BRAZIL TO PROSECUTE DRUG FIRMS OVER PRICE VIOLATIONS

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According to local press reports, Brazil's antitrust regulator CADE will file a case against four drug companies for alleged price manipulation prior to 2000. The companies include local leader Biosintética, Johnson & Johnson and an affiliate of US drug major Merck & Co.

Earlier reports had linked about 20 pharmaceuticals manufacturers to claims that leading companies had conspired to distort competition from generics producers. The present case alleges "abusive practices" ahead of the re-introduction of price controls in Brazil in 1999. Significantly, the Brazilian economy was subsequently hard-hit by spiralling inflation and currency problems.

However, an authoritative study by a government research agency, IPEA, has defended the rises. The study argues that increases were "compatible" with inflation rates between 1994 and 1999, and in any case occurred in a free pricing environment. According to legal experts, such abuses cannot occur unless monopolistic behaviour has been proven, which is not applicable in view of the unique trading conditions for pharmaceuticals.