New Vietnam regulations on pharmacy, health insurance, trade union

Vilaf law firm analyzes Vietnam's newly amended laws on pharmacy, health insurance, and trade union.

1. Amended Law on Pharmacy

On November 21, 2024, the National Assembly passed the Law No. 44/2024/QH15 amending and supplementing a number of articles of the Law on Pharmacy 2016 (the Amended Law on Pharmacy 2024).

This new law will take effect from July 1, 2025, except for specific provisions that would take effect from January 1, 2025. Below are key highlights of the Amended Law on Pharmacy 2024.

Introduction of new pharmacy business activities

One of the most critical changes of the Amended Law on Pharmacy 2024 is the official recognition of (i) online sales of drugs and drug materials as a legitimate business activity, and (ii) pharmacy chain as a distinct type of pharmaceutical business.

It is anticipated that these recognition and regulations would solidify the legal framework on emerging business models and present investors in the pharmaceutical sector with new opportunities. It should be noted that:

- Online sales of drugs and drug materials must be conducted through an e-commerce trading platform, e-commerce sales application, or e-commerce website with an online ordering function.

Moreover, the online sale of drugs is only permissible for (i) the retail of over-the-counter drugs not subject to special control and not on the list of drugs restricted from retail sales (except for cases of quarantine for infectious diseases in Group A that have been officially declared under applicable laws on disease prevention and control); and (ii) the wholesale of drugs and drug materials not subject to special control.

Businesses engaging in e-commerce sales of drugs must notify relevant authorities, offerring online consultation on drug use, and ensuring proper delivery to buyers in accordance with laws.

- A pharmacy chain is defined as a system of pharmacies operated by the same entity under a unified quality management system and a single trade name. Each pharmacy within the chain must obtain a separate Certificate of Eligibility for Pharmaceutical Business (CEPB) while the pharmacy chain-organizing entity shall be issued with the CEPB upon meeting legal requirements, including having at least two pharmacies in the chain with their own CEPB and having a unified quality management system to apply to pharmacies in the chain.

Moreover, the person responsible for pharmaceutical expertise of the pharmacy chain-organizing entity must have a bachelor’s degree in pharmacy and have at least two years of experience at an appropriate pharmaceutical establishment while the person responsible for pharmaceutical expertise at each pharmacy in the chain must meet conditions for the same position in a drug retail establishment.

Expansion of scope of activities of foreign-invested enterprises (FIEs)

Before the Amended Law on Pharmacy 2024, the rights and obligations of FIEs in the pharmaceutical sector are scattered across regulations like Decree No. 54/2017/ND-CP and Circular No. 34/2013/TT-BCT, which limit FIEs’ scope of activities to (i) importing drugs and drug materials not on the list of drugs prohibited from import, and (ii) distributing those produced in Vietnam by such FIEs.

The Amended Law on Pharmacy 2024 clarifies and broadens the scope of FIE activities, enabling them to engage in various pharmaceutical operations, including production, import/export, drug testing, clinical trials, and bioequivalence studies. For instance:

- FIEs producing drugs and drug materials are now permitted to wholesale drugs and drug materials that they import, produce, contract-manufacture, or transfer technologies in Vietnam to specific purchasers as specified at laws; and

- FIEs importing drugs and drug materials are now permitted to wholesale drugs and drug materials that they import to drug and drug material wholesale establishments.

Simplification of licensing procedures

The Amended Law on Pharmacy 2024 streamlines the licensing procedures regarding Certificate of Drug Free Sale (“giấy đăng ký lưu hành thuốc” in Vietnamese) and Certificate for Drug Material Free Sale (“giấy đăng ký lưu hành nguyên liệu làm thuốc” in Vietnamese) (collectively, the “CFS”) by limiting cases where prior consultation with the Advisory Council is required and simplifying documentation requirements.

In case where the CFS has expired but the Ministry of Health (MoH) has received the valid renewal application, such CFS still remains valid until the MoH issues its final opinion on the renewal application. This new regulation aims to ensure uninterrupted circulation of drugs and drug materials, preventing supply chain disruption.

