Firms collude to manipulate medicine prices

During the 2008 – 2011 period, Savi Pharmaceutical JSC, or Savipharm, a medicine maker located in the Tan Thuan Processing and Exporting Zone in Ho Chi Minh City, received licenses from the Drug Administration of Vietnam (DAV) for the circulation of 15 types of medicine.

In 2010 and 2011, Savipharm requested to transfer the licences to GSK, in additionto renaming all of the aforementioned drugs, a proposal which was green-lighted by the DAV.

“Only the name of the company who receives the license and the names of the medicine are changed, while the license registration application of Savipharm at DAV remains unchanged,” the DAV said in its document approving the transfer.

The DAV later granted new licences on the renamed medicines for GSK, with the same registration codes that it gave Savipharm earlier.

Savipharm later signed a ‘manufacturing and supplying medicines’ agreement with GSK.

During the period between October 18, 2011 and May 17, 2012, Savipharm manufactured six out of the 15 said medicines, and sold them to GSK under 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 transfers the goods to another company based in Vietnam, as assigned by the importer.

Specifically, it exported 103,963 boxes of medicine to GSK at prices declared with the customs agency of VND3.1 billion ($148,800). However, Phytopharma imported all of these products and declared their values at more than $1 million, or nearly VND18.2 billion, with the customs agency.

The medicine packages had been changed from domestically manufactured products into imported ones, and thus had prices three to four times higher than their original prices. However, they will be sold to customers at even higher prices.

For instance, the Meloxicam GSK 7.5mg is exported at VND14,440 per pill, while it is imported at VND70,746 a pill, up by 490 per cent, and finally sold to customers at VND78,292, which is a 542 per cent increase compared to the export price.

No transparency

Savipharm CEO and chairman Tran Tuu said GSK has conducted a large amount of technological transfers and personnel training for his company, enabling it to produce medicine at GSK standards.

By selling the products to GSK under the in-country export scheme, Savipharm has helped local patients to access medicine with similar quality, but at 40 – 50 percent lower prices compared to imported drugs, said Tuu.

However, when asked about the fact that patients have to buy medicine at exorbitant prices, Tuu said he had no knowledge of such a problem.

The director of a major pharmaceutical firm who wishes to remain anonymous said it is unreasonable for the medicine prices to be sent skyrocketing after the license transfer between Savipharm and GSK.

“Scientifically, the product quality remains unchanged after the registration is transferred, so there must be something non-transparent going on here,” he said.