Brazil, Mexico Taking Divergent Paths On Regulatory Reform

Anvisa is in the process of trying to reduce some of its red tape, but the excessive bureaucracy at COFEPRIS is likely to remain in place for the foreseeable future.

Latin American drug regulators continue to be known for their excessive red tape, but experts see the future of over-regulation in the region's two biggest markets, Brazil and Mexico, taking divergent paths, as Brazilian regulators are working to curb bureaucracy for pharmaceutical companies.

Brazil's National Sanitary Surveillance Agency (Anvisa), for example, has been holding meetings with the regulated pharmaceutical sector about reducing red tape at the agency, Marcos Levy, a senior partner at the Brazil-based law firm A. Lopes Muniz Advogados Associados, tells the Pink Sheet. Levy says that while the deregulation process will be a slow one, he believes the environment will be "a lot more friendly" in about five years.

"I do believe Anvisa is going to improve in the next couple of years, and it is going to be much easier to work with Anvisa," Levy says. One example of over-regulation at Anvisa is that drugmakers with facilities in Brazil generally cannot outsource warehousing unless they have their own warehouse.

"It has been two and a half to three years that Anvisa has been saying that it doesn’t make any sense," Levy says. "Because what happens is that what a lot of the companies do is they will lease a very very small warehouse that they will never use. But once they have that – which does cost a lot of money – then they will outsource their entire distribution to somebody else."

The dismantling of red tape would be a welcome development for drug makers, who already enjoy several opportunities the Brazilian market has to offer, including its large population size of around 200 million. (Also see "Brazilian Notebook: Key Themes From BIO Latin America" - Scrip, 3 Nov, 2016.) According to Levy, the Brazilian economy has also been "picking up" in spite of the recent political turmoil. (Also see "As Rousseff Impeachment Looms Could Her Successor Help Pharma In Brazil?" - Scrip, 25 Apr, 2016.)

Levy also noted, however, that there are other regulatory obstacles that make doing business for drugmakers difficult. Drug prices, for example, are heavily regulated by the Brazilian government as part of its national health system. As a general rule, the launch price drug companies negotiate with the government is going to be the lowest international price of the product in a "basket" of countries.

In March of every year, the government uses a formula to determine price increases on drugs, which average out to 6% to 7% a year, Levy added. The price controls, however, do not apply to over-the-counter drugs in Brazil.

"I do feel that the excess bureaucracy, together with strict price controls, has delayed some companies in starting their Brazilian subsidiaries to allow of a better understanding of the local market and regulations," Levy says.

Mexico Red Tape Likely To Stay

Another expert does not see such a trend happening in Mexico. Regulatory authorities in Brazil and Mexico declined to make themselves available, but José Alberto Campos-Vargas, a partner at the Mexican law firm Sánchez Devanny, tells the Pink Sheet that his firm does not believe the excess red tape at the country's Federal Commission for the Protection against Sanitary Risk (COFEPRIS) will go away anytime soon.

COFEPRIS is another Latin American drug regulator known for its excess bureaucracy. For example, drug companies filing for marketing authorization must have all documents and information translated to Spanish by an authorized translator. There are also certain cases where only individuals authorized by the company can file documents with the agency. (Also see "Mexico's COFEPRIS: A Friend Or Foe To Industry?" - Pink Sheet, 25 Feb, 2017.)

Similar to Brazil, the excessive bureaucracy in Mexico has caused delays in the pharmaceutical industry. For example, Campos-Vargas noted that some of the recent mergers and "may have delayed their implementation in Mexico," but have ultimately been finalized.

"Likewise, some additional time has been required for entities carrying out new activities involving new technologies as could be telemedicine services or medical analysis carried out abroad with samples and information taken in Mexico," he added.

Campos-Vargas conceded, however, that COFEPRIS has exhibited "a greater openness" in considering marketing authorizations and other general authorizations related to drugs granted by certain foreign authorities located in the countries where a company has its main facilities and offices. For example, COFEPRIS has a "fast track" approval pathway, where the agency recognizes a prior FDA approval of a product.

Additionally, "A considerable number of collaboration and mutual recognition agreements have been executed by COFEPRIS with other similar authorities in other countries in order to have a better coordination and understanding of their own requirements and thus take a more educated position regarding information submitted for purposes of Mexican authorizations," Campos-Vargas says.