Peruvian lawmakers propose to control drug prices
14 febrero 2018

Congressman Javier Velásquez Quesquén (Célula Parlamentaria Aprista, opposition) presented a bill that proposes the regulation of maximum prices of basic drugs for diseases of greater incidence, seriousness and high cost. Specifically, the text foresees the creation of a Regulating Body of Maximum Prices of Basic Drugs, with the purpose of “contributing to ensure the constitutional right to health”.

This is one of the reactions in the legislative field after the purchase of Quicorp (company that owns Quimica Suiza and pharmaceutical chains such as Mifarma, Arcángel, Fasa and BTL) by InRetail. The issue worries the Peruvian authorities, who have noted considerable differences in the prices of medicines, which reach 2,400% between generic products and branded presentations.

Reforms to regulate the market

The situation has boosted the debate on the draft bill that regulates mergers and acquisitions, introduced by Jorge Alfonso Del Castillo Gálvez (Célula Parlamentaria Aprista, opposition), and led to the presentation of another proposal on the subject made in recent days by Congresswoman Luciana Milagros León Romero (Célula Parlamentaria Aprista, opposition). For the moment, the discussion advances in the technical and business areas. The prior regulation of corporate mergers and acquisitions that could affect the structure of the market is currently gaining consensus among the technical entities of the State, including Health Social Security (EsSalud), General Directorate of Medicines, Supplies and Drugs (Digemid) and the Pharmaceutical Chemical College. On the other hand, the debate is expected to be at the center of the parliamentary agenda when Congress is back in sessions in March.

Hard criticism of the Peruvian Foreign Trade Society

The Foreign Trade Company of Peru (Comex Peru) questioned the initiative promoted by legislator Velásquez Quesquén and considered that the regulation of prices could have negative consequences for the consumer. The union maintains that Velasquez Quesquén’s proposal “has no technical support” and is “an archaic policy measure, obsolete and lacking in good results in the economic history of the country and the entire world.”

“The congressman considers that, by controlling prices, establishing maximum prices, access of medicines to the population would be ensured, thus justifying the need for the State to intervene in the medicines market and set prices, forgetting that the control of these in competitive markets has historically brought shortages, speculation, and lack of variety and quality “, argued the union.

He also attacked the creation of an agency that controls the prices of medicines, stating that it prevents companies from freely developing their activities. “This would have negative consequences (…) The theory explains that cases of price control could lead to the discontinuation of the controlled product being marketed or that its quality be sacrificed, the aggrieved ends up being the same: the consumer”, added.

Alternative proposals

In that sense, Comex considered that an alternative solution to the high prices of some drugs would be to strengthen Digemid so that it simplifies its procedures and allows a faster entry of medicines. He also noted that the system of corporate purchases by the State could be improved, through Peru Purchases, and that the dissemination mechanisms of the pharmaceutical products observatory could be reinforced. Another option would be to extend the list of medicines exempt from the payment of sales tax and customs duties. Meanwhile, some economists have indicated that if the objective is to help the sectors with less resources to buy medicines, an alternative could be the delivery of well-targeted subsidies.

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