Abstract
Abstract
Brazil is renowned worldwide for its remarkable reforms in pharmaceutical regulation, as the Generic Drug Act that have enhanced access to essential medicines while lowering drug costs. In contrast with analysis of pharmaceutical regulation that invokes international guidelines as inspiration for countries to reformulate their norms or argues that regulations emerge in order to serve the interests of powerful interest groups; this paper focuses on actors’ preferences and demands to explain how Brazil promoted this large-scale regulatory policy. Paradoxically, the generic drug regulation introduced in the name of patients and opposed by local firms given the high cost to adapt its plants and processes, is today opposed by important patient advocacy groups but solidified by the strong support of local and multinational pharmaceutical firms. The paper concludes that the state still matters for pharmaceutical regulation and that pharmaceutical regulation is only partially influenced by non-state actors.
1 Introduction
Brazil is renowned worldwide for its remarkable reforms in pharmaceutical regulation, which have enhanced access to essential medicines while lowering drug costs. As part of these reforms, Brazilian approved the Generic Drug Act in 1999, which allowed manufacturers to legally produce generic drugs that were identical to innovator drugs. A generic drug is a product that is no longer protected by a patent, and is interchangeable with an innovator drug (World Health Organization, 2001).
Generic drug policies are designed to foster market competition, prompt price declines, and thereby increase access to safe and affordable medicines (World Health Organization, 2001). In Brazil, over 80% of drug expenses are paid for by patients (Cohen, 2000). Studies suggest that generic drugs enter the market with an average price that is 40% lower than their patented counterparts, making medicines more affordable to the Brazilian population and governmental programmes (Vieira & Zucchi, 2006).
Although much has been said about the remarkable impact of Brazil's generic drug competition on pharmaceutical markets and price structures (Nishijima, 2008) the process that influenced the adoption of this large-scale regulatory reform has not been well explored. The case of Brazil is paradoxical, as the generic drug regulation that was introduced in the name of patient care and which was opposed by local firms given the high cost of adapting plants and processes, is today opposed by important patient advocacy groups, but now has the strong support of local and multinational pharmaceutical firms. The paper innovates by analysing the policy process of the generic drug reform, demonstrating that pharmaceutical regulation is only partially influenced by non-state actors.
Existing studies provide two partial explanations as why Brazil promoted this reform. First, research points to the influence of international norm-creating bodies, particularly the World Health Organization (WHO). The WHO recommends that generic drug substitution should be a key component of a national drug policy, with two policy instruments to stimulate market competition: the use of a non-proprietary name (INN) and bioequivalence tests. The INN is a unique name that is globally recognised and is public property1 and facilitates the identification of pharmaceutical substances (World Health Organization, 2010). The WHO also recommends that generic drugs must be therapeutically equivalent to their innovator version, something that can be established using bioequivalence tests.
But these recommendations do not fully explain Brazil's decision to reform. The WHO may influence domestic decision-making by setting and diffusing key norms, but it cannot ensure the capacity for policy implementation. Understanding what regulatory arrangements are necessary to improve access to medicines, it is important to understand how countries go about implementing them — how domestic political institutions (e.g. health surveillance regimes) mediate international guidelines to implement generic drug policy.
Other studies suggest that the Minister of Health and presidential-hopeful, Jose Serra, promoted the reform as a response to a crisis in the sector triggered by a scandal involving fake birth control pills (Dias & Romano-Lieber, 2006). However, because these studies focus only on the critical period of reform, little is known about either the institutional antecedents that channelled this entrepreneurial activity, or the subsequent development of generic drug regulation after Serra's influence waned. This paper attempts to fill this gap by placing the crisis period within the continuity of the longer decision-making and implementation process and exploring the preferences of political actors.
This paper is organised according to three sections, excluding this introduction. The second part reviews the literature concerning pharmaceutical regulation,2 which usually argues that this relates to the diffusion of international norms or the influence of powerful pharmaceutical corporations. I challenge these two perspectives, suggesting that an in-depth analysis of actors’ preferences/strategies, mediated by domestic political institutions, is the most important determinant of the timing and direction of the regulatory policy. The third part illustrates this argument using the Brazilian case. The paper concludes that a more promising avenue is to observe how policy legacies shape the preferences of actors; that is, the preferences of interest groups are constructed within the regulatory policy process.
2 From above or below? Policy diffusion and interest group politics
There are two analytical explanations as to why countries promote large-scale pharmaceutical policies. The first refers to the diffusion of international guidelines that inspire countries to reformulate their regulatory regimes, such as the guidelines of the WHO. Other scholars argue that regulations emerge in order to serve the interests of powerful interest groups, which are usually small and homogeneous. This paper argues against both approaches, as we shall see.
