Healthcare Procurement Fraud Investigation: Ministry of Public Security Indicts Viet My Medical Group Over Offshore Transfer Pricing and Illicit Price Inflation of Medical Devices and Oncology Drugs

Key Development

The Ministry of Public Security of Vietnam has officially initiated criminal proceedings regarding “Smuggling” and “Violating accounting regulations causing severe consequences” involving Viet My Medical Investment JSC and its affiliated corporate network. Key corporate executives have been placed under temporary detention to investigate systematic transfer pricing, tax evasion, and artificial price inflation of specialized medical systems and imported pharmaceuticals supplied to public hospital networks.

Corporate Architecture & Modus Operandi:

• Domestic Operating Entities: Managed and directed by Bui Chan Phuong, the domestic procurement cluster comprises three principal entities: Viet My Medical Investment JSC (established August 2007 in Hanoi), Sao Kim Medical Investment Co., Ltd., and Hoang Mai Pharmaceutical JSC.

• Offshore Shell Network: The syndicate established five shell entities in Singapore and three in Hong Kong to execute circular transactions, progressively marking up invoice values for medical equipment and oncology medicines prior to customs clearance in Vietnam.

• Customs Fraud & Smuggling Mechanisms: Exploiting import licenses issued by the Ministry of Health for primary imaging and radiation systems, the group filed fraudulent declarations categorizing separate medical hardware as “ancillary accessories,” smuggling uncertified devices through border ports.

Why It Matters

• Severe Financial Burden on Cancer Patients & Public Insurance: Inflating the acquisition cost of oncology pharmaceuticals and specialized diagnostic hardware depleted national health insurance reserves while increasing out-of-pocket medical expenses for vulnerable oncology cohorts.

• Recorded Price Discrepancies Exceeding 50%: Public procurement audit records reveal pricing distortions:

  • Drug H. (Indian-origin Breast Cancer Therapy): Awarded in HCMC public hospital tenders in 2025 at 26,271,000 VND/unit ($440\text{mg}$) and 9,600,000 VND/unit ($150\text{mg}$). In June 2026, subsequent to regulatory audits, winning bid prices at another municipal hospital dropped by nearly half to 13,627,000 VND/unit ($440\text{mg}$) and 4,757,000 VND/unit ($150\text{mg}$).

  • Oncology Procurement Value Contraction: In 2025, Hoang Mai Pharma won tenders for 11 oncology drugs valued at ~1.1 trillion VND; in H1 2026, winning bid totals across the same 11 molecules contracted sharply to 216 billion VND.

• Monopolizing High-Value Nuclear Medicine & Radiation Tenders: From 2018 to 2026, Viet My Medical dominated high-tier procurement dockets supplying, installing, and servicing advanced oncology equipment (linear accelerators, PET/CT scanners, and Cyclotron facilities) across national and provincial tertiary hospitals in Hanoi and HCMC.

Healthcare Insight Analysis

From the perspective of Healthcare Insight, the Viet My Medical case illustrates Offshore Transfer Pricing in MedTech & Pharma Procurement.

The syndicate’s structure was designed to circumvent statutory procurement price-control frameworks:

1. Artificial Import Base Price Inflation (CIF Manipulation): Vietnam’s healthcare tender mechanisms reference declared customs import values. By routing procurement through eight intermediaries in Singapore and Hong Kong, Viet My established elevated declared CIF values upon arrival, masking excessive markups as legitimate foreign acquisition costs.

2. Monopolizing Post-Warranty Service Contracts: For complex capital equipment (PET/CT, Cyclotrons), the group extracted multi-year margins through sole-source service, maintenance, and proprietary replacement part contracts running into tens of billions of VND annually.

3. Exploiting Accessory Declaration Loopholes: Falsely declaring standalone medical hardware as “ancillary components” exploited specialized engineering verification constraints among port customs inspection personnel.

Market Implications

1. National Tender Pricing Audits Across Oncology & Capital Devices: The Ministry of Health and Vietnam Social Security will expand retrospective pricing audits covering high-value radiation, nuclear medicine systems, and oncology formularies procured between 2020 and 2025.

2. Tightening Customs Border Inspection for MedTech Consignments: The General Department of Customs will deploy rigorous physical inspections for multi-component medical hardware imports.

3. Restructuring Public Hospital Tender Compliance: Public hospitals will enforce stricter international reference pricing and centralized procurement benchmarks to mitigate intermediary transfer pricing risks.

Investigation Ledger: Viet My Medical Procurement Syndicate

Source: https://tuoitre.vn/vu-cong-ty-viet-my-va-mang-luoi-cong-ty-con-nang-gia-thuoc-va-thiet-bi-y-te-100260815151524353.htm