On May 14, 2024, the Minister of Health issued Circular No. 05/2024/TT-BYT, which stipulates the list of drugs, medical equipment, and testing supplies subject to price negotiation, along with the procedures for selecting contractors for packages applying the price negotiation method (“Circular 05”). This replaces the price negotiation regulations in Chapter V of Circular No. 15/2019/TT-BYT dated July 11, 2019, of the Minister of Health on drug bidding at public healthcare facilities (“Circular 15”). In addition to issuing the list of drugs and medical equipment subject to price negotiation, Circular 05 supplements several issues to clarify the new regulations related to the “price negotiation” mechanism of the 2023 Procurement Law applicable to the healthcare sector. Accordingly, we believe that the provisions in Circular 05 provide detailed and specific guidance on the price negotiation process, maintaining a balance of stringency and relative flexibility to meet the operational needs of the healthcare sector, thereby avoiding the shortage of drugs and medical equipment as experienced in the past.
1. Change in the authority responsible for leading and organizing price negotiations
Previously, Circular 15 assigned the authority for tasks related to leading and organizing price negotiations (such as planning price negotiations; preparing, appraising, and approving the required documents; developing and approving price negotiation plans; directly negotiating prices, etc.) to the Drug Price Negotiation Council established by the Minister of Health and the National Center for Drug Procurement. However, Circular 05 transfers this authority to the Price Negotiation Unit (an entity designated by the Ministry of Health) and the Interdisciplinary Price Negotiation Team (comprising representatives from the Ministry of Finance, units managing pharmaceuticals, medical equipment, procurement of the Ministry of Health, and experts as needed). This regulation aims to ensure more specialized and appropriate organization of price negotiations according to the actual conditions of the work.
2. Price Negotiations Conducted According to an Annual Plan
Compared to Circular 15, Circular 05 stipulates more stringent and specific requirements that price negotiations must be based on an organized price negotiation plan. This plan must clearly define the following minimum contents:
- Number of price negotiation rounds per year;
- List of drugs and medical equipment subject to price negotiation in each round;
- Estimated time for conducting price negotiations.
In addition to requiring organized price negotiations, Circular 05 also provides a “flexible” mechanism for organizing bidding to avoid a “passive” situation, including:
- For drugs and medical equipment on the list subject to price negotiation with announced price negotiation results, it is possible to develop plans, determine procurement needs, and organize contractor selection according to the price negotiation method for the next period.
- Units and localities can actively organize contractor selection for supplying drugs and medical equipment subject to price negotiation using other methods (not price negotiation), such as open bidding, restricted bidding, direct procurement, or direct purchase; based on notifications from the Price Negotiation Unit in special cases such as when drugs, medical equipment, and testing supplies on the price negotiation list do not meet the principles and criteria for organizing price negotiations, fail to meet the negotiation schedule, cannot regulate drugs and medical equipment, or unsuccessful price negotiations.
3. Detailed Regulations on Price Negotiation Procedures
Overall, the bidding process according to Circular 05 includes similar steps inherited from the regulations of Circular 15, consisting of the following basic steps:
- Identifying and consolidating procurement needs;
- Preparing and appraising contractor selection plans;
- Preparing, appraising, and approving required documents;
- Announcing invitations to supply and receiving proposal documents;
- Evaluating proposal documents and preparing price negotiation plans;
- Conducting price negotiations and making decisions;
- Appraising, approving price negotiation results, and organizing implementation.
However, Circular 05 adds many detailed regulations related to each step's specific issues, adhering to stringent principles. Accordingly:
- Clearly defines the roles, powers, and responsibilities of each relevant agency in consolidating procurement needs; preparing and appraising contractor selection plans (including units responsible for identifying procurement needs, focal units consolidating procurement needs, Vietnam Social Security, etc.).
- Specifies the bases for developing drug and medical equipment price negotiation plans, such as winning bid prices for drugs/medical equipment; the replaceability of negotiated drugs; information on the value of negotiated drugs and medical equipment used provided by Vietnam Social Security; reference prices for negotiated drugs and medical equipment, etc.
- Specifies principles for negotiating prices with contractors, such as in cases where contractors propose prices higher than the desired price: the interdisciplinary team requests the contractor to review and adjust the proposed price, with a maximum of three reviews.
Accordingly, the provisions of Circular 05 aim to strictly control price negotiations, preventing negative activities in the price negotiation process.
4. Flexible Regulations in Bidding Activities
The subjects of price negotiation are drugs and medical equipment with "special" characteristics. If a shortage of these drugs and medical equipment occurs and timely replenishment is hindered by "rigid" mechanisms and procedures, it can result in many negative consequences. Therefore, Circular 05, while tightening price negotiation regulations to prevent negativity, also introduces “flexible” mechanisms but still within “controlled” limits to help address shortages of drugs and medical equipment if they occur, specifically:
- At the time of contract signing, healthcare facilities and contractors can agree to adjust the quantities up or down from the quantities in the signed contract based on the requirements in the tender documents.
- Allows the redistribution of drugs and medical equipment. Accordingly, the redistribution of successful bid drugs, medical equipment, and testing supplies includes additional purchases within the optional purchase scope and transfer between healthcare facilities. The optional purchase is carried out according to specific regulations, including: the Price Negotiation Unit can optionally purchase additional quantities of drugs to match the approved contractor selection plan to supplement and redistribute to healthcare facilities; the Price Negotiation Unit and healthcare facilities can apply the optional purchase in multiple batches, but the total additional quantity does not exceed the maximum limit in the approved contractor selection plan.
Circular 05 takes effect from May 15, 2024.
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