Some scholars claim that international regulatory standards formulated by developed countries inspire developing countries to revise their local guidelines (Carpenter, 2010). This seems plausible as regulators — e.g. FDA — set the rules to enable pharmaceutical firms to access developed country markets. In addition, the scientific expertise of these agencies can encourage other governments to emulate their guidelines. Since the late 1980s, WHO has provided rules to regulate INN, BE and technical specifications of drug registration (World Health Organization, 2001). However, little is agreed between countries on how to formulate these norms to secure public health interests (Pan American Health Organization, 2008).
There is a certain level of organisational isomorphism between the international recommendation and a country's regulation. However, policy diffusion is not sufficient to initiate a regulatory change in pharmaceutical sector and, in reality, there are profound differences in generic drug regulation among countries (cf. Homedes & Ugalde, 2005a). The implementation of INN and BE tests has proved to be a highly contested effort. A pharmaceutical product marketing budget can be three times as large as the budget for its research and development (Comanor, 1986); thus, firms would be less willing to surrender this important component of their business. Because of brand loyalty and the credibility attached to the product, some health professionals/consumers could be sceptical about the quality of drugs commercialised by generic names. A similar situation concerns the use of BE tests. Studies conducted by international agencies argue that current BE requirements are too stringent and are unnecessary for a number of medicines, which could have sweeping effects on access to medicines in developing countries (Gonzalez & Rossi, 2004; Hill & Johnson, 2004). Therefore, pharmaceutical reforms such as generic drug policy require the acquiescence of a constellation of agents/institutions. By looking at domestic structures we can better understand why and how policies developed the way that they did.
Other scholars argue that regulations emerge to serve the interests of powerful pharmaceutical corporations (Abraham, 2008). They suggest that all agents behave strategically in order to maximise their utility. This assumes that the economic world is constantly in equilibrium, that the economic agents are able to identify opportunities to achieve their preferences and would always act in a purposive manner. The existing studies on pharmaceutical regulation agree, to some extent, with this notion of actors’ identity. Abraham (2008) developed the concept of “corporate bias”. Assuming that pharmaceutical industries are interested in profit maximisation and patients have objective interests in drugs having the maximum benefit-risk ratio possible, the author suggests that the regulatory process in this sector tends to be biased towards commercial interests:
“The pharmaceutical industry was, and is, permitted to have privileged strategic access to, and involvement with, government regulatory policy over and above any other interest group. Also, more often than is the case for other factors, the industry was, and is, decisive in determining regulatory policy outcomes (or the lack thereof)” (Abraham, 2008, p. 869).
In other words, his studies place emphasis on the idea that actors engage in the regulatory process to maximise their utilities. Nevertheless, attributing the outcome of regulatory policy to rational actors might be incomplete as there is no single definition of the public interest, and government officials might disagree on this point in ways that cannot be understood in terms of their capture by private interests (Vogel, 1996). Also, portraying the policy process as a game where opportunists’ agents try to reap benefits out of incomplete contractual rules might be unreliable.
This paper argues that is necessary to understand how regulatory policy legacies shape an actor's preferences to be able to understand the extent to which international guidelines and interests group activities matter for policy development. To understand how preferences evolve, Hall (2005) suggests that political actors have multiple preferences (even for a single issue), which can have multiple effects. By attaching more weight to one variable over another, the actor emphasizes one dimension more strongly.3
Another important part of this process is framing: how an issue is publicly portrayed. Elster (1983) argues that actors must pay some lip service to the common good as it is impossible to express selfish arguments in public debates. It is impossible to express a preference for the common good without acquiring it: “by speaking the voice of reason, one also exposes oneself to reason” (Elster, 1983, p. 36). When a generic drug firm asserts its preference for producing affordable medicines and increasing access to medicines, these are not fabricated rationales but part of the firm's identity.4
Introducing new elements to the regulatory regime and the magnitude of change creates uncertainty and actors can pursue different and at times conflicting interests, as it is not possible to predict the outcome. For example, the scandal of thalidomide in Europe caused many children to be born with malformations led several states to create National Regulatory Authorities (cf. Krapohl, 2007). Periods of uncertainty can create discrepancies from expected behaviour making it impossible to predict what political actors want, without knowing the content and structure of social relations (Woll, 2008). Preferences are developed through a process of gradually understanding the situation/options available. As actors adapt to the new regulation, they push the path further along the way. I demonstrate this pathway with a qualitative analysis of the Brazilian case. This analysis is grounded in empirical data collected between 2007 and 2013, including more than 57 in-depth interviews with key informants, reviews of historical documents related to BE and INN (from Brazil and from international agencies like WHO) and thousands of newspaper articles. I used a process tracing approach (chronological narrative backed by the analytical parameters described in this section) to explain how and why Brazil promoted this large-scale regulatory reform in the pharmaceutical sector and to highlight its evolving implications. A supplementary appendix containing the research protocol can be found in the online version.
