Regulatory trends in drug pricing and market access in Brazil: strategies for compliance and advocacy

Marco Aurélio Torronteguy

Kestener Vieira Torronteguy Spegiorin Advogados, São Paulo

marco.torronteguy@kvlaw.com.br

Flávio A Spegiorin Ramos

Kestener Vieira Torronteguy Spegiorin Advogados, São Paulo

flavio.spegiorin@kvlaw.com.br

Introduction

The objective of this article is to discuss two potential strategies for enhancing compliance and advocacy in the context of drug pricing in Brazil, based on an overview of the regulation, aiming to contribute to the market access debate, considering some current relevant topics on the subject. The issues discussed in this article are important points of consideration for foreign pharmaceutical companies doing business in Brazil.

An overview of drug pricing regulation in Brazil

Pharmaceutical companies in Brazil are required to make a request for several permissions from the authorities before releasing medicine onto the market in the country. The regulatory framework in Brazil encompasses th following aspects, among others:

• the company and its establishments must be licensed by the National Health Surveillance Agency (Agência Nacional de Vigilância Sanitária or ANVISA) and the relevant local health authorities;
• the adoption of good manufacturing practices (GMPs), which is proven by the award of the corresponding certificate (GMPc); and
• the obtaining of product marketing authorisations (MAs) by the company from ANVISA, demonstrating the product’s safety and efficiency.

In addition to the requirements related to sanitary surveillance, the marketing authorisation holder (MAH) must submit a dossier detailing the relevant price information, in order to be compliant with the legislation applicable to drug pricing.

As per Law No. 10,742/2003, the Chamber for Drug Market Regulation (CMED) is the federal regulatory authority responsible for evaluating MAH dossiers and approving the maximum prices applicable to each medicine or new presentation. The CMED regulations include the following definitions:

‘I - Factory Price (PF): The maximum price at which a laboratory or distributor can market a drug in the Brazilian market, including all commercialisation costs and respecting the applicable taxes and their different rates.

II - Maximum Consumer Price (PMC): The maximum price to be practiced by retail outlets, including all commercialisation costs and respecting the applicable taxes and their different rates.

III - Price Adjustment Coefficient (CAP): A compulsory discount, with a variable index, applicable to offers or sales of medicines to the Public Administration, either because the medicine is listed in a specific CMED communication or because the commercialisation is intended to comply with a court decision.

IV - Maximum Government Sales Price (PMVG): The maximum price at which a drug can be offered or sold to the Public Administration, obtained by applying the CAP index to the PF […].’[1]

Based on this regulatory overview, we will explore two potential strategies for enhancing compliance and advocacy related to drug pricing regulation in Brazil: administrative requests for extraordinary price reviews before the CMED and a solution related to the debate around regulatory improvements in the country.

Administrative requests for extraordinary price reviews

Some medications have outdated price ceilings, which were set during different economic conditions. For example, exchange rate variations or changes in suppliers of raw materials can impact the cost of certain medications. Sometimes, there are historical reasons for setting price maximums that are not well-understood by companies today. Theoretically, in extreme situations, a medication’s continued presence on the Brazilian market could be impacted or threatened due to the rigidity of the top price limit.

This is because the price adjustment process for medications is on an annual basis and is not applied to each medication separately. The CMED has a strict procedure that uses an economic formula applicable to groups of medications, which means that annual adjustment percentages are applied to categories of products. Thus, the annual adjustment formulas used may not be sufficient to ensure that  the commercialisation of a medication remains viable in the country.

In circumstances like these, companies are faced with a situation where there is still no specific administrative procedure for extraordinary price adjustments. One path for companies faced with this situation to take is to try to request an adjustment through the exercise of the simple right to petition. A classic constitutional right. That is to say, the absence of a procedure cannot imply the violation of an economic right. However, this path is arduous.

During the Covid-19 pandemic, due to the shortage of some medications, the CMED authorised some extraordinary adjustments for specific medicines. Post-pandemic, many administrative requests of this nature have been denied by the CMED or, more recently, have been suspended, in anticipation of new price regulations.

In extreme situations, some companies are resorting to the judiciary to try to obtain provisional prices or even to compel the CMED to adjust the price of a particular medication or a specific form of presentation of a medication. In some cases, the judiciary does not have a strong position on the matter, which contradicts the idea of replacing the CMED in the decision-making process. In some specific situations, depending on the actual case, companies have a chance of success, but the outcome of the judicial discussion is uncertain. There may be long judicial battles in this context. Meanwhile, another movement is happening in Brazil: a discussion around a review of the current regulations.

A review of the current regulations

For the last couple of years, a new regulation by the CMED has been expected. Many aspects of the current regulations could theoretically be improved (and are being discussed by the relevant companies), for example:

• the creation of a specific and clear administrative procedure for individual requests for extraordinary price adjustments (as discussed above);
• the permission to fairly value and price incremental innovations in medications, even if they have the same active pharmaceutical ingredients (APIs) as medications that have already been approved for sale in the market; and
• the exclusion of freight costs from the price ceiling, allowing ‘FOB’ sales according to the existing upper price limit.

The CMED has not yet indicated what the regulatory improvements will be, ie, it has not yet published any draft normative changes for public consultation. This is still a scenario where potential advocacy and government relations efforts are worthwhile, both by companies and industry associations, in the pharmaceutical sector in Brazil.

Certainly, the future of healthcare access in the country involves improving price regulation. In this sense, the two aspects discussed in this article are an important part of this discussion: whether through extraordinary price adjustment requests or through the modernisation of the existing regulations, the regulated sector can contribute to the evolution of this important chapter of health law in the country, with potential impacts on regulations in other jurisdictions.

Note