Source: Folha de S. Paulo - SP - DINHEIRO - 15/11/2009

Marcelo Justo / Folha Image

Shelf with generic drugs in SP pharmacy

 

MARIANA BARBOSA
LOCAL REPORTING

 

One of the main drivers of the multiplication of pharmacies in Brazil in recent years is the strong growth of its profit margins in the sale of generic drugs.
A survey by Folha proves that they buy these drugs from the laboratories with an average discount of 65% on the maximum price established by the government for manufacturers.

 

This discount does not fully reach the consumer. At the point of sale, it varies from 10% to 20% on the maximum price established by the government for pharmacies, on average.

The price of medicines in Brazil, generic and branded, is defined by Cmed (Chamber of Regulation of the Medicines Market). According to the agency's table, the difference between the maximum price established for the manufacturer and the maximum price for the consumer is 30%.

Therefore, a drug that costs a maximum of R $ 10 at the factory should be sold at R $ 13 to the consumer. But the pharmacy buys the product for R $ 3,50 (65% discount). If it grants a 20% discount on the maximum price to the consumer, the drug costs R $ 10,40 - a difference of 200% in relation to the cost price of the product. Although it is not illegal, the practice is questioned by manufacturers.
The law also says that generics should cost 35% less than reference drugs. But there are cases where competition is so great that branded drugs can cost less than generics. This is what happens with the appetite reducer Sibutramina, whose reference brand is Reductil (by Abbott). Some similar brands of the reducer, such as Biomag (Biosintética laboratory) and Sibus (Eurofarma), cost less than generics.

The president of Abrafarma, Sérgio Mena Barreto, recognizes that the laboratories give discounts, but says that they reach 70% "only in isolated cases". Barreto also states that the average price charged by pharmacies represents a 10% discount on the maximum established by the government.

Generics were created in 1999 with a social character, to promote access to medicines. By introducing strict manufacturing controls, the policy was also responsible for strengthening national laboratories.
Today they are the target of greed by large multinationals, such as Sanofi-Aventis, which last year acquired Medley for R $ 1,5 billion.
The generics market generates R $ 3,4 billion per year. But the sector's participation in the medication market is still small. According to Pro-Generics, 19,6% of the drugs sold in the country, by volume, are generic. In the USA, this participation exceeds 60%.

For large national drugstore chains, the generic represents 14% of sales. Sales in the segment grow at rates of 20% per year.
Laboratory discounts are a reflection of competition in the sector. “No manufacturer sells generics with less than 50% discount and, in some cases, can reach 85%”, says the president of a large laboratory that did not want to identify himself.

 

Valued Real

Laboratories are able to grant large discounts due to the cost structure: the valued real made imported inputs cheaper; and generics dispense advertising and marketing expenses with the medical community.

Discounts are the way to encourage the pharmacy to offer the generic to the consumer, since, by law, the pharmacist is authorized to offer a generic to replace the brand prescribed by the doctor. Many in the industry believe that, without the incentive, pharmacies would stop offering the product to their customers.
Some manufacturers believe that the end of the tabulation would lead to a price reduction. Odnir Finotti, president of Pró-Genéticos, which represents the manufacturers, defends that a test be carried out with the temporary release of the price of the most competitive drugs.

“Leave the free price to see where they end up,” says Finotti. "If there is a maximum price, there will always be someone who will pay for it."
Price control in Brazil was introduced in 2003. The executive secretary of Cmed (Chamber of Regulation of the Medicines Market), Luiz Milton Velozo Costa, affirms that “it is not in the government's agenda to abolish or reduce the ceiling”.

A study by Fipe / USP commissioned by Etco (Brazilian Institute of Ethics in Competition) proves that the discounts practiced by retailers do not exceed 20%. “We found that, in general, there is a certain regularity in the discounts offered at points of sale”, says Etco's president, André Montoro Filho. “On average, they are less than 20% over the list price. Above that, only isolated cases. ”