3 The generic drug reform in Brazil
Until the 1990s, the pharmaceutical sector in Brazil was highly unregulated. There was no patent protection and very limited health surveillance5 (Saraiva, 1983). This sector was formed by local and multinational firms, and by public laboratories. It was highly competitive in the final stages of the production chain and, as local firms had limited research and development capacities, competition was centred on marketing strategies. Due to insufficient pharmaceutical assistance, the majority of the population gained access to medicines through thousands of private pharmacies around the country. Brazil had two types of pharmaceutical products: reference products (the first product that filled a registration licence, not necessarily an innovative product)6 and similar products (same active ingredient and used for the same indications as the reference products with a brand name). The first time the expression ‘generic medicines’ was used in Brazil was in 1991.
Concerned with increasing pharmaceutical expenditure and the population's deficient access to medicines, the Federal Deputy, Eduardo Jorge, presented a bill to regulate the market for medicines (Bill 2022/1991), suggesting that brand-names should be removed from all medicines in Brazil as this would reduce the marketing costs of the products, while reducing the price of these products and increasing populations’ access to them. However, discussions on generic drugs only gained visibility in 1993, with the deregulation of price control for medicines in 1992 (some drugs were readjusted by more than 2.600%) (Bermudez, 1999). It was also at this point that the WHO began the promotion of generic drugs as a strategy of price regulation (World Health Organization, 1988).
To speed up a response to this problem, the Executive issued a presidential decree (793/1993) introducing generic drugs. In both cases, Congressmen and the Executive decision-makers received letters from the WHO supporting the introduction of generic medicines. Despite the recommendations of the WHO, the Decree and the Bill did not mention BE specifications, but just excluded the use of brand names in pharmaceutical packaging. Nevertheless, this norm would still require extensive reorganisation of the sector as it mandated that: The font size of brand name could not exceed 1/3 of the font size of the INN; drug retailers should present a list of generic medicine names; every institution that manipulates medicines should have a pharmacist; and all drugs prescribed and procured by the National Health System should use the generic name.
Industrialists and drug retailers7 promptly reacted, triggering a political process that was beyond the WHO's influence and mediated by local institutions. Alteration in labels of pharmaceutical products would bring economic distress to both national and multinational companies as it would require costly readjustment in packing and marketing strategies. “As a Brazilian industrialist I felt deeply harmed. I could never expect that a product I brought to the market, that prescribed by doctors — with a brand/trademark — would be annihilated by a Decree” said the owner of a local pharmaceutical firm (Visconde in Estado de Sao Paulo, 1993, p. A24). With the Legislative and Executive being less sensitive to their demands, the coalition of firms and drug retailers used courts to complain against the decree (Gazeta Mercantil, 1993). As the judicial battle slowly evolved in the courts, firms and drug retailers could delay the introduction of generic drugs. To further complicate matters, doctors, consumers, and pharmacists were not confident of the quality of drugs commercialised by the generic name or were unaware of the debate (Estado de Sao Paulo, 1993). After a cabinet reshuffle and the lack of support, the new Minister abandoned the enforcement of this decree.
Two subsequent events paved the way to this regulatory reform. Since 1945, Brazil did not protect medicines as intellectual property (IP). It was only in 1996, under the administration of Fernando Henrique Cardoso, that Congress approved the IP law, assuring patent protection of pharmaceutical products and processes (Law 92879/1996). It followed the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), of the World Trade Organization (WTO). TRIPS established the minimum parameters for intellectual property protection of pharmaceutical products and processes to member states of the WTO. Despite the fierce opposition of local pharmaceutical firms (who argued that the absence of patent protection would give Brazil more time to develop its local industry), the Executive strongly lobbied the Congress for approval (Folha de Sao Paulo, 1996).
Also, because until 1996 Brazil did not have patent protection, local pharmaceutical firms could replicate medicines for the treatment of AIDS. Parallel to the approval of the IP Act, Congress passed a regulation mandating that the federal government should provide free and universal access to AIDS medicines. It was also in 1996 that the international scientific community discovered the triple therapy for AIDS. Therefore, expenditure on antiretroviral drugs in Brazil increased from US$ 34 million to US$ 336 million from 1996 to 1999 (Nunn, Fonseca, Bastos, Gruskin, & Salomon, 2007).
