Mexico jurisdiction report: Taking care of the pharma sector
This investigation (file number IO-001-2017) had previously commenced ex officio on June 27, 2017, as a result of evidence suggesting an unlawful transaction among companies and that monopolistic practices, in the form of collusion among companies, price fixing and manipulation, and exchange of information that affects competition, are occurring in several segments of the Mexican private drug market.
COFECE is one of the autonomous constitutional enforcement agencies created from the deep constitutional amendments of 2013. The Telecommunications Federal Institute (IFT) is the other, which is in charge of acting as a competition enforcer of the telecommunications, radio and TV industries. COFECE watches over any other industry, including pharmaceuticals.
Since COFECE’s creation, the healthcare sector has been a priority because it includes essential products widely consumed by 120 million Mexicans. Between 2010 and 2016, the consumer price index for medicines was 10.4% higher than Mexico’s overall consumer price index. Moreover, in 2014, lowest-income households allocated 42% of their spending on medicines, the highest rate among OECD members, according to Deloitte’s Global Health Care Outlook 2017.
COFECE has carried out several anticompetitive investigations in this sector, such as on laboratory testing and blood banks services, medical-grade latex surgery/examination gloves, and bid-rigging practices.
In this regard, in July 2016, COFECE announced a broad-ranging study on generic drug entry into the Mexican market. The results of this study were released in August 2017; the main conclusions were
(i) that generic competitor numbers and their rate of market entry are excessively low and do not cause enough price reductions;
(ii) that patent expiration has not encouraged sufficient competition; and
(iii) that industry regulations are not promoting adequate competition conditions.
The commission accompanied these findings with several suggestions pertaining to different governmental authorities and affecting several issues of importance to industry stakeholders, such as allowance of so-called secondary patents (ie, polymorphs, formulations), the linkage system, clinical data exclusivity, prescription rules, and substitution/interchangeability.