The Amended Law on Pharmacy 2024 also eliminates requirements for drug information content confirmation.

Price control measures

With an aim to strengthen control over drug price, Article 1.43 of the Amended Law on Pharmacy 2024 introduces several new control measures, including requiring drug producers and importers to (i) notify the MoH of the estimated wholesale prices of prescription drugs before selling the first batch of such drugs, and (ii) re-notify the prices upon changes.

The MoH will then publicly announce the estimated wholesale prices of prescription drugs on its online portal. No pharmaceutical business establishments are permitted to wholesale prescription drugs at a price higher than the announced price. The MoH is empowered to recommend adjustments to the announced estimated wholesale prices in certain circumstances where the MoH finds that, for example, there is a difference between the estimated wholesale price of a drug and the winning bid price of the same drug and such difference exceeds the maximum margin set by the Government. Still, the MoH’s recommendations will not apply if drug producers and importers can justify the price difference.

Further, certain regulations on price management and declaration have been revised to be aligned with the laws and regulations on pricing.

2. Amended Law on Health Insurance

On November 27, 2024, the National Assembly adopted the Law No. 51/2024/QH15 amending and supplementing a number of articles of the Law on Health Insurance 200811 (the Amended Law on Health Insurance 2024).

This law will take effect on July 1, 2025, except for provisions concerning assignment of technical expertise levels in medical examination and treatment, registration of health insurance-covered medical facility, referral of patients between medical facilities, and procedures for health insurance-covered medical care, which will take effect in January 1, 2025. Below are key highlights of the Amended Law on Health Insurance 2024.

Alignment with the Law on Social Insurance 2024

A notable feature of the Amended Law on Health Insurance 2024 is its harmonization with the provisions of the Law on Social Insurance 2024. Updates include changes regarding participants in the health insurance scheme, timelines for contributing to the health insurance fund, calculation basis for contributions when an employee holds contracts with multiple employers, and scenarios involving late or evaded contributions, along with their corresponding penalties. These updates aim to streamline and simplify the process for contributing to various mandatory insurance funds.

For example, under the current Law on Health Insurance 2008, when an employee has contracts with multiple employers, the employer paying the highest monthly salary is required to contribute to the health insurance fund based on that salary.

This conflicts with the laws on social insurance and employment, which mandate that the first employer contribute to social and unemployment insurance funds based on the salary it pays, causing difficulties for both insurance agencies and employers.

In practice, despite the aforementioned provision of the Law on Health Insurance 2008, insurance agencies often require the first employer to contribute to the health insurance fund, even when it does not pay the highest salary. Article 1.11 of the Amended Law on Health Insurance 2024 resolves this issue by assigning the responsibility for health insurance contributions to the employer responsible for social insurance contributions.

Expansion of health insurance coverage

The Amended Law on Health Insurance 2024 extends health insurance coverage to more medical services. Notably, Article 1.18 of the Amended Law on Health Insurance 2024 includes treatments for strabismus and refractive errors for individuals under 18 years old, expanding coverage from the current limitation for those under 6 years old.

Additionally, the Amended Law on Health Insurance 2024 improves insurance coverage for patients seeking care outside their registered facilities and without complying with regulations on referral of patients between medical facilities. Key improvements include:

- Full coverage within the entitlement limits for emergency treatments at any medical facility nationwide;

- Full coverage within the entitlement limits for treatments of rare diseases, serious illnesses, or advanced surgical procedures at any medical facility with basic or intensive expertise;

- Full coverage within the entitlement limits for treatments at any medical facility with primary expertise; and

- Full coverage within the entitlement limits for inpatient treatments at any medical facility with basic expertise.

Under the current regime, patients are only entitled to full coverage for treatments at district-level medical facilities.

Reallocation of the health insurance fund

According to Article 1.27 of the Amended Law on Health Insurance 2024, the proportion allocated to medical services has been increased from 90% to 92%, while the contingency reserve has been reduced from 10% to 8%. This change ensures that a larger share of the health insurance funds is directed towards patient care, reflecting the government’s focus on improving access and quality of healthcare services.

