Report From: Brazil

Designated as a "pharmerging market," Brazil is revamping its pricing models.
Sep 02, 2009
Volume 33, Issue 9

Brazil is the eighth largest pharmaceutical market in the world with 2008 sales estimated at $19.5 billion and the number of units sold in 2008 estimated at 1.8 billion (1). By 2011, Brazil and the other "pharmerging" markets (Russia, India, China, Mexico, South Korea, and Turkey) are expected to contribute approximately 27% of the overall global pharmaceutical growth and 16% of the global market (2). Keen to take advantage of this growth, the Brazilian government has been proactive on the regulatory and entrepreneurship fronts.

Remodeling pricing

One issue at center-stage in the Brazilian pharmaceutical market is its pricing models. The government is known to purchase medical products through public biddings to get the lowest possible prices.

Now, pharmaceutical companies that participate in the bidding process will have to be qualified by Anvisa, Brazil's National Health Surveillance Agency, in a measure to ensure quality and to compensate for the large tax-load that Brazilian pharmaceutical companies have to pay in comparison with other regional markets. (The measure is expected to be passed by the end of 2009.)

In Brazil, for example, companies include taxes (about 35%) in the final price of their products, which are ultimately paid for by the consumer, according to Febrafarma, the country's pharmaceutical industry association. As a result, the consumer does not know how much of what they are paying is tax-based and how much is for the actual product. To compare, the pharmaceutical tax rate is zero in Venezuela and Mexico and approximately 21% in Argentina.

"Such a change will bring benefits to patients, who will have access to medicines of better quality, since low prices won't be the most important criteria for government's acquisitions," says Mario Caetano, director of pharmaceutical consulting at Visanco (Brasilia), a third-party pharmaceutical quality service provider. "Additionally, public companies will benefit from the change in official purchase procedures, aimed at ensuring broader guarantees for prequalified companies, working under strict quality controls."

Another pharmaceutical-product pricing issue is pending in the country's Supreme Court. The court is deciding whether guidelines should be set to allow public financing of high-cost medicines. The country's constitution states that, "Health is a right of all and a duty of the State and shall be guaranteed by means of social and economic policies aimed at reducing the risk of illness and other hazards and at the universal and equal access to actions and services for its promotion, protection and recovery" (4). Many citizens have been using this clause to sue the Ministry of Health to be granted access to medications they cannot get in public hospitals. Currently, both over-the-counter and prescription drugs are provided free of charge in public hospitals, but the type and amount of items available is more limited than what may be available in a private drugstore, where consumers must pay for the products. The government, however, claims that patients can get medications of equivalent efficacy (i.e., lower-priced generic drugs) from their doctors.

lorem ipsum