Drug price regulation in Brazil: Roche faces IP rights abuse claims
The increasing price of medicines is a controversial and challenging issue worldwide. Countries adopt mechanisms to regulate such prices, generating an assumption that sales within regulated limits are legitimate.
However, on June 7 the Brazilian Federal Prosecutor’s Office (MPF) filed a class action against Roche’s Brazilian subsidiary arguing that its sales of Herceptin (trastuzumab) to state governments involves an alleged abuse of IP rights, even though they are compliant with the price regulatory framework. The abuse, according to the MPF, results from higher prices charged to states in named patient sales in order to comply with court orders, compared to sales to the Ministry of Health (MoH).
This case is of unparalleled relevance for the Brazilian pharmaceutical sector as it challenges a common belief that complying with the requirements of price regulation suffices.
Brazilian pricing system
Pharmaceutical companies in Brazil are not free to set their prices; they must comply with certain criteria defined by the Pharmaceutical Market Regulation Chamber (CMED). This applies for both the public health system (SUS) and private market. In general, once marketing authorisation is granted by the Brazilian National Health Surveillance Agency, a company must file a price request to the CMED.
CMED is a multidisciplinary chamber formed of members from ministries and the Civil Cabinet following Law 10,742 back in 2003. Its role is to promote access to drugs for the population, using mechanisms to stimulate the increase of supply and the competitiveness of the pharmaceutical sector (article 5). Law 10,742 also sets forth several objectives of CMED (article 6), including to establish the guidelines and procedures for the economic regulation of the pharmaceutical market (item I), and to monitor the pharmaceutical market to ensure the compliance with the price regulations (item XII).
At the regulatory level, the Brazilian pricing system is composed of resolutions issued by CMED. According to these rules, the price submission, filed after a marketing approval is granted, must be substantiated with documents and information to enable CMED’s appraisal. CMED’s executive secretariat will review the price request and issue a decision, setting a price limit for the product. If the company does not agree, it can file an appeal to the technical-executive committee.
Once the decision is final, the drug will have three different price limits:
