Generic Drug Policy in Mexico under fire from PhRMA

[James Love <love@cptech.org>]

Some PhRMA and Journal of Commerce hysteria regarding Generic Drug
policy in Mexico.  Jamie


JOURNAL OF COMMERCE
Monday, March 2, 1998

US drug makers fear generics law in Mexico:  Brand-name sales considered
at risk


BY MARY SUTTER
JOURNAL OF COMMERCE SPECIAL

	MEXICO CITY -- Legislation pending in Mexico for generic drugs could
disrupt the sale of trademarked and patented products worth millions of
dollars in exports to U.S. pharmaceutical companies.

	The pharmaceutical companies worry that, absent strict controls and
regulations, their investment in research and development will be
chipped away by the creation of a generics market in Mexico.  The
industry estimates it costs between $350 million and $500 million from
discovery through development of a new drug.

	"Our biggest concern is there may exist  shortcomings in the
implementation of the generics law," said Carlos Garcia, director
general of Eli Lilly y Compania de Mexico, subsidiary of the U.S.
multinational. "If the necessary controls are not in place at the point
of sale, branded products could be affected quite negatively."

	Rigorous controls are needed with the generics law to ensure that poor
quality or dubious products do not slip into the market, and that
doctors' orders are respected, Mr. Garcia said.

	Patent expiration key

	Generic drugs are like their brand-name counterparts, but they become
available to consumers only when the life of the original patent
expires.

	Because they normally are much cheaper -- their production does not
involve research and development costs since they are copied from the
patent -- their appearance on the market forces brand-name drug makers
to slash the price of their own products.

	U.S. drug makers lose $1 billion annually worldwide from unauthorized
copying of their inventions, according  to the Washington, D.C.,
Pharmaceutical Research and Manufacturers of America.

	"While new drugs are highly expensive and time-consuming to develop,
they can often be copied at a small fraction of their development
costs," Pharmaceutical Research and Manufacturers of America said.

	In Mexico, the main problem for U.S. drug exporters is how the generic
market will operate.

	"We want to be sure that these (generic) drugs fulfill the same
requirements as we do," said an executive at an international
pharmaceutical company. "It's not the generics so much as the conditions
under which they are introduced into the market." When Mexico became a
partner in the North American Free Trade Agreement, its patent law and
rule-making process became subject to harsher scrutiny. Regulations
covering generics have been slow in coming, although officials had
promised that they would be published by the end of last year. Some
aspects of the generics rules were published in February, but the U.S.
industry is nervously awaiting the whole package of reforms that will
define the market for generics.

	Eric Hagsater, a board member of the Mexican pharmaceutical association
Amiif, insists that Mexico's Health Ministry worked closely with
industry representatives to create rules that are acceptable to all
sides while preserving the interests and health of the Mexican public.
For example, he said, only drugs that are listed in the government
registry -- those distributed by public-service and other government
organizations -- will be eligible for sale as generics. While drugs on
the registry make up about 20% of all pharmaceutical products, they
account for more than 50% of sales in Mexico.

	"The emphasis will be on what is in widest use and not highly
specialized medicines," he said.

	'Similar' not allowed

	Mexico will not be allowing "similar" products. The first generics will
be interchangeable -- exactly the same as the brand-name drug, just
marketed under the generic name.

	In a key step, expected by mid-March, Mexico will publish a list of
those drugs for which generics can be made, along with the procedures
manufacturers must follow when applying  for a generic to be included in
the register. The current  complete registry of drugs includes 531
medicines in 776 forms (capsules, tablets, etc.).

	Under a recently published health regulation, doctors will have to
include the generic name of a given drug on prescriptions, as long as
the generic is listed in the government registry. Pharmaceutical
Research and Manufacturers of America had fought against mandatory
inclusion of generic drugs on prescriptions. However, doctors in Mexico
can specify a brand-name drug on the prescription, in which case, only
that brand-name product may be issued.

	"What is going to happen here is not what happened in the United States
because the U.S. has just one (single) pharmaceutical market," said Mr.
Hagsater. "There, the day after the patent expires, several generics are
launched in the market and it causes a decline in the price (of the
brand-name drug)."

	Different in Mexico

	However, in Mexico, the use of brand names to market a generic drug
will be strictly prohibited. A company will be able to package a product
as "Company X penicillin," for example. 

	But even with the new rules, Mexico still lacks the necessary
infrastructure -- such as labs to test equivalency  -- for the generic
market. So even after the rules are published, it likely will take some
time before the market is truly operational, Mr. Hagsater said.

	Another worrying issue for the U.S. side is the massive presence of the
government sector in the drug market.

	Pharmaceuticals are among the few products still  subject to government
price controls in Mexico.  Pharmaceutical Research and Manufacturers of
America estimates that price controls and government manipulation reduce
sales by $100 million to $500 million annually. And the market still
isn't what it used to be.

	Mexico's pharmaceutical market -- with total sales last year estimated
at $3 billion -- is just crawling back  from the economic crisis of
1995-1996. Sales aren't expected to return to 1993 levelsuntil next
year.

	U.S.-made medicines remain priced beyond the reach of most Mexicans.