The flare-up of COVID-19 pandemic on a global scale has entailed the upsurge of demand for medical equipment. This increasing demand has elevated the price of this kind of merchandise. Availing themselves from the pandemic, many businesses have unreasonably boosted the price charged on the COVID-19 prevention equipment.
To take a proactive role in stabilizing the price and strengthen regulatory control over medical devices, on 8th December 2021, the Government issued Decree No. 98/2021/ND-CP on administering medical devices (“Decree 98”), replacing Decree 36/2016/ND-CP on the same matter (“Decree 36”), which has come into effect from 1 January 2022. In Decree 98, several regulatory changes are recorded, as follows:
(i) Imposing strict administration of the price of medical devices. Medical devices are, now, added to the list of products subject to price declaration under the laws. Under the new degree, tax authorities and specialized management authorities can challenge the price by asking companies to elaborate the components of price of medical devices.
(ii) Amending the current framework on licensing of Certificate of Selling medical devices, allowing companies to self-declare the standard applicable to medical devices, streamline the procedures for licensing of Certificate of Selling medical devices, which has been granted with Certificate of Free Sale number at countries such as US, Japan, Canada, etc.
The following is detailed updates.
Price declaration means the act of sending price notice of goods or services to competent State agencies by organizations and individuals as determining prices, adjusting prices for a group of goods or services required by the laws.
For the merchandise under administration of Ministry of Health, before the introduction of Decree 98, companies were subject to price declaration for products such as medicine, medical examination and treatment services, dietary supplements for children under six years old, other similar products, etc. Medical devices did not fall into this category. With the advent of Decree 98, medical devices such as surgical gloves, medical masks are subject to price declaration and all changes to price of such goods need to be updated accordingly.
The laws forbid the act of selling medical devices whose price was not declared, and selling medical devices at a price higher than the price declared on National Portal of Ministry of Health. In case there are multiple distributors of the same product, the holder of the medical device registration number must appoint a distributor to declare the price. Other distributors are not required to declare the price but shall not sell such product higher than the price declared by the designated distributor.
In a price declaration, the following details must be included:
Additional information such as the price of components, accessories, warranty costs, maintenance, training costs, and other costs could be required.
Besides, Decree 98 records the rights of governmental authorities (not only the Ministry of Health) to request companies to explain the components of price if such authorities deem necessary.
Decree 98 no longer requires enterprises to obtain the Certificate of Sale for class B medical devices, instead, enterprises will announce applicable standards as for medical equipment class A by compiling the documents as prescribed by law and submitting to the Department of Health where the business is located.
In addition, the new regulation shortens the timeline for issuance of Certificate of Sale from 60 days to 30 days for standard applications and 10 days for medical equipment that has been granted a certificate of free sale by countries and prestigious international organizations such as EU, the UK, Switzerland, US Food and Drug Administration (FDA), Health Canada, etc.
Under Decree 98, the activity of classifying medical devices is no longer conditional, which means companies, now, do not need to apply for the Certificate of classification to perform the classification of medical device, instead the classification will be done by the enterprise named on the announcement of applicable standards or Certificate of Sale. This can be interpreted as enterprises shall classify the device by themselves based on the criteria specified in Decree 98 and are responsible for their own classification.
Extension of the validity of Certificate of Sale registration number of medical equipment from 05 years to indefinite. This leads to the revocation of the procedure for extension of the Certificate of sale registration number as prescribed in Decree 36.
Streamlining declaration procedures related to manufacturing, selling, and consulting related to medical equipment.
Decree 98 simplifies matters related to administrative procedures, but still maintains and improves the management of state agencies and relevant ministries over manufacturing and trading medical equipment, especially the issue of price monitoring of these items at this moment. With the promulgation of this regulation, enterprise manufacturing and distributing medical equipment need to ensure price transparency when entering into contracts for trading medical equipment.
The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.