JOINT CIRCULAR No. 20/2005/TTLT-BYT-BTC Circular guiding the implementation of tendering for drug supply in public health facilities

MINISTRY OF FINANCE-MINISTRY OF HEALTH ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
No.: 20/2005/TTLT-BYT-BTC	Hanoi, July 27, 2005

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF HEALTH AND THE MINISTRY OF FINANCE NO. 20/2005/TTLT-BYT-BTC OF JULY 27, 2005 GUIDING THE IMPLEMENTATION OF PROCUREMENT OF MEDICINES IN PUBLIC HEALTH INSTITUTIONS

Pursuant to the Procurement Regulations issued together with Decree No. 88/1999/ND-CP dated September 1, 1999 and subsequent amendments and supplements to the Procurement Regulations issued together with Decrees No. 14/2000/ND-CP dated May 5, 2000 and No. 66/2003/ND-CP dated June 12, 2003 of the Government;
Pursuant to Decree No. 120/2004/ND-CP dated May 12, 2004 of the Government on the management of drug prices for disease prevention and treatment;
In order to strengthen management and effective use of funds from public health institutions for purchasing medicines, chemicals, infusions, biological products, consumable materials serving medical examination and treatment needs and disease prevention, the Ministry of Health and the Ministry of Finance guide the implementation of procurement of medicines, chemicals, infusions, consumable materials, and biological products for public health institutions as follows:

I. GENERAL PROVISIONS

1. Scope of application:

a) Public health institutions using state budget funds and other lawful sources (referred to collectively as the state budget) according to regulations to purchase medicines, chemicals, infusions, consumable materials (collectively referred to as medicines) to serve medical examination and treatment and disease prevention needs with total annual funding of VND 200 million or more for central public health institutions; VND 100 million or more for provincial and centrally-administered city public health institutions; VND 50 million or more for district and county public health institutions must organize procurement (open, restricted, or competitive bidding) in accordance with the Government's Procurement Regulations and specific provisions in this Circular.

b) For public health institutions with total annual state budget funding for medicines below the aforementioned levels, the heads of units shall decide on appropriate and effective procurement methods, which may include competitive bidding, direct procurement based on the results of procurement (for less than one year) for medicine items from other public health institutions in the same locality.

2. Scope of application of procurement and procurement: To be implemented for all types of medicines (except those specified in Point 3 below) used in public health institutions.

3. This Circular does not apply in the following cases:

a) Purchasing medicines, chemicals, vaccines, biological products ordered by the State and paid for with state budget funds; supplying blood and blood substitutes. Management and procurement of goods and services ordered by the State and paid for with state budget funds in these cases shall be carried out in accordance with Circular No. 05/2004/TT-BTC dated January 20, 2004 of the Ministry of Finance guiding the management of goods and services ordered by the State and paid for with state budget funds.

b) Traditional and herbal medicines (excluding finished products).

II- SPECIFIC PROVISIONS

1. When organizing procurement of medicines, public health institutions must comply with the Procurement Regulations issued together with Decrees No.

88/1999/ND-CP dated September 1, 1999 and subsequent amendments and supplements to the Procurement Regulations issued together with Decrees No. 14/2000/ND-CP dated May 5, 2000, No. 66/2003/ND-CP dated June 12, 2003 of the Government; Circular No. 121/2000/TT-BTC dated December 29, 2000 of the Ministry of Finance guiding the implementation of procurement of office supplies, materials, equipment, and working tools with state budget funds for state agencies, armed forces, mass organizations, and state-owned enterprises. Additionally, the following provisions must be followed:

a) Preparing and approving the procurement plan for medicines:

- Based on the annual budget estimate approved by the competent authority, the heads of public health institutions are responsible for preparing the procurement plan for medicines and submitting it to the competent authority for approval: The Minister, head of a ministry-level agency, or head of a government-affiliated agency approves for central public health institutions; the Chairman of the People's Committee of a province or centrally-administered city (or their authorized representative) approves for local public health institutions.

- In the document submitted for approval of the procurement plan, the following contents must be clearly explained:

+ The method of selecting contractors and the procurement method applied to each tender package or item.

+ The annual budget plan for purchasing medicines.

+ The quantity and value of medicines to be procured in each tender package by generic name. If the medicine is a compound containing multiple components, all components must be listed by generic name.

+ The quantity and value of medicines to be procured in each tender package by brand name.

+ The time frame for organizing each tender package.

+ The type of contract for each medicine item.

+ The contract execution period.

- The procurement plan should be prepared for six months or the entire year and submitted to the competent authority for approval no later than January or June of each year.

