Interview

>> Better regulation of the drug market
Luiz Milton Veloso Costa
Source: ANVISA Bulletin No. 03

Since the General Office of Administration and Finance was established, federal surveillance has succeeded in combining sanitary surveillance of the pharmaceuticals market with financial regulation. From April 2000, this task has been the responsibility of economist Luiz Milton Veloso Costa, 52 years old, from the city of Montes Claros in Minas Gerais. The Director's mission is to carry out a thorough study of the Brazilian drug market, in an effort, through the adoption of integrated policies, to ensure better access to these products while at the same time guaranteeing their quality. In the Administration area, which he also coordinates, Luiz says that there is a need to recruit more employees to form part of the permanent staff of the National Health Surveillance Agency.

What does economic regulation mean?
Luiz Milton: The essence of public regulation resides in active policies taken forward by the government in the markets, with the aim of guaranteeing desirable results from the point of view of the social well-being of the population.

What is the justification for economic regulation in the pharmaceutical market?
Luiz Milton: A market is subject to regulation when it consists of goods and services essential for the population but remains the victim of oligo-political supply in which producers hold market power over consumers. This situation can be detected in different sectors such as energy, telecommunications, transport and healthcare (private health and medical plans). It is worthwhile noting that the Federal Constitution, in the chapter dealing with economic order, establishes a legal basis for government regulation of markets.

How does economic regulation of the pharmaceutical drugs market correspond with the objectives of ANVISA?
Luiz Milton: International experience indicates clearly that regulation of the pharmaceuticals sector only functions correctly when it is carried out in an all-embracing manner, namely the need to take action simultaneously in all the different aspects of the market. ANVISA currently carries out sanitary regulation, laying down norms which aim to guarantee quality and safety for consumers. In this respect, economic regulation complements the activities of the Agency.

How are these policies related?
Luiz Milton: While both regulatory activities appear to be different, sanitary regulation and economic regulation need to be dealt with within a context of integration and complementarity. For example, if it takes an excessively long time to grant an operating license to a company or to grant a product license, this can hinder the entry of new competitors to the market. On the other hand, regulatory measures in the economic area can certainly have a impact on the health area. For example, increasing the State Tax on Merchandise and Services Circulation (ICMS) of a particular group of medicines in one state can provide an incentive for selling that product in another state where the tax is lower, and then bringing the product back into the original state. Moving medicines around in this way, basically the result of distortions in market conditions, makes health control of medical products extremely difficult.

In the light of this, how do ANVISA's activities to monitor the drug market fit in?
Luiz Milton: As part of regulatory activity, monitoring is absolutely fundamental, so that the Agency can familiarize itself in depth with the market under its responsibility. Compiling and dealing with production data, sales information, imports of finished products and inputs and so on is of key importance for an integrated overall sanitary and economic regulatory scheme. A thorough assessment of the Brazilian drug market will enable us to identify sales of the products according to type of product and by geographical region, and to identify places where excessive consumption is taking place. Identifying local and imported sources of raw materials is of course vital for guaranteeing the quality and safety of the medicines on sale in this country.

As far as the Administration offices are concerned, what are your plans for 2001?
Luiz Milton: In the personnel management area, we are going to direct our recruitment efforts towards setting up the permanent group of staff members of the Agency, and in particular building up the specific career of Regulator/Regulatory Agent. The first appointments should be made in the first half of 2001. In the fee collection area, we shall establish control and follow up mechanisms regarding receipts in order to provide better data concerning assessments of the cost-benefit ratio with the users. In the financial and budget area, the costs of each organizational unit will be examined in an effort to increase the involvement of those responsible for resource management in the elaboration and execution of the budget. We will conclude the exercise involving decentralization of the management units of our Coordination Offices of Ports, Airports and Borders. We also aim to build up activities dealing with covenants and agreements in order to make their planning, formulation and follow up viable. As far as logistics are concerned, we shall guarantee the material and asset resources necessary for the Agency to achieve its mission. These are the main initiatives that are planned, among others, for 2001.