In addition, simultaneous, contingent developments disturbed the regulatory environment of pharmaceutical sector. In June 1998, it was revealed that at least 14 women had become pregnant after using inactive birth control pills from Schering and two patients had died after using fake cancer medicines (Revista Veja, 1998a). The outbreak of fake pills led to emotionally driven criticism of the MoH and negative publicity for pharmaceutical firms.
This distress continued when the President decided to bring economist Jose Serra, former Senator, to the MoH. An experienced politician and presidential hopeful, Serra's approach to the problem was aggressive. He prescribed five days of intervention for Schering's manufacturing unit; he personally visited many of the affected women; determined the creation of regional prosecutors to investigate crimes in the pharmaceutical sector; and edited a Ministerial Directive (802/1998) to regulate the distribution of medicines and quality control mechanisms (Gazeta Mercantil, 1998).
In short, the Minister singled out the pharmaceutical sector as a flagship for championing important regulatory reforms. The generic drug reform was divided into two periods: the legislative discussions leading up to the Act, and the creation of resolutions and policy instruments to implement it. Therefore, as opposed to the initial motivation to introduce generic drugs into Brazil in the early 1990s (which was based on price issues associated with brand-names), the issue was now raised in the political agenda as there was a need to regulate the quality of off-patent products in the market.
3.1 Reform phase one: parliamentary negotiations
The first step towards implementing a generic drug policy was a ministerial directive that established Brazil's first National Drug Policy in 1998 (Ministerio da Saude, 1998) and a Bill regulating generic drug products. Although national and multinational firms opposed the use of INN, there was no consensus among them on the BE affair. The founder of a local pharmaceutical firm commented: “We thought this [BE tests] would be insane. Brazil did not have the structure to do something like this. This is so true, that the first generic drugs were developed outside the country […] because no one here knew how to do this” (Interview with local pharmaceutical businessman A, 2009).
The responsibility of articulating pharmaceutical firms’ demands lay with Abifarma, an industry association with both national and multinational members. In contrast to local firms, multinational firms and Abifarma were openly supporting BE requirements right after the enactment of the patent legislation in 1997 (Abifarma, 1997). Their argument for the BE requirement was linked to a discourse of quality control. Innovator companies knew that at some point they would face a generic drug competition. They could pay some lip service to it or resist by boycotting any attempt to encourage generic drug substitution (with a high probability of bringing negative attention to their business). The BE requirement reduces the number of firms qualified to produce generic medicines, but also has a clever frame of legitimising the quality of the product which, once diffused, could be difficult to reverse.
A former civil servant who participated in the negotiation of the Generic Drug Bill commented that both national and multinational firms opposed the regulation to some extent. Multinational firms were concerned with the trademark and prescription rules. The government's proposal required that all similar and innovator drugs should display the INN in labels, while the trademark would present a size no more than 20% of the generic name (Interview with government official A, 2009). This matters a great deal to this sector as marketing strategies represent an important element of the product cycle. It was then agreed that, in the label of innovator products, the trademark would be displayed in a higher font size and the INN would come right below, with a reduction of 50% compared to the brand name. On the other hand, all products registered as generic drug could only be commercialised by its INN.
By contrast, the debate with national industries was much harder: “The local pharmaceutical industry was afraid of disappearing if they had to face a legislation mandating bioequivalence. They knew bioequivalence would be expensive” (Interview with government official A, 2009). The founder of a local private pharmaceutical company commented on this uncertainty: […]Brazilian firms, facing a new situation and very diverse compared to the one in operation before… got scared because of the issues involved […] It is natural that there was some frightening given the volume of changes that happened at the same time (Interview with local pharmaceutical businessman B, 2009).
The bill was approved unanimously in November 1998. Records of the floor discussions highlight the relevance of Deputy Ronaldo Coelho and the Minister of Health in championing the agreement (Camara dos Deputados, 1998). The Generic Drug Act (Law 9787/1999) introduced a new product into the market, forcing a rearrangement of the pharmaceutical sector. Competition turned to three pharmaceutical products: an innovator (or reference) product, a similar drug (not-interchangeable with a reference product, using the INN) and the generic drug (interchangeable with its reference product, holding a brand-name). According to this law, all doctors in the National Health Service are mandated to prescribe the INN name; therefore, consumers are allowed to choose among the three types of product, if available. However, public purchasing of medicines is regulated by another law (Law 8666/1993), and should be based on the lowest price and not on the type of product.
3.2 Reform phase two: governmental activism
The National Health Surveillance Agency and the MoH were responsible for establishing the regulatory parameters for implementing the Generic Drug Act. But how would they make generic drugs happen? How could they induce pharmaceutical firms and drug retailers to supply generics? And how would they encourage health professionals and consumers to request generic drug substitution? Establishing the resolutions to regulate the market would prove to be the most controversial step of the reform.
