DSpace at VNU: How might the Trans-Pacific Partnership impact on the pharmaceutical sector in Vietnam?

DSpace at VNU: How might the Trans-Pacific Partnership impact on the pharmaceutical sector in Vietnam? tài liệu, giáo án...

part of

Pharm Pat Anal.

Perspective 2016/06/17

05

04

2016

Ratification of the Trans-Pacific Partnership (TPP) will attract a large number of foreign drug companies in the coming years to Vietnam It is anticipated to bring investment

to Vietnam’s pharmaceutical industries, lead to increased infrastructure and enable the use of more sophisticated technologies for the discovery, development and manufacture of drugs However, with respect to pharmaceutical companies, which are producing generic drugs primarily, the availability of biologic will be reduced

Thus, the consequence is, an increase in drug cost resulting in difficulties for patients wishing to procure these drugs This will be particularly detrimental for developing countries, such as Vietnam and Malaysia.

First draft submitted: 14 February 2016; Accepted for publication: 3 June 2016;

Published online: 27 June 2016

Keywords: brand name • data exclusivity • drugs • generic • industry • market • patent

• pharmaceuticals • TPP • TRIPS

The Trans-Pacific Partnership agreement

After 5 years of negotiations, the Trans-Pacific Partnership (TPP) agreement – the world’s largest free trade area, constituting 40% of global GDP [1], between 12 Pacific-bordering nations (namely: Australia, Brunei Darussalam, Canada, Chile, Japan, Malay-sia, Mexico, New Zealand, Peru, Singapore, the USA and Vietnam) – was finally reached

on 5 October 2015 It took a long time to unify multiple points of view and, although

it has not yet come into effect in these afore-mentioned nations, the TPP is still assessed

as a potential document by its Members It not only governs almost every aspect of inter-national and inter-national policy in each Member States, especially with regards to the econ-omy; but also ensures that the international cooperation between Member States, as well

as with the countries outside the agreement, will be undivided and expanded In addi-tion, the TPP may be considered an open agreement, where both the current Members

and the other countries, which expect to become part of it in the future, may negotiate thereafter [2]

On the intellectual property (IP) front, the TPP has imposed stringent measures and more demanding requirements for IP protec-tion, and likewise for the exchange of sci-ence and technology However, the TPP also facilitates the introduction of more advanced technologies in less developed member nations, which are vital in today’s world

Pharmaceutical patent in the TPP

With regard to the provisions outlined in IP (rights) chapter, it is clear that in order to comprehend and comply, the patent system

in the TPP Member States has to improve

Parties thereby recognize the need to promote innovation and creativity; facilitate the diffu-sion of information, knowledge, technology, culture and the arts; and foster competition and open and efficient market [3]

Throughout the negotiating process, the topic of pharmaceutical patenting was

sub-Nguyen Hoa Binh* ,1 , Pham Ngoc Kieu Anh** ,2

& Nguyen Minh Phuong*** ,3

1 Daitin & Associates, 19 Hoang Dieu, Dist 4, Ho Chi Minh City, Vietnam

2 Master of Law course S1580107, Major in Economic Law, Law Department, University of Economics and Law, Vietnam National University, 6 Quarter, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam

3 Ho Chi Minh City University of Food Industry, 140 Le Trong Tan, Tan Phu Dist.,

Ho Chi Minh City, Vietnam

*Author for correspondence:

binh@daitin.com.vn

**Author for correspondence:

anhpham2292@gmail.com

***Author for correspondence: phuongnm@cntp.edu.vn

How might the Trans-Pacific Partnership impact on the pharmaceutical sector in Vietnam?

Special Focus Issue – Pharmaceutical Patent Law: Expert Perspectives From Around the Globe

ject to much debate before an agreement was met On

a basic level, a pharmaceutical patent has to comply with all the requirements of a general patent, for exam-ple, a set of rules pertaining to how the patent is pro-tected, changed, maintained and enforced That said, the Member States were involved in extensive discus-sions regarding providiscus-sions in relation to drugs Issues can arise from the length of data protections for new drugs, notably for biologics (large-molecule drugs) and for generic drugs As such, the TPP agreement offers several options that Member States can choose

to adhere to For example, one of the options imposes

8 years of exclusivity to a new biologic; while another one requires 5 years of protection to clinical data and

3 years of a half exclusivity, plus the pharmaceutical company has exclusivity over new clinical information relating to the new drug [4] Although it is not much compared with the previous negotiations of 12-year period, the regulation for adjustment of data exclusiv-ity in the TPP Agreement is still the longest term, and will most likely impact the patent rights of drugs

