December 2, 2019
Investment

FNE recommends structural reform of pharmaceuticals market

FNE recommends structural reform of pharmaceuticals market
The National Economic Prosecutor’s Office (FNE) released today a preliminary report on its study of the pharmaceuticals market.

This report is the result of work by the Prosecutor’s Office, which began in April 2018 and consisted in a complete review of the industry, from the production of drugs through to their sale, including all the relevant actors and regulators.

“Medicines are a prime necessity and measures are urgently required to allow the population to access them at a lower price. The way to achieve this is through regulation that promotes greater competition in this market,” said the National Economic Prosecutor, Ricardo Riesco.

The FNE’s conclusions are reflected in a package of 14 measures, with four fundamental objectives: the introduction into the market of more bioequivalent drugs; an obligation on the part of doctors to prescribe without indicating a particular brand; an obligation on the part of pharmacies to dispense the cheapest alternative; and more transparent, efficient and effective procurement of drugs by the state. The Prosecutor explained that “at present, the pharmaceuticals market in Chile operates in the same way as any other mass consumption market with competition between brands like, for example, cars, clothing or cell phones, and this is because the bioequivalence policy has not been effective.”

In its study, the Prosecutor’s Office found that 80% of the drugs registered in Chile still do not have bioequivalent alternatives and that laboratories are investing over US$200 million a year to promote their brands among doctors, who prescribe these products to their patients, rather than other technically equivalent and cheaper alternatives.

A survey by the FNE also found that patients mostly adhere to the doctor’s recommendation and are reluctant to change it for a cheaper alternative. Pharmacies, in turn, sell patients the prescribed brand-name drugs, which they acquire from laboratories at prices an average 70% higher than those paid by the public sector.

“We propose a structural reform that modifies the way laboratories, doctors and pharmacies act, changing the dynamics of the industry and introducing more competition,” said the Prosecutor.

In practice, the FNE recommends deepening the bioequivalence policy, creating a single national system under which doctors are obliged to prescribe drugs according to their common international name, rather than by brand, while pharmacies must sell the cheapest alternative and also receive a fixed fee for dispensing drugs. This should be accompanied by a substantial reinforcement of the Public Health Institute (ISP) and/or the National Medicines Agency (ANAMED).

In a second stage, the FNE proposes the creation of a public or private pharmacological insurance scheme to cover expenditure on medicines.

In addition, it recommends authorizing the sale of over-the-counter (OTC) drugs in establishments other than pharmacies and through other channels, such as online.

A public consultation on this preliminary report will take place. Those wishing to participate should send their comments to [email protected] by Friday, December 20.

At the end of that process, the FNE will publish the final report and send its definitive recommendations to the government for evaluation of their implementation.

Source: National Economic Prosecutor’s Office