Brazil’s government may lower medicine price ceilings to align with retail prices, amid concerns from pharmaceutical retailers and manufacturers about competition and small pharmacies’ viability. Industry leaders fear reduced profit margins could lead to market withdrawal of low-cost drugs. Discussions signal a crucial juncture for Brazil’s pharmaceutical landscape.
The Brazilian federal government is poised to consider a proposal to lower the maximum price ceiling of medicines, which is currently regulated by the Drug Market Regulation Chamber (CMED) under ANVISA. This initiative aims to reduce the disparity between government-set maximum prices and retail prices, with pharmacies often providing an average discount of 30% off these ceilings.
Pharmaceutical retailers and manufacturers have expressed concerns that such measures may hamper competition and negatively impact small and regional pharmacies, which represent 80% of the sector. These independent drugstores typically maintain higher profit margins by charging full prices and could face significant challenges if price ceilings are reduced.
Companies within the pharmaceutical sector warn that lowering the ceiling could lead to the cessation of certain low-cost medicines in the market, as many are sold under tight profit margins. While CMED aims to align price ceilings closer to market rates, officials indicate that any alterations will likely be modest to protect the current system of discounts.
The discussion surrounding drug pricing is not new; in 2020, Senator Fabiano Contarato introduced legislation following concerns from the Brazilian Institute for Consumer Protection (IDEC) regarding significant price discrepancies leading to inflation during supply shortages. With inflation control as a government priority, this topic has been reignited within the context of medicinal regulatory frameworks.
CMED Executive Secretary Daniela Marreco acknowledged that discussions are ongoing, emphasizing concerns that aligning prices might diminish manufacturer discounts. Nelson Mussolini, president of Brazil’s pharmaceutical industry association, criticized the government’s approach, highlighting potential adverse effects on market competition without prior consultation with the industry.
Mussolini further indicated that any profit margin reduction would pressure smaller companies and could eventually lead to increased costs for consumers. He also pointed out that lowering prices does not effectively address inflation since pharmaceutical inflation is not a significant issue currently.
Marreco noted risks associated with a rapid policy change, referencing broader trends in countries that have adjusted their price ceilings. Such shifts typically resulted in diminished discounts or in some cases, price increases for previously undervalued medicines. The public consultation process regarding the new regulatory framework is anticipated mid-year, involving multiple government entities.
Concerns have been raised that small, independent pharmacies could struggle should price ceilings decrease, as they serve crucial roles in remote, underserved regions and often depend on selling medicines at higher prices or operating in informal markets. A pharmacy sector representative highlighted that tens of thousands could go out of business, emphasizing the diversity in business models across the industry.
Currently, Brazil is home to approximately 90,000 pharmacies, with a significant portion classified as small businesses or family-operated ventures. Conversely, larger chains anticipate minimal impact from proposed changes due to existing competitive pricing strategies.
The discussions on price ceilings are particularly timely, coinciding with recent changes to the Farmácia Popular program, which has drawn criticism from small pharmacies due to reimbursement delays. The expanded product list under the program further complicates the cash flow for smaller establishments, raising questions about their financial sustainability amidst growing dependency on government reimbursements.
The Brazilian government’s consideration to lower the price ceiling on medicines has sparked significant debate within the pharmaceutical and retail sectors. While the objective is to align prices closer to market realities, stakeholders warn about potential negative impacts on competition and the viability of small pharmacies. The proposal poses risks of disrupting the delicate balance of profitability necessary for many independent drugstores that play a crucial role in providing essential medication in underserved regions. As discussions progress, the health of Brazil’s pharmacy industry hangs in the balance.
Original Source: valorinternational.globo.com