TPP: pros & cons to the rights of the pharmaceutical patent

It can be easily seen that, the clear regulations, as well

as stringent measures on medicine, provide an oppor-tunity for the holder to be guaranteed their rights and other legal interests The strict rules, especially for the enforcement of IP rights in general and pharmaceutical patent in particular, is one of the most effective methods

to avoid, detain and handle any future infringement

Besides, the TPP also constitutes a legal framework bind-ing all Member States collectively Each Member shall ensure that their legal system provides fair and equitable protection and enforcement for pharmaceutical patents, thereby decreasing potential violations

There are three provisions significantly affecting pharmaceutical protection in the TPP First, accord-ing to the TPP, pharmaceutical companies are allowed

to consolidate a granted patent The patent holder can thereby make a minor change in drug formulations

in order to extend periods of exclusivity for branded drugs Second, in case of unreasonable or unnecessary delay in the processing of marketing approval applica-tion, a provision allowing extended protection is accept-able [5] And finally, with regard to advanced drugs as biologics, the length of data protection is up to 8 years

With the said provisions, the pharmaceutical patent shall be protected at a higher level than previously, in the case of some Member States, even over the Trade-related Aspects of Intellectual Property Rights (TRIPS) Agreement [6] or other bilateral free trade agreements (FTA) This measure encourages the creativity among brand-name pharmaceutical companies

However, applying for practiced registration in Vietnam, according to the IP laws, a drug can be pro-tected by patent when its active ingredients are still within period of protection – normally lasting 20 years Besides, with regards to the provision of Clause 2 Article

14 of Circular No 44/2014/TT-BYT dated 25 Novem-ber 2014 on Registration of Drugs, in order to register for the circulation of generic drugs, which are protected

by a patent, at least 2 years before the expiry date, a drug registration establishment must submit an application form and relevant documents as proof that the valid-ity period is due to expire [7] Hence, when the TPP is brought into effect, the length of new pharmaceutical product’s data protection in Vietnam should conform with such conditions As a result of a period of protec-tion adjustment, exclusivity rights of pharmaceutical companies in Vietnam will be extended from 5 years to

up to at least 8 years

Although there are many advantages to this new leg-islation relating to pharmaceutical patent rights, some challenges may emerge due to extended adjustment of pharmaceutical patent protection, notably for the USA, which are applying, or are going to apply, the shorter patent term extensions with respect to drugs, which is less than or equal to 5 years, compared with Peru, Chile, Malaysia, New Zealand, Australia and Brunei Darus-salam [8] With extended term, it means that the patient has to wait longer for generic drugs In addition, Viet-namese pharmaceutical companies will have to invest more since the cost will be much higher The agree-ment has also received criticism that it will add costs to Pharmac (the Pharmaceutical Management Agency is a New Zealand Crown entity), which will in turn affect the New Zealand taxpayer [9] Additionally, Kenneth Arrow, a Nobel Laureate in economics, has argued that the extended monopolies will not only drive up costs but also reduce the pace of innovation [10], because ‘it stifles discovery of new or improved biologic treatments’ [11]

Scenarios of the pharmaceutical patent sector in Vietnam before the TPP

Pursuant to the Law on Intellectual Property No

50/2005/QH11, mutatis mutandis [12], with respect to

a pharmaceutical patent, there are two types of patent

in Vietnam: invention patents and utility solution pat-ents [13] As with general patents, a pharmaceutical pat-ent must be globally novel, involve an invpat-entive step and

be industrial capable application [14] A subject matter related to drugs shall be protected if it is:

• In a chemical product form (or active ingredient)

• A drug substance

• Pharmaceutical/drug formulation

• Method or formulation of dispensing

• Method or formulation of extracting active

ingredients from pharmaceutics

With regards to current IP Laws, the measures of

prevention, diagnosis and treatment for human and

animal are not protected Additionally, at

pharma-ceutical patent application, the description section

must state the results of clinical trials and

pharma-ceutical effects, which includes at least the following

information [15]:

• Used substances/mixtures

• Employed trial method (system)

• Trial results

• Correlation between the result of the

pharmaceuti-cal effects obtained in the trials and the practipharmaceuti-cal

usage of the pharmaceutical in disease prevention,

diagnosis and treatment

With regard to the right of pharmaceutical patent,

patent holder(s) has/have rights to allow or prevent

others from using and/or exploiting a granted

pharma-ceutical patent [16] Notwithstanding, in some cases,

the exceptions can be applied and may restrict the right

of patent holders to their inventions [17] It includes:

• The use of inventions concerning a pharmaceutical

shall have the right to, on behalf of the State, use

or permit other organization or individuals to use

inventions for public and noncommercial purposes,

national defense, disease prevention and treatment

and nutrition for the people and to meet other

urgent social needs;

• The use or exploitation of inventions concerning

a pharmaceutical being protected by third party

shall have the right to obtain compulsory licensing

that was settled by the State;

• Parallel imports;