After passage of the Act, there was great tension between the MoH and Abifarma. Abifarma claimed that some local firms were engaged in unfair competition, advertising similar drugs as if they were generic drug products (cf. Abifarma, 1999). The association began its own public campaign to inform consumers about generic drugs.
Governmental officials, in turn, accused Abifarma of boycotting generic drugs, delaying the entry of these products and generating confusion around the issue (Interview with government official A, 2009). The Minister of Health chose to bypass Abifarma by consulting with firms individually (Valor Economico, 2000). He also asked Congress to investigate the cost structure of the pharmaceutical sector through a Parliamentary Investigative Commission (Serra, 2009). The fanfare surrounding the investigation received extensive media coverage, promoting a negative image of the sector and reducing their leverage. This seems to have been a deliberate strategy — by fostering a crisis, the Minister could move forward with his reform agenda.
A decisive step was the creation of the Brazilian Association of the Pharmaceutical Industry (Pro-Genericos) in 2001 to aggregate the interests of generic drug manufacturers. The initiative of consolidating this lobbying group was a suggestion of the Minister of Health (Sindicato da Industria de Produtos Farmaceuticos no Estado de Sao Paulo, 2006). For this remarkable activism, he was quoted as a “Guerrilla Minister”, who “went after pharmaceutical companies, slashing ‘abusive prices’ for brand-name drugs and flooding the market with cheap generics” (Newsweek, 2001).
The responsibility of formulating resolutions to regulate the generic drug sector fell to the Health Surveillance Agency (ANVISA). However, as a recently established institution, ANVISA did not have the technical expertise to formulate these regulatory guidelines (Vecina in Dias & Romano-Lieber, 2006, p. 29). A Division for Generic Medicines was created apart from other pharmaceutical regulatory departments with a direct connection to the president of the ANVISA to facilitate the formulation of these rules (Interview with Local Pharmaceutical Industry Informant A, 2009). Also, a number of resolutions were issued to encourage the demand and the supply of generic medicines, creating mass media campaigns and mandating disclosure of production scale of generic drug industries, for example (Dias & Romano-Lieber, 2006).
4 Assessing the regulatory process in the 2000s
The generic drug reform had an extraordinary impact on the pharmaceutical market, prompting considerable change in the governance of this sector, including the industrial development of local private pharmaceutical firms (Shadlen & Fonseca, 2013). According to Pro-Genericos (2009a), the market share of generic drugs has increased steadily, representing 14% of sales in 2008. Registration of generic medicines at the ANVISA increased from 893 in 2002 to 3000 in 2006 (Pro-Genericos, 2009a), implying that more products entered the market. Demand for generic drugs has also progressed since 2001.
Serra largely used the implementation of generic medicines as one of his foremost achievements during the presidential election campaign of 2002 (PSDB, 2002). Regardless of this credit-claiming, Serra lost the election, and has since been less able to continue influencing the path of generic drug policy.
4.1 Local pharmaceutical manufactures
As seen so far, local pharmaceutical producers were the least likely group to adapt to the reform, fearing the high cost of adjusting to the new regulatory regime. The regulation established not just a stringent framework but also a short period for producers to adjust to the new rule. The fate of similar drug producers would then be either to adjust and convert to a generic drug, or provide evidence of incremental innovation and request a new patent at the National Patent Office, or exit the market.
Surprisingly, local firms not only managed to adapt but also became market champions in the sector (Shadlen & Fonseca, 2013). For those who managed to adapt, generic drugs became a big business opportunity. Brazilian pharmaceutical industries account for 88% of the domestic generic drugs market. In 1999, the local pharmaceutical firm EMS was 29th in the ranking of pharmaceutical industries in Brazil, and in less than 10 years it became the market leader in the generic segment. Similarly, Eurofarma, Biosintetica and Medley had an impressive market performance over the this period. Eurofarma, one of the largest local industries, from 2000 to 2005 invested nearly U$ 45 million in pharmacokinetic tests (Exame, 2005). How and why did local pharmaceutical firms become highly supportive of generic drug policies and become leaders in the pharmaceutical sector?
Given the massive negative media attention, it was necessary to restore communication with civil society after the crisis in 1999. Pro-Genericos focused highly on providing seminars, interviews, publicity material to drug retailers and pharmacists so they could understand their relevance in sales behaviour (Interview with Local Pharmaceutical Industry Informant A, 2009). It also provided market data on the sector's performance and reacted to attempts to disqualify the quality of generic drugs.8 As the governmental campaigns to stimulate the generic drug demand shrank, in 2003 Pro-Genericos launched a US$ 1.5 million dollar mass media campaign to inform health professionals and the population about these products (Gazeta Mercantil, 2003b).
