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Brazilian Ministry of Finance releases the Regulatory Impact Analysis (RIA) Report, recommending repealing CMED's Ordinance #2/2004 and the release of guidelines for transparency in the pricing process

September 27, 2023

The Brazilian Secretariat for Economic Reforms of the current Ministry of Finance (SRE) released, this past week, the Regulatory Impact Analysis (RIA) Report of Ordinance #2, of March 5, 2004 (CMED Ordinance 2/2004) from the Chamber of Drug Market Regulation (CMED), which establishes criteria for the pricing of new pharmaceutical products and new presentations of drugs. The Secretariat for Economic Monitoring of the former Ministry of Economy started the RIA with the purpose of identifying potential regulatory issues arising from the pricing criteria and categories outlined in Ordinance #2/2004. This analysis sought to rethink the drug pricing mechanism and develop a regulatory solution aligned with the best practices in the pharmaceutical sector, intending to promote its development, balance the interests of companies and citizens, and attract investments to the industry.

Public Consultation SEAE #2/2021, approved by the 3rd Extraordinary Meeting of the Technical Executive Committee of the Chamber of Drug Market Regulation - CTE/CMED in 2021, set the RIA in motion, aiming to gather input from civil society regarding the need to revise CMED's Ordinance #2/2004, considering its economic, social, and health impacts. The Public Consultation was open for 60 days and received contributions from civil society and the regulated sector. It is important to mention that, according to the Report, the lack of clarity and criteria for drug categorization and the low transparency of the pricing process were some of the most notable critical points raised.

With the contributions from Public Consultation SEAE #2/2021, the SRE evaluated the current regulatory environment and developments in the pharmaceutical market, identifying the outdated categories in CMED's Ordinance #2/2004 as the primary regulatory bottleneck.

The result of the RIA was influenced by the growing demand for pricing for innovative treatments, such as new gene therapies, which currently fall under CMED's "unclassified" category as there are no other categories that can accommodate them within the existing CMED regulations. These therapies represent significant hope for patients with no effective therapeutic alternatives. It is necessary to acknowledge that the pharmaceutical market is constantly evolving, and it is crucial for this evolution to be reflected in CMED regulations.

As a result, the SRE chose to recommend the repeal of CMED's Ordinance #2/2004 and the development of a new regulation for the criteria on pricing new products and presentations, as well as the creation of a guide, manual, or handbook on the CMED pricing process, with an emphasis on category guidance. Finally, the recommendation includes conducting training sessions for CMED agents and the regulated sector regarding any new regulatory developments introduced in the pricing process.

The release of the RIA Report demonstrates an important step taken by CMED to address pharmaceutical market bottlenecks and improve the regulatory environment. For the next steps, CMED will need to decide on whether to follow the recommendation and then initiate a new phase of public consultation for the alternative regulation, with the participation of civil society.

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