Argentinean Government Signs Agreement to Slash 600 Drug Prices by 30%, Senate Bans Drug Sales Outside Pharmacies

These past days have brought significant changes to Argentina's regulatory framework, significantly affecting the pharmaceutical sector. Argentina's President Cristina Fernandez de Kirchner has announced the finalisation of an agreement with pharmaceutical laboratories, which brings a 30% price cut to 600 medications commercialised in the country, reports La Nacion. Meanwhile, as stated by El Cronista Comercial, the senate has finally approved the introduction of a long-awaited law that bans the commercialisation of over-the-counter (OTC) drugs outside regulated pharmacies in the country, the exhibition of medications outside pharmacy counters, and also emphasises the role of pharmacists in drug sales.

Price Reductions

The introduction of price-regulation measures comes one month after President Fernandez submitted a draft bill in the country (see Argentina: 20 October 2009: President Submits Draft Bill on Drug Price Control in Argentina). The final agreement included four leading chambers in Argentina incorporating Caeme (the chamber of foreign laboratories), Cilfa (the chamber of national laboratories), Cooperala (the chamber of co-operatives), and Capgen (the chamber of generics manufacturers). As reported by La Nacion, in exchange for their co-operation, the government has agreed to implement a strategic development programme to support the pharmaceutical industry in the country.

The agreed 30% cut will remain valid until 1 July 2010. The president has emphasised the public accessibility of price information, which should become available on the internet. Some of the medications affected by this measure are included in the table below.

The complete list of medications can be accessed online at Cilfa's website.

Sales Restrictions

As reported by El Cronista Comercial, the senate's approval of the medications sales law was reached with 51 votes in favour and 0 votes against the measure. Its introduction substitutes articles 1 and 2 from the law 17565, and eliminates articles 14 and 15 from the decree 2284/91. The final decision follows mounting pressure from authorities in the country, who believe it is the right step to fight Argentina's problems with counterfeited drugs (see Argentina: 18 September 2009: Argentine Government Faces Increasing Pressure to Approve Drug Sales Restriction Law). Meanwhile, pharmaceutical laboratories that commercialise OTC medications have stated their discontent over the measure and its lack of relevance for the government's campaign to eradicate counterfeited products.

This law, which the parliament has spent over a year revising, will come into effect in the following days, and will be applied on a national basis (see Argentina: 18 September 2009: Argentine Government Faces Increasing Pressure to Approve Drug Sales Restriction Law).

Outlook and Implications

Argentina's introduction of stricter commercial rules for medications is a clear reflection of a changing trend within the country's regulatory environment, which today represents one of the loosest within the region.

Looking into price-cut regulations, they bring a process of formalisation to previous unofficial efforts (mainly by Secretary of the Interior Guillermo Moreno) to control the cost of drugs in the country. As expected, the institutionalisation of these efforts has introduced a downward trend in prices, which is expected to greatly benefit the government (one of the most important clients for pharmaceutical firms). Meanwhile, the participation of pharmaceutical laboratories within the process of negotiation brings a stable environment for the smooth introduction of these changes. The government's promise to introduce a development plan for this sector, such as in Brazil, is also expected to have influenced compliance with the government's plans.

Meanwhile, the drug sales restriction law brings important changes to Argentina's commercial environment. The main objectives reside in the government's intentions to eradicate problems with counterfeit drugs (estimated to account for 10% of the overall pharmaceutical market) and reduce over-consumption and self-medication (see Argentina: 15 September 2009: Argentine Obras Sociales Under Government Scrutiny over Illegal Drug Trafficking and Argentina: 28 August 2009: Counterfeited Drugs Occupy 10% of the Pharmaceutical Market in Argentina). Growing discontent within the sector and Argentina's lack of experience and capabilities to secure a successful implementation are factors that could undermine the effectiveness of this law.