Luiz Hoffmann, former advisor to Cade (Administrative Council for Economic Defense), alongside lawyer Pedro Victhor Lacerda, launched last month the book “Anticompetitive conduct in the pharmaceutical sector”, the result of research which identified 129 cases analyzed by competition defense organizations in more than 20 countries.
According to Hoffmann, it can be said that there is a tendency for “repeated abuse” by large global laboratories of a dominant position on the market. The book cites anticompetitive behaviors that generated hyper-price increases, such as cartels, payments to competitors for delays in bringing generics to market, and artificial barriers to maintain monopoly.
In some cases, this type of behavior has led to drugs being priced up to 1,400% higher than they could have been sold for.
When asked, Sindusfarma (Pharmaceuticals Industry Union) said that talk of standard laboratory conduct is a simplistic narrative. “The development of a new drug involves on average more than a decade of research, high failure rates and investments of several billion dollars. Without patent protection, these investments would simply not take place,” says the entity.
What prompted the investigation?
No work has consolidated the decisions concerning the pharmaceutical industry from the point of view of competition authorities. Health is one of the most important sectors in Brazil and I think this discussion is interesting from a public policy perspective. Because Cade protects free competition based on how it affects society.
And what did they find in the research?
Out of 129 cases, 70% were convicted. That’s a high number. So there is a pattern where there is a repeated abuse of this position that we call the dominant position. It’s a behavior.
Why does this standard exist in the pharmaceutical industry?
The sector is concentrated, with high barriers to entry: it requires a series of licenses, invested capital, pharmacists, doctors, and company tests. Not just anyone becomes a player. In some cases, when the pharmaceutical company owns the patent, it is in a monopoly position. Whenever there is a lot of concentration, this economic power can be abused. And there is still an aggravating factor. As a consumer, I don’t know which medicine I should take. Who knows, it’s the doctor. There is, however, one aspect: in South Korea, we recorded eight convictions because pharmaceutical companies gave discounts to doctors, which is the famous commission
Does this exist in Brazil?
We found no condemnation on this subject from Cade.
Sir Are you against patents?
I am not against patents or against the pharmaceutical industry. We have just made a diagnosis. I use medicine and I am glad that there are pharmaceutical companies, because they invest to find new solutions and bring benefits to society. But we can’t abuse it.
How to avoid abuse?
Let’s look at the European Union. They let competition take over and, in the event of abuse, companies are taken to court. In the United States, it’s the Chicago school, everything is open. So the FTC (Federal Trade Commission) focuses more on cartel cases, or on pay for delaythe famous “pay to delay”, which is a practice according to which the pharmaceutical company, when its patent expires, pays its competitor so that it does not put a drug on the market.
Is there a case like this mapped in Brazil?
No, only in the United States, where drug prices are the highest in the world. As there is no regulation, and it is more flexible, medicines are on average 200% more expensive there than in other countries. Brazil has the CMED (Medicine Market Regulatory Chamber), which sets a maximum value for medicines. But it sets this price based on an average for other countries. And one of the countries is the United States.
How to resolve this situation?
I think we need to strengthen institutions. It also takes complaints, more human resources, more investment from the state and a constant discussion with the WCED to ask whether we should keep the United States as reference. Because, in the end, who will pay the most for medicines? This has an impact on society or the SUS. In the state itself.
What are the most emblematic cases mapped?
In South Africa, there is a case where HIV drugs (from GSK and Boehringer Ingelheim) were sold at prices up to four times higher than what should be charged. As a result, half of the population with the disease did not have access to medication. There is another case in the European Union, that of Aspen (Pharmacare), whose medicines exceeded their costs on average by almost 300%. In this case, there wasn’t even a patent. The argument was that companies should charge to recover the investment made to bring the medicines into the country (Italy).
And in Brazil?
There’s one that’s about to be tried now, a drug called scopolamine (used to relieve spasms of the gastrointestinal, urinary, and respiratory tracts). And it was an international cartel, with production and sales quotas set to restrict the amount of drugs available on the market.
RADIOGRAPHY
Luiz Augusto Hoffmann, 44 years old
1981, Sao Paulo
Bachelor of Laws from Mackenzie University, with a specialization in tax law from PUC-SP and a doctorate in civil law from USP and Università di Camerino (Italy). He is a founding partner of the law firm Almeida Prado e Hoffmann. He was legal director of Fiesp, judge at the Tax Court of São Paulo and advisor to Cade, from 2019 to 2023.
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