VENEZUELAN PRICE LIBERALISATION CONSOLES DRUGMAKERS

Venezuela's pricing environment remains difficult for multinationals, but international trade associations have welcomed recent government moves which partly improve the outlook. US group PhRMA notes that although roughly a quarter of all patented medicines -- those deemed "essential" by the government -- are price controlled at 2003 levels, pricing in the remainder of the market is relatively free.

Venezuela first liberalised medicine price in 1996, but the Chávez government reversed the move in 2003, in the wake of stringent currency controls and measures to control inflation. Although local firms report that access to hard currency has now "normalised," foreign companies continue to object to a 16% tariff on imported pharmaceuticals imposed in 2002.

Despite the general improvement in pricing, however, the outlook for patenting has continued to deteriorate. With a generics-friendly policy, the government has also used judicial rulings by the Andean Community to steadily erode intellectual property rights in Venezuela. In the medium term, only the prospect of an Andean free trade deal with the US holds any promise in this area -- but this leaves the level of enforcement of patent rights in Venezuela as an open question.