- The approval time for the procurement plan shall not exceed seven working days from the date of receipt of complete documents.

b) Tender package price in the procurement plan for medicines when preparing the procurement plan:

- Institutions entrusted with organizing the procurement of medicines base the tender package price on the prevailing retail price of medicines on the market and refer to the price announcements of the Vietnam Drug Administration - Ministry of Health, and the retail price range of essential medicines prescribed by the State to prepare the tender package price in the procurement plan for submission to the competent authority for approval. The price of each medicine item in the tender package must not be higher than the prevailing retail price of that medicine on the market at the same time.

c) Preparing the tender invitation document, contents of the tender invitation document, and approving the tender invitation document shall be carried out in accordance with the Government's Procurement Regulations issued together with Decrees No. 88/1999/ND-CP dated September 1, 1999, No. 14/2000/ND-CP dated May 5, 2000, and No. 66/2003/ND-CP dated June 12, 2003 of the Government. In addition, the following provisions shall be added to the tender invitation document for medicines:

- A contractor may participate in one or more medicine items within a tender package if they have the capacity to supply them.

- The tenderer evaluates the tender documents separately for each medicine item within each tender package.

- The name of the drug stated in the tender invitation must be the generic name. If tendering for a mixed drug with multiple components, all components must be listed according to their generic names. In cases where the tender is invited under the brand name, such procurement must be decided by the competent authority based on the provisions of the law approved on the basis of opinions from the heads of healthcare facilities after obtaining the consensus of the Drug and Treatment Council of the unit and being approved in the annual tender plan. The head of a public healthcare facility shall be responsible for their decision.

- Quantity, concentration, unit of measurement, packaging specifications, and form of preparation for each item of medicine.

- Requirements for drug quality:

+ Must comply with the quality standards registered with the Vietnam National Medicines Administration.

+ Test certificates for each batch of drugs as required.

+ A valid Good Manufacturing Practice (GMP) certificate issued by the competent authority for the manufacturing plant.

+ A product circulation permit issued by the competent authority for the sale of products in Vietnam.

+ For imported drugs: a circulation permit from the country of production is required.

+ Expiry date: at least 18 months remaining for drugs with an expiry period of three years or more; at least 12 months remaining for drugs with an expiry period of two years or less (counted from the delivery date).

+ Drug label: must comply with labeling regulations, including a Vietnamese language drug usage guide (including imported drugs).

- The successful bidder must:

+ Commit to recalling the drug if it does not meet quality standards or has been recalled by the competent authority, and the cause is not due to the fault of the tenderer;

+ Commit to supplying the drug at the bid price (including cases where drug supply contracts are executed in multiple batches throughout the year);

+ Commit to the supply schedule;

d) The tender period shall vary depending on the quantity of drugs needed, but the entity may organize tenders at least once every six months during the year.

đ) Tender participation conditions: entities and individuals belonging to various economic sectors (including foreign companies or joint ventures permitted to establish and operate under Vietnamese law) have the right to participate in the tender if they meet the conditions stipulated in Point 3, Section II of Circular No. 121/2000/TT-BTC dated December 29, 2000, issued by the Ministry of Finance, and the following specific requirements:

- Possess a business license for pharmaceuticals issued by the competent authority;

- Have the capability to supply and ensure the quality of drugs when supply is carried out in multiple batches throughout the year;

- Submit a tender bond as required by the tender organizing body before the tender closing time;

- Use valid sales invoices issued by the financial authority;

e) Tender results: The winning bid price must not exceed the tender package price in the approved tender plan and the retail price commonly available on the market at the time of the tender.

2. In cases where there is a need to purchase additional quantities of certain drug items within the tender plan during the year, the entity may apply direct procurement methods as provided for in

Point 2, Section III of Circular No. 121/2000/TT-BTC dated December 29, 2000

issued by the Ministry of Finance.

3. In cases where there is a need to purchase additional quantities of certain drug items not included in the tender plan during the year, with small quantities and low total value (under VND 10 million), the heads of public healthcare facilities may choose procurement methods such as competitive bidding or direct assignment based on the tender results of other public healthcare facilities in the same locality, ensuring that the purchase price does not exceed the winning bid price and bearing responsibility for their decisions.

4. Responsibilities for reviewing and approving the tender plan and tender results:

The Minister, the head of a ministry-level agency, or the head of a government agency (for public healthcare facilities directly under the Ministry of Health); the Chairman of the People's Committee of a province or centrally-administered city or their authorized representative (for local public healthcare facilities) shall approve the tender plan and tender results based on the review of relevant assisting units.