• The use of inventions concerning a pharmaceutical

for individual or noncommercial purposes

These Vietnam IP law provisions are amended to

harmonize with the TRIPS agreement, and adapted

from the content of Doha Declaration on the TRIPS

Agreement and Public Health

To access the Vietnamese market, Pharmaceutical

products should conform to all the regulation of Drug

Administration of Vietnam (DAV), under Ministry of

Health (MOH) By adopting the ASEAN Common

Technical Dossiers (ACTD) procedure of

pharma-ceutical product registration, Vietnamese laws request

that the application dossier for a new chemical entity should include four elements: administrative data and product information; quality; preclinical/safety;

clinical/efficacy The application dossier for generic drugs, however, need only include the first and second elements [18,19]

Currently, Vietnam is endeavoring to improve the rules and strive to strengthen its healthcare systems

For product registration, both local manufacturers and foreign pharmaceutical investment companies are eli-gible to register the product for trading in Vietnam

However, before the TPP, Vietnam did not adhere to the ‘patent linkage’ system The patent linkage system,

as stated in Article QQ.E.17 of the TPP agreement, generally refers to the system by which a country or territory establishes a relationship between the generic drugs marketing approval process and the patent sta-tus of the originator’s product The requirements, thereby, are given that the marketing approval will not be granted for applicants (generic drug manufac-turer in other words) if the drug is still protected by

a patent, unless the applicant can prove that the pat-ent will not be infringed by a written conspat-ent, which

is provided by the patent holder Hence, the use of this system reduced the infringement against patent rights, facilitating a competitive market environment

In the absence of this system in Vietnam, only until the patent protection validity of brand-name drugs has expired, is marketing approval for the generic version

of a brand-name drug granted Therefore, the patent holders are urged to notify the DAV and other relevant authorities of their pharmaceutical patent, under the regulations of Article 14 of Circular No 44/2014/TT-BYT [20], including new information relating to the quality, safety and effect of the drugs, if the drug is being manufactured or imported, in addition to the expiration of the pharmaceutical patent [21]

Potentials & challenges of TPP for the Vietnamese pharmaceutical sector in the field of patent protection

TPP not only impacts the rights of the pharmaceutical patent holder as mentioned above, but also significantly effects pharmaceutical patent protection According

to the TRIPS Agreement, a patent in Vietnam is pro-tected for 20 years [22] Furthermore, Vietnam’s pat-ent laws provide a 5-year data exclusively period that commences from the date on which a product license

is granted, subject to Article 128 of IP Law 2005 of Vietnam When this rule is maintained and TPP has come into effect, it might also cause certain problems

Especially with regards to difficulty of approaching brand-name drugs, several local generic drug manu-facturers have tried to obtain clinical information,

which are being duly protected by laws Meanwhile, the IP law system in Vietnam is still weak and inef-fective, especially with regards to the enforcement

of patent rights In many cases judges lack the right expertise and legal training to bring fair judgments that are in accordance with Vietnamese law [23] This may be a result of the fact that the competent authori-ties are not powerful enough to prevent infringements, and the shortage of IP specialists who handle patent infringements [24] In this case, judges, customs agen-cies or other enforcement agenagen-cies dealing with pat-ent infringempat-ents should consult the National Office

of Intellectual Property of Vietnam (NOIP), and/or specialist IP rights organizations before taking enforce-ment actions As the 2014 annual report of the NOIP provided 123 expert comments at the request of IP enforcement agencies; in which, six were in relation

to patents and two on utility solutions [25] Therefore, after the TPP come to force, with more stringent pro-visions of IP implementation and enforcement, the pharmaceutical patent infringement will be reduced

However, the length of pharmaceutical data exclu-sivity protection (up to 8 years) for biologic drugs will lead to huge difficulties for Vietnam’s competent authorities, generic drug companies and the Vietnam-ese taxpayer Many VietnamVietnam-ese patients, who are pay-ing large amounts for brand-name drugs, will have to wait a long time to access price-lowering generic drugs

The pharmaceutical data exclusivity protection period under the TPP agreement with also restrict local busi-nesses from accessing and manufacturing generic drugs

Therefore, after the TPP adoption, Vietnam should amend IP law and regulations, and hopefully, the pharmaceutical patent infringement will be reduced

Will TPP cause negative effects to the Vietnamese pharmaceutical industry

& generic market?

