, in reality, in this bidding, the prices of the five generic drugs have decreased sharply, breaking the previous concept that generic drugs are exclusive and never decrease in price," said Mr. Duong Tuan Duc, Director of the Center for Health Insurance Assessment and Multi-line Payment in the Northern Region, Vietnam Social Security.

Social insurance calculated that if hospitals and provinces still used the old winning bid prices, the total price of the 20 winning bids for drugs this time would be more than 1,187 billion VND. Meanwhile, thanks to the national drug bidding, the amount spent in 2018 was only nearly 936 billion VND; a decrease of more than 251 billion.

According to Mr. Duc, the Social Insurance has asked contractors to commit to the ability to supply drugs according to schedule. The insurance will also have software to monitor the supply and use of drugs in hospitals and provinces.

Authorities will continue to select national bidding for high-cost medical supplies with many types and prices such as artificial lenses, coronary stents, etc. In addition, bidding for antibiotics and diabetes drugs will be expanded.

Previously, the Ministry of Health also conducted a national centralized bidding for 5 active ingredients corresponding to 22 products (including 5 branded drugs and 17 generic drugs), to be supplied in 2018-2019. The bidding results saved 477 billion VND, a reduction of about 17% compared to the bid price.

Medicines currently account for a large proportion of health insurance expenditures. According to a representative of the Vietnam Social Security, the total expenditure on medicines from the health insurance fund in 2015 was more than VND26,000 billion, accounting for 48%. In 2016, this figure was more than VND31,500 billion (41%). This ratio is higher than that of countries with similar socio-economic conditions.

One of the limitations is that drug bidding is still carried out separately in each province, city and medical facility, leading to different winning bid prices, with some items having high winning bid prices. International experience shows that if drug bidding is carried out in a reasonable centralized manner, it will help to better manage the supply chain, price and quality of drugs.