Digital transformation

Currently, health insurance cards are available in paper formats only. Patients must present their health insurance cards at medical facilities to access health insurance benefits. This creates issues when patients lose or forget their cards, leading to denial of coverage even though they have fully paid health insurance premiums.

The Amended Law on Health Insurance 2024 addresses this problem by introducing electronic health insurance cards. Each participant in health insurance scheme will be assigned a unique insurance code and issued with a health insurance card bearing this insurance code in both electronic and paper formats, both holding equal legal validity. Patients will no longer need to present physical health insurance cards; instead, they can simply provide their health insurance information to medical facilities to access health insurance benefits.

3. New Law on Trade Union

On November 27, 2024, the National Assembly passed the Law on Trade Union No. 50/2024/QH15 (the Law on Trade Union 2024), which will replace the Law on Trade Union 2012 from its effective date of July 1, 2025.

The newly passed law introduces new key guidance to strengthen employee rights while enhancing the role of the Vietnam Trade Union. Key changes are discussed in more detail below.

Expansion of trade union membership

One of the most notable changes is the extension of the right to establish, join, and operate trade unions to Vietnamese workers without formal labor relations. This means that individuals who work as freelancers can now form or become members of trade unions, providing them with a platform to voice their concerns and protect their interests.

In addition, foreign employees working under an employment contract with a term of 12 months or more are now eligible to join grassroots-level trade unions (“công đoàn cơ sở” in Vietnamese). Under the current Law on Trade Union 2012, trade union membership is exclusively available for Vietnamese employees. This change ensures that foreign employees will have representation in trade unions and can benefit from the support and protection offered by trade unions while working in Vietnam.

Integration of employee organizations

According to Article 6 of the Law on Trade Union 2024, existing employee organizations at enterprises (“tổ chức của người lao động tại doanh nghiệp” in Vietnamese) now have the option to apply for integration into the Vietnam Trade Union system. Upon integration into the Vietnam Trade Union, the operations of the existing employee organizations at enterprises shall automatically cease. Members of employee organizations at enterprises who are willing and eligible to join the Vietnam Trade Union according to the Charter of the Vietnam Trade Union will be recognized as trade union members.

Trade union finance

The Law on Trade Union 2024 maintains the trade union fee contribution rate of employers at 2% of the salary fund used as the basis for compulsory social insurance contributions for employees.

Following the application of the ad-hoc policy on exemption from and reduction in trade union fee contribution during Covid-19 pandemic, the Law on Trade Union 2024 now officially recognizes circumstances in which employers can be exempted from or entitled to a reduction or postponement of such fee. In specific, an employer may be considered for:

- an exemption from paying trade union fees when it is in the process of dissolution/ bankruptcy;

- a reduction in the trade union fee contribution rate when it is facing difficulties due to economic reasons or force majeure events; and

- a postponement of paying trade union fees of up to 12 months when it is forced to suspend its operation. Upon the expiry of the postponement period, such employer is obligated to compensate for the unpaid amount during that period.

Prohibited acts

Article 10 of the Law on Trade Union 2024 introduces a number of new prohibited acts in trade union actives, including: (i) failing to ensure conditions for trade union activities; (ii) mismanaging and/or failing to pay trade union fees; (iii) illegally receiving aid or sponsorship; (iv) abusing trade union rights to violate relevant laws; and (v) spreading false information about trade union organization and operation.

Further, to align with the provisions of the Labor Code 2019, Article 10 of the Law on Trade Union 2024 elaborate acts of discriminating against employees and trade union officers for the reason that they establish, join, and operate trade unions to include the following acts, notably: (i) forcing employees to join/ refuse to join the trade union as a condition of employment; (ii) terminating employment relationship or refusing to extend labor contracts to create difficulties for union involvements; (iii) discriminating in wages, benefits and/or working conditions (including financial and non-financial rights and obligations); (iv) spreading false information to defame trade union officers; (v) promising and providing material, non-material benefits to prevent employees from joining trade unions; and (vi) causing difficulties related to work in order to weaken trade union activities.