Undoubtedly, in Vietnam, the generic drug indus-try is very important as it enables access to drugs at

a cheaper price This is particularly important with regards to, chronic diseases like diabetes, heart disease and tuberculosis As of 2015, the generic drugs value increased from 19% in 2010 to 86% [26] Therefore, on

a micro level, the provisions with respect to 8 years of data exclusively, could lead to cheaper biosimilars – the equivalent of a generic drug The TPP would apply its provisions on high standard generic drugs So, as men-tioned above, the restrictions in accessing brand-name drugs and the associated clinical information will lead

to delays in the availability of cheaper generic drugs on the Vietnamese market In addition, these regulations allow brand-name companies to extend their

exclusiv-ity over the pharmaceutical for some time until the patent monopoly expires, along with raising the price

of the medication, thus limiting consumer access Consumers from developing countries, Vietnam in particular – one of the TPP’s most vulnerable populace – is under significant pressure, since drugs for chronic diseases and HIV might become unaffordable [27] Moreover, the TPP Agreement also discourages the Vietnam government from exerting pressure on price control in the pharmaceutical market Therefore, these new regulations may allow companies to participate in and affect the payment policy of the health insurance system

Regarding the biologic drugs, the TPP could drive

up costs and restrict access from the generic compa-nies Currently, biologics are known as one of the most expensive drugs on the market, thereby it may cost up to

22 times more than nonbiologic drugs Avastin, a can-cer drug, can cost more than US$50,000 a year, while the rheumatoid arthritis drug Remicade can cost up to US$2500 per injection [28] In order to explain why these biologic drugs have higher prices than other drugs, it is necessary to consider their constituents and production method;, biologic drugs are therapeutics from a biologi-cal source, including vaccines, gene therapies, antitox-ins, proteins and blood, blood component, protein [29]

A biologic is typically much larger and more structurally complex than other drugs, and these medicines are also more difficult and costly to develop and manufacture Therefore, for important biologic drugs, the developed countries, especially the USA, aim to encourage phar-maceutical companies to perform research in this area For example, the USA currently provides 12 years exclu-sivity for new biological products under the Biologics Price Competition and Innovation Act (BPCIA) [30] The data exclusivity rights in the USA are, therefore, much stronger than the rights for other pharmaceutical patents; in particular, there are no exceptions or flexibili-ties, which allow governments to tailor the law according

to national circumstances, such as compulsory license The USA has tried to use the TPP to export this system

to other Pacific Rim nations, which have much lower bars for biosimilars, ranging from 0 years in Brunei to a maximum of 8 years in Japan, according to Brookings Institution [28] But, because of objections from other Member States, this provision was not accepted How-ever, when the TPP takes effect, a provision of at least

8 years for biologic exclusivity will be enforced which, although shorter than the previous request of United States Trade Representative (USTR), will drive cost up for some important medicines, as well as making them more difficult to access in other developing countries Hence, these provisions will have damaging outcomes from a public health perspective

Notwithstanding, although along with some of

other Member States, where the length of new

phar-maceutical product’s data exclusivity is less than or

equal to 5 years, the Vietnam pharmaceutical industry

is only at the level of 3–4 out of a 5-level scale [31] The

domestic manufacturing industry is small and most

drugs or drug materials are still imported, so the price

of medicines is relatively high in Vietnam When the

TPP takes effect, an important provision relating to

duties on pharmaceuticals will reduce the tariff

bar-rier, from the current 2.5–0% [32] Currently,

phar-maceutical companies worldwide participate on equal

terms with domestic companies, and these equal terms

and an increase in international companies setting up

in Vietnam will lead to absolute advantage As such,

when foreign generic drugs companies hit the

mar-ket, prices of local brand-name medicines, as well as

imported generic drugs, shall fall

Simultaneously, although the new stringent

provi-sions of IP protection will generate short-term

nega-tive impacts, if Vietnamese IP laws and related laws

are implemented well, the TPP will give rise to

oppor-tunity for the pharmaceutical industry and hopefully

the Vietnamese consumers can buy the high-quality

product at lower prices in the near future

Vietnam pharmaceutical companies face the

competitions derived from TPP

Currently, Vietnam has been identified as one of the

fastest growing pharmaceutical markets in Southeast

Asia Vietnam has 178 large organizations operating

in pharmaceutical industry, with more than 300 small

organizations who manufacture traditional medicines

in which, the local companies are occupying over 85%

of total pharmaceutical companies in Vietnam [33]

Furthermore, Vietnamese pharmaceutical market

value has increased from US$3.81 billion in 2014

to US$4.17 billion in 2015; ranked 13th among 175

countries with the highest growth in medicine

spend-ing, about US$200 per year per capita [34] In addition,

Global Data also predicted that the value will

materi-ally surge over the next 4 years and reach a net worth

of US$8 billion by 2020 [35] In the period 2010–2013,

the pharmaceutical industry in Vietnam maintained an

average growth rate of 20%; wherein, the proportion

of generic drugs was highest, over 51%, had grown up

to 22% [36] Through these statistics, Vietnam is one of

the most attractive markets for companies looking to

invest in the sector of private healthcare in the region

However, although the growth of pharmaceutical

market in Vietnam is rapid, the local

pharmaceuti-cals account for only 0.11% of the total revenue in the

industry [31] One of the most difficult challenges for

local pharmaceutical companies is importing drugs

and raw materials In the first 7 months of 2015, the imports of raw materials reached US$199.4 million, primarily from China, accounting for 56.6% of the imports of raw materials [37] Besides, there is still an absence of advanced technology investments on the drug developing and manufacturing Notably, after the ratification of TPP agreement, in order to protect local industry and the reputation of drug quality, technical barriers present an important challenge in research, development and production In the meantime, the cutting down of tariffs on imported pharmaceuticals into Vietnam will facilitate investment by foreign pharmaceutical companies These companies will have the same status in the market as the local pharmaceu-tical companies In an effort to grow pharmaceupharmaceu-tical product domestically, nowadays, foreign investors may enter into Vietnam pharmaceutical market by joint venture (JVEs) or foreign-owned business (FOEs), or business cooperation contracts (BCCs) [38]

