Recently, the Vietnamese authorities have heightened scrutiny over compliance in the medical device industry, especially in relation to device prices and public tenders. This enforcement trend can impact authorities, state-owned hospitals in the public sector, as well as bidders, suppliers, importers, and manufacturers of international brand medical devices in the private sector. Thus, companies in the medical device industry should prepare themselves well for possible inquiries coming from the authorities.
*Note: Information from this alert has been collected via public press reports, available in Vietnamese only.
Scrutiny beginning in 2019
In 2019, the Government Inspectorate reportedly commenced specialized inspections of the procurement of medicines and medical devices on a wide scale. As of March 2021, the Government Inspectorate has found breaches of public tender protocols, especially at the price planning and appraisal stages, in 63 cities and provinces in Vietnam as well as the Ministry of Health (MOH).1
Multiple arrests within the past year
Vietnamese authorities, including the Ministry of Public Security (MPS) and the MOH, have been escalating enforcement and investigation into the medical device industry, particularly with regard to compliance with bidding and anti-corruption regulations. As a result, there have been several arrests and trials of government officials, managerial personnel of state-owned hospitals, and even bidders in the private sector in many provinces and cities across Vietnam over the past year.
Notably, in late 2020, the director of the Hanoi Center for Disease Control (CDC) and multiple other personnel were prosecuted and sentenced to prison for colluding with the director of a price appraisal company to inflate prices of Realtime-PCR machines for COVID-19 testing.2 This was the result of extensive investigation by the MPS into the Hanoi CDC’s purchases of medical devices for the purpose of fighting the COVID-19 pandemic.3
Also in late 2020, the MPS arrested several individuals, including managerial personnel of Bach Mai Hospital, a medical device company, and a price appraisal company. The managers of Bach Mai Hospital allegedly colluded with the medical device company and the price appraisal company to inflate prices of medical devices by billions of VND. Accordingly, the authority has concluded that patients at the Bach Mai Hospital had been drastically overcharged for medical fees.4 In addition, the medical device company has been subject to further scrutiny from Vietnamese authorities for compliance with bidding and anti-corruption regulations as the company has a suspiciously high winning rate in public tenders on medical devices.5
More recently, on 8 and 9 February 2021, the press reported the arrest of executives at the Ho Chi Minh City Eye Hospital in relation to bid-rigging charges,6 which followed searches by the MPS of the hospital executives’ offices to investigate bid-rigging violations from 4 November 2020.7 The arrest seems linked to allegations raised by some bidders in March 2020 that the technical requirements for intraocular lens in this hospital’s bidding documents were intentionally configured in favor of products of specific brands.8
More enforcement to come
With investigations and inspection having been reported in different provinces and cities throughout Vietnam, it shows that the Vietnamese authorities are heightening scrutiny over compliance in the medical device industry. At the same time, amidst the COVID-19 pandemic, demand for medical devices has been skyrocketing, giving rise to more corruption opportunities.
For the above reason, we anticipate that the investigation and enforcement efforts of the Vietnamese Government in the medical device industry will be continued and enhanced even further. Enhanced enforcement can impact not only the authorities and state-owned hospitals in the public sector but also bidders, suppliers, importers, and manufacturers of international brand medical devices in the private sector. Companies in the medical device industry should therefore prepare themselves well for possible inquiries coming from the authorities in relation to the relevant issues.
If you have any concerns and questions on the above, please contact our Compliance and Investigation team.