Opportunities from EVFTA commitments on Pharmaceutical products and medical devices

Pharmaceutical products and medical devices are a group of goods that the EU in general and Germany in particular have advantages in producing, while Vietnam has strict mechanisms to control the import and circulation of these products. Therefore, the EVFTA has a number of specific commitments (besides tariffs) that only apply to pharmaceutical products and medical devices, specifically:

• Technical standards

Vietnam and the EU committed to developing technical regulations for pharmaceutical products and medical devices based on relevant international standards, practices and guidelines, unless it is scientifically proven that these standards, practices, and guidelines are inappropriate or ineffective for the fulfilment of the legitimate objectives pursued.

• Marketing authorization procedure

Vietnam committed to abolishing the requirement of a minimum period of existing authorization in the EU, prior to the submission of a request for marketing approval in Vietnam, and abolishing any additional requirements relating to clinical studies going beyond those stipulated in international practices (in particular the practice of The International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use - ICH).

• Transparency

Vietnam and the EU committed to transparency in legal documents, regulations, criteria and procedures related to pricing, price listing, reimbursement or management of pharmaceutical products and medical devices.

• Business rights

Vietnam committed to allowing foreign-invested enterprises to import pharmaceutical products that have been licensed for circulation in Vietnam. However, these enterprises are not allowed to engage in wholesale or retail of imported pharmaceutical products, but may only resell them to distributors or wholesalers authorized to distribute pharmaceutical products in Vietnam. These enterprises are also allowed to build warehouses to store imported pharmaceutical products, to conduct clinical/testing studies to ensure that the pharmaceutical products are suitable for domestic consumption in Vietnam in accordance with the regulations of the Ministry of Health of Vietnam, to introduce information about imported pharmaceutical products to medical staff in accordance with regulations of the Ministry of Health or other competent authorities of Vietnam.

• Intellectual property

  • Commitment to compensating for delay in marketing authorisation: The EVFTA recognizes that a patented pharmaceutical product before being put on the market is generally subject to an administrative authorisation procedure. The EVFTA requires that in case the marketing authorisation is unreasonably delayed (more than 2 years from the date of application for the marketing authorisation), making the normal commercial exploitation period of the patented pharmaceutical product shortened (due to the expiration of the patent protection period), the patent owner will get a compensation in the form of an extension of the duration of the patent protection right in one of the two ways: (i) The reasonable time for granting a marketing authorization is 02 years, if it takes more than 02 years, then the excess time will be compensated but not more than 2 years; or (ii) the extension period is equal to the period from the date of application to the date of the first marketing authorization minus 05 years, but the duration of extension shall not exceed 05 years, and may be extended for another 6 months in specific cases;

  • Commitment to protecting exclusive data: Commitment not to disclosing and protecting confidential information and data submitted to competent authorities for a pharmaceutical marketing authorization within at least 05 years, no other applicant for the same pharmaceutical product can rely on that information and data to apply for a marketing authorization unless permitted by the person who submitted the information and data before.

Note that EVFTA commitments on IP in general and related to pharmaceutical products in particular will be generally applied to pharmaceutical products from all sources, not just from the EU or Vietnam.

• Government procurement

Vietnam committed to allowing German contractors to participate in pharmaceutical product procurement of 34 hospitals and a number of agencies at the central level and in 02 cities (Hanoi and Ho Chi Minh City) of Vietnam. However, Vietnam also has some reservations as follows:

  • Set aside a certain share of public procurements of pharmaceutical products for domestic pharmaceutical enterprises, this share will gradually decrease over a transitional period (from 100% for the first two years of entry into force, 65% for year 3-9, 60% for year 10-15, 50% from year 16 onwards);

  • Exclude public procurements that purchase only one type of pharmaceutical product with a value of less than 130,000 SDR (about 4.2 billion VND);

  • Reserve public procurements associated with distribution rights (EU contractors, after winning the procurement, must select enterprises with the right to distribute pharmaceutical products in Vietnam to deliver medicines to hospitals).

Compared with previous FTAs, the EVFTA is the FTA that Vietnam has the most specific commitments related to pharmaceutical products towards creating favorable conditions for the import, distribution and protection of pharmaceutical products. As a major pharmaceutical supplier of the EU as well as of the world, German pharmaceutical manufacturers as well as Vietnamese enterprises importing pharmaceuticals from Germany are expected to benefit from these commitments.

 EVFTA full text for more information: https://wtocenter.vn/chuyen-de/12778-eu-vietnam-trade-and-investment-agreements 

Source: "Business Handbook: Exploiting the EVFTA  to import and export goods between Vietnam and Germany" - Center for WTO and International Trade