Brazil Regulators Confirm 2005 Drug Price Hike

CMED, the drug pricing unit of Brazilian health regulator Anvisa, has confirmed this year's rises in wholesale drug prices. The increases will be imposed in three price bands, but CMED has decided that the largest permitted increase of 7.39% will apply to therapeutic areas in which strong generic competition exists. Details of the price rises, which are due to last until March 2006, confirm industry suspicions that drugs produced by the multinational sector are likely to face the largest price increases.

Drugmakers now have until March 30 to submit details of their pricing plans for the twelve months to March 2006, based on recent unit sales performance, and may be awarded increases below the maximum rate, either at 5.89% or 6.64%. The increases are likely to be the subject of friction, as Brazil's government has in the past allowed drug prices to lag inflation during periods of economic turmoil, as in the case of only marginal rises seen in 2001-2003. This year's rises are likely to be closely observed by the multinational sector, especially as CMED has the authority to decide which drugs remain subject to its price controls, and the government remains keen to encourage the penetration of cheap generic medicines.