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Brazil's healthcare conundrum

A rising middle class has seen healthcare challenges shift from a lack of affordability to discussions about willingness to spend

Brazil flag

Predicted to become the world's sixth-largest pharma market by 2014, there are many compelling reasons why the industry should be interested in Brazil. But this country is a conundrum because while it appears to be very large and increasingly attractive, it is also confusing, complex and marred by reports of corruption and inefficiencies.

The health service is so complicated that many Brazilian nationals say even they have trouble understanding it!

Economy Superintendent Joao Carles Gomes put it well when he stated: “This is a country with an excellent market and high demand. But it's a pity it has such huge bureaucracy. Brazil is a great country when it works.” Pharma companies interested in penetrating Brazil need answers to a number of questions if they are to be able to leverage the opportunities potentially on offer.

These are four of the biggest.

Question 1: Is there universal access?
The 1998 Brazilian constitution guarantees universal access to healthcare for all citizens, regardless of income. Currently 75% of healthcare provision is delivered by the public sector, yet 61% of healthcare spending is in the private sector. Healthcare spending still lags behind developed countries, reaching just 4% of GDP in 2010.

Even though Brazil has a statute offering 'free health' to all citizens, not all medicines are included in the formulary.

Meanwhile, public healthcare funding is collected and distributed at state and municipal levels, so services and facilities vary widely from city to city.

This leads to a unique situation where patients resort to legal action in order to force the government to provide their medication. Patients are sometimes actively encouraged to sue the government by patient associations and even by doctors and pharmacists. Some treatments only become available to individual patients if the government is forced by the courts to provide it.

Once a court decides on the side of the patient, the treatment must be made available within 72 hours or the health authorities face fines. In many cases it is cheaper for the government to be sued by individuals than to include the drug in the formulary.

However, once there are too many individual legal actions then it becomes more cost effective to make the treatment commonly available.

There has been a dramatic increase in the number of lawsuits by patients (see table below). This has led to an ongoing conversation about the rights of the individual versus the ability of the public health system to treat the whole population.

Lawsuits in Brazil 

Federal Expenditure - Lawsuits drugs

(in R$ millions)



(in thousands)



Most frequent:
Oncology and rare diseases

Sao Paulo State expenditure - Lawsuits drugs

(in R$ millions)



(in thousands)



Most frequent:
Insulin not in the formulary

Question 2: Who are the stakeholders?
It is key to consider the influence of stakeholders such as pharmacists in the decision-making process. The government has been trying to cap healthcare costs by actively promoting the value of generic medications. Now, in contrast to most emerging markets, the majority of patients believe generic alternatives offer the same efficacy as the originator brand but at a fraction of the cost.

This belief is reinforced by the dispensing pharmacist who frequently offers the generic equivalent to the patient.

The pharmacist may have a financial incentive to offer one company's generic and will actively try to persuade the patient to accept this. A 2011 survey found that 82% of patients have had a pharmacist suggest replacing the branded drug by a generic alternative at least once if not more often.

Such generic substitution is permitted and often leads to the situation where the prescribing physician often asks his patient what medicine he actually ended up taking – was it the one originally prescribed or the one recommended by the pharmacist?

Question 3: How are prices set?
Full marketing authorisation is granted only after both technical registration and price approval procedures are complete. Prices are controlled at, and after, launch by CMED (a government council coordinated by the Ministry of Health). In 2004 a maximum launch price policy was instigated in line with the type of product:

Patented new drugs – the final price of a new drug may not exceed the lowest price granted in any of the nine reference countries (Australia, New Zealand, Canada, the USA, Spain, France, Italy, Greece and Portugal)
'me-too' drugs – reference to the price of existing drugs in the same therapeutic class
Generic drugs – ceiling of 35% lower than the branded drug.

Recently the health authorities set a ceiling price for a basket of strategic drugs bought by the government, in response to increasing cost of medications. The ceiling price is around 20% lower than the ex-manufacturing price. CMED determines the maximum price increase every year (usually on the 31st March), with price increases typically in line with inflation, which was running at 8.1% in the 12 months to April 2013.

Question 4: How do you ensure your product is accepted?
Technical registration is managed by ANVISA and normally it takes between one to two years to have a product successfully registered. However, this process has been criticised for its lack of transparency. The submitted file is given to one of a number of ad-hoc reviewers who need to give a positive opinion based on a number of objective parameters. The ad-hoc reviewers tend to be key opinion leaders (KOLs) in the relevant therapy area. Therefore the implication is that a company launching a new brand on to the Brazilian market should focus its pre-marketing activities on those select KOLs who may end up reviewing (and hopefully approving) its submission.

However some decisions appear to be less transparent. For example, in 2009 the Mines and Energy Resources minister and now Brazil's President Dilma Rouseff, was diagnosed and treated for a non-Hodgkins lymphoma. She was surprised to discover that her prescribed treatment rituximab was not listed in the Cancer Treatment formulary. However, in August 2010 rituximab was included. We will never know whether this rapid inclusion was due to political pressure or Roche's efforts to be accepted on the formulary.

And it doesn't end there
Once you have got to grips with the healthcare system, there are other macro-environmental issues to consider. Chronic inefficiencies in the economy, including poor infrastructure, complex taxation systems, excessive bureaucracy and rampant corruption, have contributed to what has become known as 'The Brazil cost'. Corruption alone is thought to have cost the country US$40 billion (2.8% of GDP) in 2008, the equivalent of 50% of the national education budget. Consequently a question mark hangs over the stability of Brazil's economy, and this is something that pharma must weigh up in assessing its overall attractiveness against other markets such as China.

Marketers with a strong knowledge of Brazil's healthcare environment, who conduct comprehensive market research in the country, can arm themselves with the information they need to make informed decisions about the strategy for their individual brand. There is no doubting that Brazil is a major emerging market and one that many big pharma organisations will be keeping a close eye on in the future.

This article was orginially published in the PME supplement Pharma and BRIC


Article by
Marc Yates

is director of emerging markets at the Research Partnership
Email him

25th June 2013


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