Moreover, a major challenge for local pharmaceuti-cal companies is caused by most of their existing prod-ucts, which are generic drugs In addition to this, the provision of extended biologic exclusivity would restrict local companies from accessing and manufacturing new medicines While, the world’s biggest pharmaceu-tical companies, such as Pfizer, Merck [39], etc might

‘break the law’ by making minor changes in biologic drug formulations in order to enhance their exclusiv-ity [40] Simultaneously, foreign pharmaceutical com-panies have more potential than local ones because,

in general, imported drugs are preferred by the con-sumer It will create heavy competition problems for local companies, with some of them likely to be forced out of the market ‘If Vietnam does not adopt special measures, foreign pharmaceutical companies will gain

an even larger market share’, Mr Nguyen Thanh Binh, General Director of the Hanoi CPC1 Pharmaceutical JSC (Hanoi CPC1) said [41]

Even without taking into account the type of drugs, the risk of losing pharmaceutical market share is aggra-vated by the fact that the small and medium-sized enterprises (SMEs) are not paid sufficient with respect

to their cooperation The absence of linkage might lose the local’s capable competition Moreover, main issues also come from counterfeiting, lack of drug price control and inadequate IP protection

Key points for a strong pharmaceutical industry in Vietnam

Vietnam is a potential market for both local and for-eign-made drugs In accordance to the BMI Report, Vietnam market in the field of pharmaceutical has several factors in order to attract foreign investment, such as the risk index is 48.4 out of the maximum 100;

and the country scored above average for overall mar-ket expenditure and sector value growth [34] However, because of shortcomings in the State’s policies and limitations of government, the investors and/or entre-preneurs have to spend so much time on their research

of the Vietnamese drug market Meanwhile, according

to experts, the TPP agreement will be a wide door for both pharmaceutical industry and companies To take advantage of this, the pharmaceutical company will likely aim to attract more investments, diversify and innovate, standardize production line and drug qual-ity Consequently, for sake of increasing the competi-tiveness of Vietnamese market, as well as building up

a strong pharmaceutical industry in Vietnam, either local business or foreign business or State should be moving in the right direction

Local pharmaceutical companies in particular, should invest inbiologics instead of generic drugs,

as this will generate more opportunity for meeting domestic demand and for exporting to foreign mar-kets Moreover, to seize the opportunities that will arise from the TPP agreement, the domestic pharmaceutical enterprises need to upgrade their manufacturing plants

to reach international standards, such as PIC/S-GMP and EU-GMP [42] When the domestic pharmaceutical production lines serve the general criteria for manufac-turing drugs, they will have enough capability to cope with the stiff competition Hanoi CPC1 provides proof

of this: ‘Pharmaceutical producing companies have prepared for this game for many years by investing in modern production machines and technologies of the world Hanoi CPC1 invested US$3 million to build production lines, powered by BFS (Blow-Fill-Seal) technology, to manufacture distilled water, injection and paraffin in plastic pipes This move has enabled

us to manufacturing outstanding products, secured the market leadership in this segment and created a new trend of replacing glass pipes with plastic pipes We not only meet the domestic market but also export to other markets’ [31] As did Hanoi CPC1, many Vietnamese companies with strong foundations like Mediplantex, Traphaco, Imexpharm and DHG Pharmaceutical JSC are also seizing opportunities arising from the TPP, such as the DHG has completed the construction of a new pharmaceutical manufacturing plant, while Imex-pharm has built a new penicillin manufacturing plant

in southern Vietnam [41]

In parallel with this, the TPP agreement is also expected to guide domestic pharmaceutical compa-nies and assist them in exploiting their strengths in order to benefit research, investment and production,

in addition to providing protection, although it is not

a simple path The improvement of IP rights protec-tion shall attract investments into the field of biologics,

especially for vaccines [43] When the linkage of foreign investment is established and completed, the National Expanded Program on Immunization (EPI) and epi-demic prevention would mark a new milestone in the country’s vaccine production industry [44,45], in which vaccines will be produced locally instead of imported – making them national products, as opposed to for-eign ones As Vietnam represents a key manufacturer

of vaccines (specifically 12 type of vaccines, of which ten are used in the National EPI [46]), the potential in researching and producing vaccines, as well as sharing advances in technology in vaccine production serving domestic demands and export, is possible