III- INSPECTION AND VIOLATION HANDLING

Inspection of drug tender supply at public healthcare facilities is regulated as follows:

1. The Ministry of Health's Inspectorate conducts inspections of drug tender supply at public healthcare facilities directly under the Ministry of Health; Inspectorates of ministries and sectors conduct inspections of drug tender supply at public healthcare facilities under central ministries and sectors; Provincial Health Department Inspectorates organize inspections of drug tender supply activities within the scope of public healthcare facilities in their respective regions.

2. Inspection organizations shall be carried out according to plans approved by the Minister of Health, the heads of ministries and sectors, the Chairmen of provincial or centrally-administered city People's Committees (or their authorized representatives); when there are signs of violations of tender supply laws; upon request from the inspection bodies mentioned in Clause 1, Section III of this Circular; or upon request from the Minister of Health and other ministries and sectors, or the Director of the Provincial Health Department regarding specific tender supply cases.

3. The content of the inspection shall be implemented in accordance with the provisions of Section 4, Clause 25, Article 1 of Decree No. 66/2003/NĐ-CP dated June 12, 2003, of the Government on amending and supplementing some articles of the Tender Regulations promulgated together with Decree No. 88/1999/NĐ-CP dated September 1, 1999, and Decree No. 14/2000/NĐ-CP dated May 5, 2000, of the Government.

4. Handling of violations: During the inspection process, if violations are discovered, the inspectorate will impose penalties according to the functions prescribed in the state's inspection law, depending on the nature of the violation.

IV- IMPLEMENTATION

1. Annually, every six months, the Ministry of Health (Vietnam National Pharmaceutical Administration) publishes in mass media and informs healthcare facilities about import prices, retail prices (for imported drugs), factory prices, and retail prices (for domestically produced drugs) for all types of drugs approved for circulation in Vietnam.

2. Public healthcare facilities directly under the Ministry of Health and central ministries and sectors shall organize drug tender supply in accordance with the regulations.

3. For healthcare facilities under local administration: The Department of Health shall base on the usage needs of healthcare facilities under local administration to submit for consideration and decision by the Chairman of the People's Committee of the province or centrally governed city to select one of the following three forms:

a) The Department of Health shall organize centralized bidding for types of medicines with regular, stable, and large usage requirements for all public healthcare facilities under local administration. Public healthcare facilities under local administration shall base on the results of such bidding to sign supply contracts for medicines according to their needs.

b) The Department of Health shall direct one of the provincial general hospitals to organize bidding to purchase medicines immediately in the first quarter of each year. Other units within the province may apply the bidding results to sign contracts to purchase medicines from the successful bidder or organize their own bidding but the winning bid price shall not exceed the winning bid price of the provincial general hospital designated by the Department of Health to organize the bidding. As for public healthcare facilities located in remote, mountainous, and island areas, the supply price of medicines shall not include reasonable transportation costs.

c) Assign public healthcare facilities to organize bidding for medicine supply based on their medicine usage needs. The winning bid price shall not be higher than the tender package price approved in the bidding plan and the retail price commonly available on the market at the time of bidding.

4. Handling transitional issues after the issuance date of this circular:

a) For tenders that have issued tender documents before the effective date of this circular, they shall continue to be implemented according to the bidding regulations and supplementary bidding regulations issued together with Decrees No. 88/1999/NĐ-CP dated September 1, 1999, No. 14/2000/NĐ-CP dated May 5, 2000, and No. 66/2003/NĐ-CP dated June 12, 2003 of the Government and guiding documents.

b) For tenders that issue tender documents after the effective date of this circular, they shall be implemented according to this circular.

5. Healthcare facilities under public administration shall report in writing to the superior management agency every six months and annually on the implementation of bidding for purchasing medicines.

6. Annually, Ministries, agencies equivalent to Ministries, agencies under the Government, People's Committees of provinces and centrally governed cities shall be responsible for compiling and submitting reports on the implementation of bidding and purchasing medicines of their respective sectors and localities to the Ministry of Finance and the Ministry of Health before December 31 for consolidation and reporting to the Prime Minister.

7. The Minister, head of agencies equivalent to Ministries, heads of agencies under the Government, Chairmen of People's Committees at all levels shall decide and organize inspections of bidding and purchasing medicines according to current bidding regulations and guidance provided in this circular for units under their management.

8. Financial agencies at all levels shall be responsible for coordinating with health agencies at the same level to regularly and spot-check the implementation of bidding and purchasing medicines by units under their management.

9. This circular shall take effect 15 days from the date of publication in the Official Gazette. Any difficulties encountered during implementation should be reported to the relevant ministries for examination and resolution.

Huỳnh Thị Nhân (Signed)

Le Ngoc Trong (Signed)