POSITION PAPER

Committee: ECOSOC

Country: Vietnam

Delegate: Tomolici Cezara Andreea

Counterfeit and fraudulent medicine trafficking

Fraudulent medicines pose a considerable public health threat as they

can fail to cure, may harm and even kill patients. These threats to public
health have led the international community to call for a stronger and
more coordinated response. Compounding this public health risk is the
fact that the supply chain for medicines operates at a global level, and
therefore, a concerted effort at the international level is required to
effectively detect and combat the introduction of fraudulent medicines
along this supply chain.

Vietnam has faced several changes in the last decades which have the
consequences nowadays. In 1986, the Communist Party congress
adopted a new economic policy doi moi (economic renovation) which
brought about changes from a command economy to a free market
economy but with many sectors still managed by the Government. In the
last ten years many private companies have sprung up. In the
pharmaceutical sector these changes have caused a considerable
increase in the number of private pharmaceutical companies. Also,
pharmaceutical imports into Vietnam have increased very substantially
since the introduction of doi moi.

As a result, counterfeit and fraudulent medicine trafficking increased

considerably because of the free market economy and the insufficient
safety rules.

A survey conducted by the National Institute of Drug Quality Control of

Vietnam over a period of two years reported that out of 25,000 samples
collected from 20 provinces, 1771 (7%) failed on testing. The types of
counterfeiting were reported to include the following: wrong ingredients,
without active ingredients, containing incorrect quantities of active
ingredients, and with fake packaging.
The institutes and the laboratories are engaged in post-marketing
surveillance activities. In 1995, 31,125 samples collected from different
parts of the country were tested and 1703 samples failed to meet quality
standards. Of these, 1537 were substandard, while the remaining 166
were counterfeit. Reports show that the rate of failure of drugs has
decreased very much after the introduction of an intensive post-
marketing quality surveillance system using the simple testing kits
developed by the National Institute of Drug Quality Control.

In Vietnam, more emphasis was given to quality control services than to

inspection services. Because the powers and responsibilities of the
inspection services at the different administrative levels are not clearly
defined, enforcement was very weak.

Thus, the fight with counterfeit drugs continues for Vietnam, the state
being prepared to cooperate with other organisations and states in order
to manage this international problem.

Corporate and economic espionage

At a trade fair, the head of a company discovers a machine developed by

his own employees - but at the stand of a competitor, where the new
item is proudly displayed. Looking through his company's inventory, he
sees four new printers, even though he in fact ordered five. And to top
things off, he's having problems with the state prosecutors, who say his
firm is implicated in a bribery charge. His company, in short, has fallen
victim to industrial espionage - three times over.

A large number of companies from Vietnam faced the situation of being

spied by other rival companies. This starts when it appears an innovative
product on the market and the desire of the other companies of getting
knowledge of the secret becomes immeasurably.

Unfortunately, this is not the main problem of the state. Vietnam is the
fifth state in the world on the number of products, which is practicing
industrial intelligence. Because of the low salaries and the cheap raw
material, a large number of companies choose Vietnam as a place for
their production, fabricating fake products.
The Vietnamese state is taking measures trying to combat the rise in
copyright and patent violations and also it is trying to protect the
innovations with the origin of Vietnamese companies.

Strengthening UN role in international tax cooperation

Double taxing is a very important problem for the Vietnamese companies

because of the low-income of the country. A company which did
business in other states would have to pay taxes for each state, fact that
would unbalance the financial sector of the firm.

Experience shows that there is often ample room for more effective and
efficient use of investment tax incentives in low-income countries. Tax
incentives generally rank low in investment climate surveys in low-
income countries, and there are many examples in which they are
reported to be redundantthat is, investment would have been
undertaken even without them. And their fiscal cost can be high,
reducing opportunities for much-needed public spending on
infrastructure, public services or social support, or requiring higher taxes
on other activities.

Effective and efficient use of tax incentives requires that they be carefully
designed. Many low-income countries use costly tax holidays and
income tax exemptions to attract investment, while investment tax credits
and accelerated depreciation yield more investment per dollar spent. Tax
incentives targeted at sectors producing for domestic markets or
extractive industries generally have little impact, while those geared
toward export-oriented sectors and mobile capital appear to be relatively
effectivebut the former need to be tempered by considerations of WTO
consistency and both can be instances of mutually damaging tax
competition. Enabling conditionsgood infrastructure, macroeconomic
stability, rule of law, etc.are important for effectiveness.