(2002; 166 pages)
Economic regulation of pharmaceuticals in Brazil
Dr Marcelo Liebhardt, Brazil
In the early 1990s, the market for pharmaceuticals in Brazil was liberalized. In the mid-1990s, it was realized that drug prices had risen substantially and some controls needed to be reintroduced.
The failure of market forces in relation to pharmaceuticals is attributable to the fact that pharmaceuticals are essential products with inelastic demand and high technical complexity. There is also brand loyalty among prescribers. Substitution is low and there is little vertical mobility inside one therapeutic class. All these factors limit the capacity of the consumer to choose.
Recent experience in Brazil shows that competition policy is inadequate to control the pharmaceutical market. The alternatives are technical and economic regulations. Technical regulations monitor the quality and safety of medicine while economic regulations reduce the market power of the pharmaceutical industry and increase consumer access. In Brazil, a mixture of technical and economic regulations is employed.
The instruments used for economic regulations are country-specific and are affected by the characteristics and epidemiological situation of the country, patterns of consumption, distribution of the population and the relationship between state and industry.