With respect to the foreign drug companies, under the TPP agreement they are able to challenge the laws

in Member countries (and Vietnam in particular) that might cut into the companies’ profits [47] Specifically, that provision allows foreign investors to sue State par-ties for violating broad investor protections contained

in the agreement [48] These provisions were leaked in a chapter of the TPP about ‘investor-state dispute settle-ment’ [49] Until now, the ISDS was regulated in over

60 agreements between Vietnam and other countries,

or areas, including both the Bilateral Investment Treaty (BIT) and FTA However, in comparison with the pro-visions for ISDS, requirements under TPP are broader and more flexible For example, in the BIT agreements, the people who have the right to initiate lawsuits only include investors who have investment projects in Viet-nam, the defendant is a competent authority, the appli-cable law is the Vietnamese legal system and related BIT provisions For TPP, the procedures used in a lawsuit are made easier to follow, consultations are not required

as the first and mandatory step in the ISDS settlement process, nor does it require written approval from the competent authority that was the defendant, broaden-ing the scope of subject matter that allowed foreign investors to sue States Besides, the TPP also clearly provides the particular profits that could be obtained

by investors Hence, foreign investors shall snatch any opportunities that come from such provisions in order

to protect their interests in Vietnam

Of course, apart from the efforts of pharmaceutical companies, the State’s policies are always an impor-tant point to build up strengths in Vietnam’s pharma-ceutical industry Those policies include both capital and technology supports together with the long-term growth orientation for companies

The expectation of further integration

& compatible amend in the Vietnamese

IP law

It has taken more than 5 years for the TPP Member States to reach a unified agreement Although it has

been predicted that Vietnam would benefit most out

of the TPP, there still exist many challenges for

Viet-nam’s pharmaceutical industry too At present, the

biggest challenge is how to implement the TPP

Agree-ment post ratification effectively, as well as how to

bring the IP system into line with both TRIPS and

TPP, or including other international conventions

To overcome this challenge, Vietnamese IP Laws and

relative regulations, not only have to amend

imper-fections, shortcomings and even illegal terms to the

international agreements, but also supplement with

more cobeneficial provisions There are three purposes

of amendment: ensure the implementation of TPP’s

provisions for drugs protection in Vietnam; integrate

and harmonize with the stringent rules of TPP,

espe-cially for drug exclusivity; and endeavor to improve

and boost the provisions on IP enforcement If the said

adjustment is conducted, it will make a positive impact

on both Vietnamese IP legislation and pharmaceutical

market Thus, it also reduces the risks of infringement

for investors Potential challenges aside, opportunities

for Vietnam are significant Its products will enjoy

fair treatment on the international market, which will

help Vietnam to boost exports, expand pharmaceutical

industry and attract investment and technology from

the TPP Member States

Furthermore, the National Strategy for the

Phar-maceutical Industry Development to 2020 and Vision

to 2030 [50], which was approved by the government,

outlines plans for developing and supporting

pharma-ceutical companies This demonstrates a confidence of

Vietnam’s pharmaceutical industry and indicates that

they are ready for the upcoming race

Conclusion

Although Vietnam’s pharmaceutical industry is a

young market with high potential for growth, it is

still remains challenging for both local and foreign

investors Over and above, when the TPP agreement

is ratified, the provisions on IP rights protection,

pharmaceutical exclusivity in particular, will

gener-ate short-term negative impacts (kindly note that the

aforementioned impacts on biologics will be delayed

because of 5-year term extensions for data exclusivity

and patent for Vietnam in Article 18.83(f) of the TPP

agreement) However, parallel to challenges, we believe

that many opportunities will arise when TPP comes

into effect With regards to Vietnamese people, the

TPP agreement facilitates access to biologic drugs and

even the cheaper generic drugs than before

Vietnam-ese IP Laws and drug companies should implement

the TPP’s provisions well, not only building up the

Vietnam pharmaceutical industry but also setting up a

huge potential market for foreign investors Therefore,

Vietnam needs to endeavor in improving the rules and regulations to achieve pharmaceutical regulatory har-monization and offer a faster and more stable growing market in the future

Future perspective

Ratification of the TPP will attract a large number of foreign drug companies in the coming years in Viet-nam Of course, it will bring investment in Vietnam’s pharmaceutical industries According to the BMI Research, it is forecasted that the pharmaceutical sales

in 2019 will be at US$6.715 billion and the health spending will be US$16.925 billion [34], which will lead to infrastructure and engineering development in the pharmaceutical industry Simultaneously, many of the advanced technologies will be applied in research-ing and manufacturresearch-ing drugs, with the modern production lines