As part of the adjustments, Abifarma, one of the most influential representatives of the sector for more than fifty years, was extinted in 2002. During the negotiations to introduce a generic drug law, the Minister of Health and the president of Abifarma had constant public disagreements, exposing the sector as a whole and brought negative attention. A new association was created, the Brazilian Federation of Pharmaceutical Associations (Febrafarma). “The government had segmented the sector. For some negotiations invited one association and excluded the other. We noticed that it was necessary to create an institution to speak for all of them” (Libbos in Sindicato da Industria de Produtos Farmaceuticos no Estado de Sao Paulo, 2006, p. 68). Aggregating the voices would strengthen the sector, making policy advocacy more efficient.
In 2003, ANVISA proposed a new resolution establishing that all similar producers should present the same BE tests as generic drug producers when registering a product or in renewing its registration and that, by 2014, all similar products must be adjusted (Resolution 133 and 134/2003). These proposal allow similar products to keep their brand-names (different from generic products that must be commercialised by the INN) and to increase the regulatory standards thereof. Therefore, even after the enactment of the Generic Drug Act, there was still room for local industrialists to maintain their production of similar drugs without providing BE tests. Thus, this put Brazil in an awkward situation, with four pharmaceutical products in the market: innovator product, generic product, similar product (not BE) and similar product (BE). Local producers would have no other option than to adjust their products to fulfil BE requirements. The MoH did not promptly agree with this proposal, defending that conversion of similar drugs into generics should be incremental and be in the long term. Surprisingly, local pharmaceutical firms did not back this position, as a governmental official commented: “The [generic] segment as a whole took the political position to adapt. I was furious with them at that time. At that time I guess the decision to adapt was strategic to national producers so they wouldn’t have to face questions about the quality of its products” (Interview with government official B, 2009). Therefore, even after the enactment of the Generic Act, there was still room for local industrialists to maintain their production of similar drugs without providing BE. Although some local producers were clearly dissatisfied with the decision to adjust their products, they opted not to voice their opinions against it their chances of success fell considerably as more industries began to adapt (Interview with local pharmaceutical businessman A, 2009). At that time the generic drug sector was already experiencing an extraordinary evolution, with the leadership of the national (Gazeta Mercantil, 2003a).
As presented in the previous section, local producers defended vehemently their rights to use a brand name and were uneasy about introducing new technical requirements to register off-patent medicines. Paradoxically, nowadays local producers account for 88% of the generic drug market in value. Looking at their demands after the generic drug reform helps illustrate how preferences are adjustable to the policy process rather than fixed. Generic manufacturers have advocated that prescription of medicines must be done by the INN:
[…] another important challenge to overcome barriers of access to medicines is related to the behaviour of medical class. It is essential health professionals use the generic name when prescribing medicines, as a way of assuring an economic feasible treatment to their patients, which at the same time assures its safety and efficacy (Pro-Genericos, 2009b, p. 16).
Furthermore, representatives of generic manufacturers also linked the generic drug regulation to industrial success:
The Generic Drug Act contributed significantly to local pharmaceutical industries, as they could effectively improve and develop […] It led firms to operate in another level, a higher level. […] Never in the history of the pharmaceutical sector in Brazil have you ever seen the situation we have today (Finotti, 2009)
This evocative language highlights the quality value attached to BE drugs. This discourse has a clever strategy as there is no room for policy discussion about the merits of quality control, nor space for support in the direction of “poor quality drugs”. As the local industries began to adapt, they highlighted themselves as producing high-quality drugs as much as innovator companies, providing a better product to consumers and contributing to access to medicines. Pro-Genericos emphasises the centrality of BE products as a certificate of safe and effective medicines, linking generic drugs as to a major societal concern (access to medicines) and thus building a social image and reinforcing the regulatory path. The medicine's reputation and quality are bound together into the regulatory concept of BE (cf. Carpenter & Tobbell, 2011).
Complementary to this paper, Shadlen and Fonseca (2013) suggest that the government had an important role in applying a set of industrial policies and collaboration with firms to assist them into building capabilities to adapt to the regulation. They suggest that preference does not shift is as coercion of a new regulatory regime but as a supported by the government to acquire the new capabilities.
4.2 Patient advocacy: new actors into pharmaceutical regulatory policy
This section presents the stakeholders that question the current architecture of the pharmaceutical regulation in Brazil and their debates on the, arguable, stringency of the Brazilian norm. Despite firms’ adaptation to generic regulatory policy in Brazil, the reform has produced unforeseen consequences associated with the public production of medicines, which provoked a reaction from AIDS patient groups (some of the most prominent patient advocacy groups in the country). Brazil has 18 public pharmaceutical manufacturers that supply most of the country's pharmaceutical assistance programmes.
