Vietnam’s prime minister calls for fewer healthcare intermediaries

Vietnam’s healthcare supply chain faces pressure to justify every trading layer, as its prime minister calls for purchasing reforms that bring hospitals closer to manufacturers.

At a National Assembly group discussion on 21 October, prime minister Le Minh Hung called for changes to the Pharmacy Law and the Law on Medical Examination and Treatment. His proposed approach combines competitive tendering for widely used products with price negotiations for specialised medicines and equipment.

The commercial opportunity lies in changing how hospitals buy. Giving buyers access to manufacturers can expose avoidable trading margins. But a shorter invoice chain still needs someone to deliver products, finance stock and support equipment. Procurement reform will work best when hospitals price those functions explicitly.

Import dependence limits the shortcut

Hung said domestic production met only a small part of demand, with many medicines and devices still imported and local manufacturing also reliant on foreign inputs. Removing intermediaries therefore leaves an international supply chain to manage, even when the hospital negotiates directly with the producer.

For manufacturers, direct negotiation offers a route to a closer customer relationship and greater control over the commercial offer. For distributors, it creates pressure to explain the value behind their margin. A business providing dependable stock, credit and technical support has a stronger defence than one whose principal contribution is another resale.

Market access also has an industrial-policy dimension. Health minister Dao Hong Lan said the 2024 Pharmacy Law amendment gave foreign businesses investing in manufacturing, technology transfer and factories in Vietnam distribution and direct hospital supply rights equivalent to domestic businesses. That makes local production relevant to the route to the customer as well as the production cost.

Lan defended the domestic distribution framework on security grounds. She said those rights had been maintained since Vietnam joined the WTO to protect pharmaceutical security and avoid dependence on foreign businesses during disruption. The policy therefore gives domestic distribution a strategic role alongside the push for closer contact between hospitals and manufacturers.

Hospital bargaining needs comparable offers

Hung said he had asked the Ministry of Health to study private hospitals’ purchasing experience. He also proposed examining arrangements that would let hospitals negotiate and buy some products directly within the law. These are directions for reform, with the allocation of purchasing powers central to their commercial effect.

The private-hospital comparison is useful as a challenge to purchasing practice. Turning it into a workable public procurement model requires equivalent offers: the same product specification and volume, with payment terms and service obligations priced alongside the goods. A lower quotation becomes less attractive if it transfers financing or maintenance costs to the hospital.

Pooled tendering can strengthen bargaining over standard products by bringing demand together. Specialised purchases need room to negotiate the complete package. For equipment, that means assessing maintenance and consumables alongside acquisition cost; for medicines, delivery commitments and the cost of holding stock belong in the purchasing calculation.

The principal execution risk is a price reduction that weakens supply. Aggressive awards can leave too little room to fund inventory or fulfil service commitments. Contract terms that make delivery and support measurable would give hospitals a firmer basis for rewarding an efficient supplier and challenging an expensive one.

Linked price data reaches beyond the tender

National Assembly deputy Tran Thi Nhi Ha proposed linking health, customs, tax and procurement data so authorities could track import, wholesale and tender-award prices across the supply chain. She also called for automatic alerts for unreasonable prices and timely intervention. This would extend scrutiny upstream of the hospital’s purchasing decision.

That approach addresses the point at which an inflated cost can enter the chain. Hung said investigators had found arrangements involving overseas companies and circular trading that sharply increased prices before goods reached Vietnam. Focusing exclusively on the hospital’s final tender would leave those earlier transactions outside the purchasing review.

Shared data would be commercially useful if officials could match the same product across transactions and account for legitimate costs between them. A wide gap between an import value and a hospital price is a starting point for scrutiny. Enforcement needs to identify the transaction and conduct responsible for an avoidable charge.

Disclosure also creates a trade-off over commercial confidentiality. Ha proposed giving authorities the information needed for price control while making public information useful for reference without exposing pharmaceutical businesses’ trade secrets. Buyers need usable comparisons, while suppliers need clarity about which prices and contractual details become public.

Ha said the draft revised the definition of expected medicine wholesale price disclosure and added mechanisms for disclosure, renewed disclosure and publication on the Ministry of Health’s portal. That places the process for updating a price alongside the initial declaration. For buyers, a usable reference needs to reflect the supplier’s current commercial offer.

Lan also outlined an exception for urgent supply. She said disclosure after sale would apply only in special, urgent cases, including epidemics, rare medicines and snakebite. Eligible cases would be specified to prevent abuse. The design gives emergency access a separate route within the disclosure system, making the boundary of that exception commercially significant for suppliers handling urgent demand.

Clear disclosure rules and coordinated enforcement would improve the prospects for lower delivered costs. Blanket margin pressure would be less effective if suppliers responded by reducing stock or support. The reform’s commercial value rests on separating avoidable charges from the services that keep hospitals supplied.

The government’s stated position leaves room for commercial returns. ‘We agree that businesses must make a profit, but only a reasonable profit,’ Hung said.