Despite Official Rise, Brazil's Drug Prices Stay Low

According to local studies, a recent officially mandated price increase on prescription drugs has failed to take effect across much of Brazil's retail sector. Last month, the government authorised price rises of between 5.89% and 7.39%, but many consumers are currently able to acquire drug products at up to 30% below the official price.

The current disparity between approved price levels and those set by market forces is largely a result of fierce competition in the pharmacy sector, which is dominated by only a few major chains. As the country's drug reimbursement system is basic and limited, many drug manufacturers find themselves obliged to sell to local pharmacies cheaply.

Indeed, the March price rise was already widely considered insufficient, as the government has allowed drug price rises to lag far behind spiralling inflation and a devalued currency in recent years. Meanwhile, Brazil's government drug pricing unit, CMED, will be unlikely to intervene to restore drug company margins, in view of its policy of encouraging the penetration of cheaper generics, as well as its inability to guarantee a minimum price for pharmaceuticals in the country.