Public pharmaceutical firms faced enduring challenges in adapting to generic drug regulation, particularly in providing BE tests (PNUD, 2006). The limited technological capacity of public pharmaceutical producers forces them to obtain active pharmaceutical ingredients (API) from foreign markets such as China and India. Purchasing is governed by a public procurement process where contracts are awarded to the bidder with the lowest price (Law 8666/1993)9. For each API purchase, a new BE test would be necessary, increasing the costs of production. Thus, the difficulty of public producers to adjust to the regulation is beyond a matter of business strategy, costs or technical capacity. It is also obstructed by public administration rules.
Public producers questioned the relevance of BE as a proxy of quality medicines, arguing that medicines produced by public firms are in use for a long time and have had their clinical performance validated already (Gomes, Chaves, & Ninomya, 2008). Between 1996 and 2006, around 26% (sales) of the AIDS medications supplied to the National AIDS Program were produced by public industries (Costa, 2010). Although there is no study about the effects (e.g. viral loan resistance) of antiretroviral drugs produced by public industries on AIDS patients, many studies have reported the significant improvement in life expectancy and quality of life of AIDS patients (Campos et al., 2005). Because historically Brazil has been using non-BE medicines, it can provide important evidence for pharmaceutical regulation.
AIDS activists have slowly initiated an agenda to discuss the relevance of BE, and of how/when it would be necessary. A booklet published in 2007, “Medicines: talking about quality”, for the first time challenged the association of BE generic drugs with quality medicines (Ruiz & Osorio-de-Castro, 2008). It explains that several steps in the manufacture process, such as Good Manufacturing Process, assure the quality of drugs and that BE should not be considered one of them. They argue that this misconception is propagated by those who want to profit from it. To support these arguments, the authors mention the celebrated National AIDS Program and the supply of public firms. “The industry has done a perfect job of lobbying, such that many activists are now using this discourse without even knowing what bioequivalence is”, mentioned the organiser of this booklet. The coordinator of the Working Group of Intellectual Property (GTPI) corroborated this concern:
We [GTPI] do not believe that bioequivalence and bioavailability is equal to quality […] We listened to the thesis of Division of Pharmaceutical Assistance (Fiocruz) that has a good study on this, about quality of medicines. Our flagship is quality and this is not the same as ‘if you have bioequivalence and bioavailability this will be the best option’ (Reis, 2009).
This is also the position of the president of the Brazilian Federation of Pharmacists:
The fact that similar drugs do not have bioequivalence doesn’t mean it is not good; the only difference is that it is not bioequivalent. In other words, I simply can’t do the same treatment [protocol] with similar drugs, the same treatment I was getting with an original drug, or reference or generic […]. Maybe I will need to use a prescription a little bit different, this doesn’t mean it is not good (Chaves, 2009).
The discourse of these activists raises several concerns. Increasing the stringency of generic drug regulation by mandating off-patent drugs to be an equal copy of an innovator product will not necessarily increase the quality of medicines. In fact, it could reduce the supply of medicines and competition. It also gives a false impression that medicines produced in Brazil are less effective than those that are BE.
How are these concerns expressed in terms of policy demands? What has been done to reverse or adjust the policy path? Interestingly, besides the aforementioned booklet there was no record of advocacy or lobbying demands to reformulate the generic drug regulation. Much of the discourse of BE associated with quality was incorporated into the discourse of activists to an extent that it is difficult to question. The acceptance of the idea that off-patent medicines must equal their innovator versions, and the difficulty in mobilising the bulk of AIDS activists against it, suggests that the regulatory concept of BE has been incorporated by these patients. Mostly important, by comparing the antecedent period of the reform with the narrative of this section, demonstrates how these activists (that were not participating in pharmaceutical regulation) have slowly became aware of the implications of this rule. Thus, this also exemplifies how a narrow deduction of their interest, would ignore this important element of the regulatory process.
The findings of this case study can provide insights into the ongoing global health deliberations regarding BE requirements. Documentary evidence collected for this project suggests that controversy surrounding BE began in 2003, when international agencies’ consultants and heath activists debated the stringency of BE parameters (Gonzalez & Rossi, 2004; Gonzalez, Fitzgerald, & Rovira, 2008; Gonzalez, 2008; Hill & Johnson, 2004; Hogerzeil, 2004). Therefore, it is still a discussion that is in its infancy. We still need to learn more about how this regulatory parameter could affect the governance of the pharmaceutical sector, which could have far-reaching implications for the price and supply of medicines. This analysis, using the case of Brazil, adds to this discussion and is one of the few studies demonstrating the political construction of generic drug regulation and how it evolves.