However, with respect to the pharmaceutical com-panies, which are producing generic drugs primarily, the availability of biologics will be reduced Thus, the consequence is an increase of drug costs and difficulty for patients accessing drugs, especially in developing countries, such as Vietnam and Malaysia

Together with the growth of economy and phar-maceutical industry, the IP legal systems will also be changed appropriately in order to ensure the imple-mentation of the TPP provisions, especially for the term of exclusivity extensions It is necessary if Viet-nam wants to attract more investments and strengthen its pharmaceutical industry Therefore, it can be easily seen that in 2- to 3-year periods, the IP laws in Viet-nam will have significant adjustments in general IP and patent in particular

Acknowledgements The authors are extremely thankful to Takeshi S Komatani, Patent Attorney at SHUSAKU·YAMAMOTO, for his encour-agement and recommendation to write this article They also acknowledge their sincerest thanks to Nguyen Thanh An, the Senior Consultant at Mission International Patent & Trademark Office for his precious help in reviewing and completion of this article.

Financial & competing interests’ disclosure The authors have no relevant affiliations or financial in-volvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript This includes employ-ment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.

Paper of special note has been highlighted as:

• of interest; •• of considerable interest

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2 Giới thiệu chung về Hiệp định TPP (a general introduction

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This results in drastic changes in patent adjustment term.

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Paper, 2 (2009).

drive up cost and even reduce the pace of innovation As

a result, these impacts will lead to a difficult situation for the pharmaceutical market, and then significantly affect people’s lives.

11 Kenneth Arrow Economic Welfare and the Allocation

of Resources for Invention C.o.E.G.o.t.S.S.R.C (Ed)

Universities-National Bureau Commitee for Economic Research Vol The Rate and Direction of Inventive Activity: Economic and Social Factors Princeton University Press, 619 (1962).

supplementing a number of articles of the Law on Intellectual

Property.

13 Article 58 Section 1 Chapter VII Part III Law No

50/2005/QH11 dated 29 November 2005, on intellectual

property.

Executive summary

• Trans-Pacific Partnership (TPP) agreement: Vietnam is one of 12 members of the TPP agreement the current world’s largest free trade area.

• Pharmaceutical patent in the TPP includes provisions on pharmaceuticals and adjustment on drug exclusivity, especially for biologics.

• TPP: pros and cons to the rights of the pharmaceutical patent – enhances enforcement, facilitates brand-name drug companies, drives up cost of drugs and may reduce the pace of innovation.

• The status of the pharmaceutical patent sector in Vietnam before the TPP: the pharmaceutical patent is

governed in Vietnam’s Intellectual Property Law 2005, mutatis mutandis in 2009, and harmonized with the

Trade-Related Intellectual Property Rights; the pharmaceutical trade is governed by the Drug Administration

of Vietnam.

• Potential outcomes and challenges of TPP for Vietnam’s pharmaceutical patent sector: protects brand-name drugs, reduces infringement; however, restricts access to biologics.

• Effects to Vietnamese pharmaceutical industry and generic market: makes generic medicines more difficult

to access in developing countries because of exclusive protection, which in turn drives up costs; increases competition between local and foreign drug companies because of the cutting down of tariff barrier.

• Competition between pharmaceutical companies: the issues come from absence of advanced technology

in order to produce biologics, favor of Vietnamese people, overloading of imported drugs and ‘wide door’ policies of government to investors; besides, from counterfeiting, lack of drug price control and inadequate intellectual property.

• Key objectives to ensure a strong pharmaceutical Industry in Vietnam: investment in biologics instead of generic drugs; upgrade of manufacturing plants; focus on pharmaceutical sector’s key strengths for example vaccines; implementation of investment policies for foreign investors.

• The expectation of further integration and compatible amendments in the Vietnamese intellectual property law: amend shortcomings and even illegal terms to other treaty; supplement with more cobeneficial provisions; implement the national strategy for the pharmaceutical industry development to 2020 and Vision

to 2030.

14 Clause 1 Article 58 Section 1 Chapter VII Part III Law No

50/2005/QH11 dated 29 November 2005, on intellectual

property.

15 Clause 10 Article 3.I.1.23 Section 23 Circular

No 01/2007/TT-BKHCN dated 14 February

2007, was amended and supplemented by Circular

No 13/2010/TT-BKHCN dated 30 July 2010.

16 Clause 1 Article 123 Section 1 Chapter IX Part III

Law No 50/2005/QH11 dated 29 November 2005, on

intellectual property.

17 Clause 1 Article 133 Section 1 Chapter IX Part III

Law No 50/2005/QH11 dated 29 November 2005, on

intellectual property.

18 Tilleke & Gibbins Vietnam pharma update 4–5 (2014)

http://tilleke.com

19 Article 6, Article 7 Chapter II Circular No

03/2012/TT-BYT dated 2 February 2012, provides guidance on clinical

trials.

