Decision No. 110/2005/QD-TTg on approving the Plan for "national drug reserve circulation to serve disease prevention and treatment for the people"

DECISION OF THE PRIME MINISTER

Regarding the approval of the National Medicine Reserve Plan to serve disease prevention and treatment for the people

serving disease prevention and treatment for the people

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Public Health Law dated July 30, 1989;

At the proposal of the Minister of Health and the Minister of Finance in the report No. 2829/TTr-YT-TC dated April 15, 2005,

DECISION:

Article 1. Approve the National Medicine Reserve Plan to serve disease prevention and treatment for the people with the main contents as follows:

1. Objectives:

a) General Objective:

Actively reserve medicines, ensuring that there is always a sufficient quantity of quality medicines available at reasonable prices to supply disease prevention and treatment activities; ensuring the needs for people's health care.

b) Specific Objectives:

- Reserve a number of essential and specialized medicines to ensure the needs for use at state medical examination and treatment facilities.

- Reserve essential and brand-name medicines to balance supply and demand, contributing to stabilizing medicine prices on the market.

2. Contents of the medicine reserve circulation:

a) General principles:

The State finances certain state-owned enterprises meeting the conditions stipulated by the Ministry of Health to be designated to undertake the tasks of producing and distributing pharmaceuticals to ensure a constant stock of reserved circulating medicines according to the list prescribed by the Ministry of Health. Reserved circulating medicines are decided to be used in necessary cases, timely supplied to state medical examination and treatment facilities or contributing to stabilizing the medicine market, preventing sudden price fluctuations.

b) List of reserved circulating medicines:

The Minister of Health specifically determines the list of finished medicines and the required quantities to be included in the reserved circulation to meet the two aforementioned objectives, based on the following criteria:

- Essential medicines, medicines for major diseases commonly suffered by many people and for emergency, epidemic prevention and control purposes where current supply sources have not yet ensured stable supply.

- Medicines with high usage in state medical examination and treatment facilities but limited capacity to meet demand.

- Some specialized and unique medicines and medicines without substitutes or medicines with few registrations bound by global exclusive distribution practices.

- Medicines frequently experiencing price fluctuations, especially those whose price changes are due to external factors.

- This list may be adjusted to suit specific market conditions.

c) Funding for the medicine reserve circulation:

The Ministry of Health takes the lead, coordinating with the Ministry of Finance to calculate the specific types, quantities of medicines, and funding needed to purchase the initial stock of medicines under the List of Reserved Circulating Medicines for a period of 45 days. Initially, it is necessary to reserve approximately 330 billion VND.

d) Financial mechanism in the medicine reserve circulation:

- Enterprises assigned the task of reserved circulation of medicines are allowed to borrow money from banks to purchase reserved circulating medicines as required.

- The state budget supports 100% interest on borrowed bank funds to purchase the initial stock of reserved circulating medicines corresponding to the approved funding amount.

- The state budget provides a one-time funding to upgrade, expand warehouses, invest in information technology, and purchase equipment for storing reserved circulating medicines. The Ministry of Health will develop a specific project to submit to the Prime Minister after obtaining the consensus of the Ministry of Finance and the Ministry of Planning and Investment.

- Enterprises undertaking the task of reserved circulation of medicines must comply with current tax laws.

- The Minister of Health shall establish principles for determining the purchase price and sale price of reserved circulating medicines after reaching agreement with the Ministry of Finance in the following situations:

+ Supplying to state hospitals when there is a shortage of treatment medicines.

+ Selling to the free market to stabilize market prices.

- Price compensation mechanism: The Minister of Health, authorized by the Prime Minister, decides to release reserved circulating medicines to stabilize the market, and if the selling price is lower than the cost price, the difference will be considered for compensation from the state budget.

e) Mechanism for purchasing, selling, storage, rotation, and supply in the medicine reserve circulation:

- Enterprises assigned the task of reserved circulation of medicines have the right to proactively purchase, sell, store, and rotate reserved circulating medicines but must ensure compliance with the prescribed list, types, quantities, quality, and expiration dates set by the Ministry of Health; while always maintaining a stock equivalent to 100% of the approved reserved circulation level outside the enterprise's business reserve to meet treatment needs and stabilize the medicine market when necessary.

- The Minister of Health decides on the following cases: selling medicines to state medical examination and treatment facilities when there is a shortage; selling medicines to the market to contribute to stabilizing the market when there are price fluctuations; selling medicines from the List of Reserved Circulating Medicines to state medical examination and treatment facilities when it is necessary to rotate the expiration date of medicines.

- State medical examination and treatment facilities must use the fund for purchasing medicines from the state budget and health insurance to buy medicines from the List of Reserved Circulating Medicines as decided by the Minister of Health. For state medical examination and treatment facilities under provincial or centrally-administered municipal People's Committees or managed by other ministries or sectors, the Minister of Health issues decisions after reaching consensus with the respective provincial or municipal People's Committee Chairmen or the respective ministry or sector heads.

3. Implementation schedule:

a) Period 2005 - 2006:

- The Minister of Health decides on selecting three state pharmaceutical enterprises meeting the conditions in the North, Central, and South regions to purchase finished medicines for implementing the reserved circulation of medicines. During this phase, focus on reserving medicines needed for treatment and currently monopolized by foreign companies. Upgrade, expand, or renovate the warehouse systems of selected enterprises to meet the requirements for medicine reserves.

- The Ministry of Health directs enterprises to import corresponding generic medicines, simultaneously importing substitute medicines for monopolized brand-name medicines to prevent artificial shortages and contribute to balancing supply and demand on the market.

- Combine the reserved circulation of medicines with administrative measures to ensure stability in the medicine market, preventing sudden price increases that harm consumers.

b) Period 2006-2010:

- Develop the domestic pharmaceutical industry towards industrialization and modernization, shifting from a passive supply position to an active one based on domestic production, gradually reducing and aiming for the goal of not being dependent on foreign countries in terms of quantity, variety, and price for finished drugs and drug raw materials.

- Plan, modernize, enhance financial capacity, and invest comprehensively in the distribution and supply system to ensure sufficient strength, gradually reducing, and eventually not using state budget to regulate the pharmaceutical market.

Article 2. Division of responsibilities:

1. Entrust the Ministry of Health to lead, coordinate with relevant ministries and sectors to issue regulations on managing circulating drug reserves, develop plans, organize implementation, inspect, and supervise the execution of circulating drug reserve plans after approval by the Prime Minister, and be responsible for the effectiveness of the plan.

2. The Ministry of Finance will balance the annual budget, have plans to support interest rates for bank loans for circulating drug reserves and compensate for price differences when selling prices are lower than cost prices in cases where circulating drug reserves are released to stabilize the market.

3. The Ministry of Planning and Investment and the Ministry of Finance will allocate the budget to upgrade, renovate, expand warehouses, invest in information technology, and purchase equipment for preserving circulating drug reserves according to approved decisions by competent authorities.

4. The State Bank of Vietnam is responsible for directing commercial banks to allocate sufficient loan capital for circulating drug reserves work.

Article 3. This Decision takes effect fifteen days from the date of publication in the Official Gazette.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decision./.