5 Conclusion
Studies of pharmaceutical regulation usually invoke either the triumph of interest groups over governments, or on the diffusion of international guidelines to explain patterns of regulation within the sector. Nevertheless, these explanations provide only a partial understanding of the regulatory process; the findings of this paper enrich both perspectives. This article suggest that the WHO practices can act as a stimuli for countries to rethink their regulatory norms, but it is domestic political institutions and policy legacies that matter the most as far as the timing and direction of the reform are concerned. The case of Brazil illustrates that actors’ preferences (firms and patient groups) that capture the pharmaceutical regulatory process can, by contrast, be shaped by these processes themselves. When facing periods of major economic and political crisis, these groups rethink their demands and their strategies in order to pursue them. As they adapt and learn how to act in the new regulatory environment, they also push the policy path forward.
The claim that institutions matter is not new but it needs to be qualified. I emphasise the importance of observing how regulatory concepts are being framed. This is consistent with arguments that political structures determine not just how much influence groups have but also what policies they demand in the first place (Hall, 2005; Woll, 2008).
There was a clear shift in the demands of Brazil's pharmaceutical industries that probably would have been left out of analyses that assume an actor's identity as rational, fixed. Had the firms not adapted, pharmaceutical regulation in Brazil may not have changed much since 1999, and there would still be competition between patented and similar products. Although firms’ preferences sustain the generic drug regulatory policy, this does not mean that they control the regulatory arena. Similarly, the, AIDS NGOs, who were illiterate in the area of pharmaceutical regulation during the 1990s, learned the unintended consequences of the reform and became active in pharmaceutical regulation.
Comparative qualitative case studies on other countries that have implemented generic drug policy are necessary to give an understanding of the extent to which foreign guidelines or crisis in pharmaceutical sector give rise to new rules. In countries with co-payment and reimbursement system, government plays an important role in the demand of pharmaceuticals and the extent to which this matter for regulation is yet to be assessed. This dilemma goes beyond the scientific debates and mobilises different interests and groups of society. Also, we still need to learn more about the effects of BE to access to medicines. This study concludes that the state still matters for pharmaceutical regulation and that pharmaceutical regulation is only partially influenced by non-state actors.
Notes
* Previous versions of this article were presented at the Social Policy Association Annual Meeting in Sheffield (July 2013), with travel-grant from the Center for Metropolitan Studies (CEM).
** I thank the two anonymous reviewers for their comments.
1 Medicines have three names: the chemical name describes the product's molecular structure; the INN is a shorter version of the chemical name; and the brand-name is assigned by the manufacturer.
2 Although not all studies were concerned with pharmaceutical regulatory reforms, they provided information regarding why and how countries adopt regulatory policies in this sector.
3 This is not nested games as rational scholars propose, but a constitutive element of who the group is and what they want. Nested game are independent situations, while for the historical perspective, events are sequent and dependent on one another.
4 The process is not to look at the causal role of ideas as distinct from interests but rather in the constitutive role of ideas. The former implies a methodological analysis of the causal arguments/variable testing, the latter requires process tracing.
5 The Law 6360/1976 regulated the registration of medicines. The industry had to prove (with scientific evidence) that the product was safe and efficient for what it was proposing to treat, and that it complied with the identity/activity/quality/purity necessary for commercialisation. Until 2001, pharmaceutical surveillance in Brazil was incipient, with little supervision of manufacturing plants (Piovesan, 2002).
6 As there was no patent protection, if a Brazilian pharmaceutical firm were able to copy and register a medicine prior to the innovating firm, the MoH would grant the registration of ‘reference product’ to the local firm.
7 Pharmacies are an important element in the distribution chain (regulated by the Law 5991/1973). Interviews with several key informants suggested that their role in the policy process was residual compared the advocacy of the pharmaceutical industry. This is partially because they were historically less organised than the industry, but also because their business is highly dependent on the industry. It would be unlikely that they would support regulations that go against the pharmaceutical industry's preferences.
8 Some ad hoc studies suggest that physicians and patients are insecure about the quality of generic drug products. For example, in a study of social representation of generic drugs conducted between 2002 and 2003 with drug retail consumers, Carvalho, Accioly, and Raffin, (2006) found that they refer to generic drugs as lower-priced medicines that might be of questionable quality.
9 Local private industries and multinational firms do not bid to purchase API by the lowest price; therefore they can fix three sources of API producers, chosen by other criteria than price. Also, in case they would need to swap API suppliers, the costs and timing to do it wouldn’t be as long and costly as for public producers.
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Appendix A Supplementary data
Supplementary data associated with this article can be found, in the online version, at doi:10.1016/j.polsoc.2014.03.004.