GENERICS BLAMED FOR ADDED BRAZILIAN PRICE "FREEZE" WOES

Brazilian drug pricing authority CMED's ongoing "freeze" on drug prices -- which is set to expire only in March 2006 -- remains a cause for concern for many foreign drug firms. In the meantime, however, it appears that prices are rising even more slowly than the officially approved maximum rate of 7.39%. Local sources report that price controls have been in existence since 2001.

CMED's methodology for the pricing of pharmaceuticals has also remained controversial. The agency has also adopted a reference pricing system of sorts, based on an "adequate price coefficient" of each drug in a group of nine Western countries and the product's country of origin. An adjustment for relative purchasing power is often admitted at CMED's discretion.

The framework has been widely criticised for favouring generic medicines, the market for which has grown rapidly in the last 1218 months. In an industry already ill at ease with some aspects of government policy, it appears that inflation is just one aspect of current pricing arrangements, and this largely ignores the higher costs of imported drugs brought on by currency devaluation in recent years.