•• This Article of Circular provides the necessary elements

by which the application dossier for generic drug needs

notice while accessing Vietnam’s pharmaceutical market.

20 Clause 2 Article 14 Chapter II Circular No

44/2014/TT-BYT dated 25 November 2014, on registration of drugs.

21 Clause 2(g)(h) Article 4 Chapter I Circular

No 22/2009/TT-BYT dated 24 November 2009, on

registration of drugs.

22 Clause 2 Article 93 Section 1 Chapter VIII Part III

Law No 50/2005/QH11 dated 29 November 2005, on

intellectual property.

23 Vietnam Intellectual Property Factsheet A.I.S Helpdesk

(2013).

understand that the currently enforced measures against

intellectual property infringements in Vietnam have

shortcomings and are ineffective.

24 N.T.H.A Dang The Duc Vietnam: enforcing patent

rights IAM (IP Value 2014), 162 (2014)

www.iam-magazine.com

25 NOIP Vietnam Intellectual Property Activities Annual

Report 2014 S.a.T.P House (2014).

26 Le Nguyen TPP – Cơ h ội và thách thức: Nhiều thách

thức với ngành duợc (TPP: pros & cons: many cons to

pharmaceutical industry) Tien Phong Online Newspaper

(2015) (Vietnamese)

www.tienphong.vn

the pharmaceutical industry in Vietnam through actual

statistical assessment.

27 The Bubble Online Magazine TPP: Pros & cons (2015)

www.thebubble.org.uk

28 Elizabeth Richardson Health Policy 101: How the

Trans-Pacific Partnership will impact prescription drugs The

Bookings Institution (2015)

www.brookings.edu

29 Section 351 of the Public Health Service Act 42 US Code

262 Regulation of Biological Products.

30 Section 7002 (m)(2) Subtitle A Title VII 42 US Code

262, Biologics Price Competition and Innovation Act of

2009 H.R 3590–3701.

31 Thu Ha, Giang Tu Opportunities for Pharmaceutical

Industry Vietnam Chamber of Commerce and Industry,

Vietnam Business Forum (2015)

www.vccinews.com

32 Annex 2-D Vietnam Tariff Elimination Schedule The

Trans-Pacific Partnership agreement.

33 TPP – Pros & Cons to Vietnam Pharmaceutical Industry

V.V.M.R Consultants (2014).

•• Proves that the reduction of the tariff barrier is one

of the most important provisions related to duties

on pharmaceuticals that will increase competitive advantage.

34 Summary Vietnam Pharmaceuticals & Healthcare Report

B Research (2015).

35 Global Data: Vietnam’s Pharmaceutical Market Value to Hit

$8 billion by 2020 (2014).

36 Ngành duợc và thiết bị Y tế: Cơ hội M&A và áp lực cạnh tranh (Pharmaceutical Industry and Medical Aids: M&A

Opportunities and Competitive Pressure) R.V Research (2015).

37 Le Kim Lien Ngành Du ợc Việt Nam đón đầu các cơ hội

từ Hiệp định TPP (Vietnam’s Pharmaceutical Industry

catches up the opportunities derived from the TPP Agreement) Cong Thuong E-Newspaper (2015)

www.baocongthuong.com.vn

38 Section 1 Chapter IV Law No 67/2014/QH 13 dated 26

November 2014, on investment.

39 Liyan Chen 2015 Global 2000: The World’s Largest Drug

and Biotech Companies Forbes (2015).

40 Article 18.53 Subsection C Section F Chapter 18 The

Trans-Pacific Partnership agreement.

41 TPP poses problems for local pharma companies

Vietnamnet Online Newspaper (2015)

www.vietnamnet.vn

42 Vietnam Business Review Seiko Ideas Corporation, (41), 7

(2015).

issues which the pharmaceutical industry concerning post TPP) Bac Giang Online Newspaper (2015) (Vietnamese)

www.baobacgiang.com.vn

News (2015)

www.vietnambreakingnews.com

45 Draft Regional Framework for Implementation of the Global Vaccine Action Plan in the Western Pacific World Health Organization Western Pacific Region Section 2.7.2 Annex

1 (WPR/RC65/8), 39 (2014).

46 Nguyen Van Trang Experience With Rotavin-M1: Review

of the Vaccine Development, Pre and Post Marketing Evaluation and Future Plan A.V.C.A 9 (2015).

(2015)

http://medium.com

48 Lise Johnson, Lisa Sachs TPP would let foreign investors

bypass the Canadian public interest The Globe and Mail

(2015)

www.theglobeandmail.com

49 Section B Chapter IX The Trans-Pacific Partnership

agreement.

Prime Minister approving the national strategy on Vietnam

pharmaceutical industry’s development to 2020 and with the vision to 2030.

the Vietnam pharmaceutical industry, and even had a positive influence on Vietnam’s intellectual property legal system.