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Cablegate: Brazil - Regulatory Agency Forging Ahead with New

VZCZCXRO5250
RR RUEHRG
DE RUEHBR #2606/01 3481841
ZNR UUUUU ZZH
R 141841Z DEC 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 7650
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 3554
RUEHRG/AMCONSUL RECIFE 6019
RUEHSO/AMCONSUL SAO PAULO 8864
RUEHBU/AMEMBASSY BUENOS AIRES 4478
RUEHAC/AMEMBASSY ASUNCION 5845
RUEHMN/AMEMBASSY MONTEVIDEO 6653
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 002606

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR:SCRONIN/MSULLIVAN
USDOC FOR 3134/USFCS/OIO/WH/SHUPKA
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
STATE FOR EB/TPP/BTA and WHA

E.O. 12958: N/A
TAGS: ETRD ECON BR
SUBJECT: BRAZIL - REGULATORY AGENCY FORGING AHEAD WITH NEW
REQUIREMENTS FOR MEDICAL DEVICE REGISTRATION

REF: BRASILIA 2589

1. (SBU) Summary: Emboffs met December 12 with representatives of
Brazil's National Sanitary Vigilance Agency (ANVISA, an FDA-like
agency) to clarify the scope of new requirements for commercial and
pricing information for approval of medical device sales and urge
that the GoB take into account industry concerns over the
implementation of the measure (reftel). Economic and Regulatory
Issues Department Director Pedro Bernardo and International
Relations Director Rogerio Ferreira argued that the new regulation
was merely the application to medical devices of the requirements
for provision of commercial information as part of the ANVISA
licensing process that were introduced in 2003 by law 10742; these
requirements already applied to pharmaceuticals. Bernardo stated
that both the new regulations and law 10742 only require provision
of pricing data for licensing approval and do not give ANVISA any
power over these pricing decisions. Bernardo stated that the
regulations apply equally to Brazilian and imported products. He
dismissed industry concerns that anti-trust considerations might
prohibit provision of pricing data. Bernardo assured Emboffs that
ANVISA would protect companies' proprietary commercial strategy
information, but would share with other GoB agencies the pricing
information provided. End Summary.

2. (U) Emboffs met, at our request, with ANVISA reps Bernardo and
Ferreira to urge that industry concerns over a new regulation
(185/2006) be taken into account, as well as to clarify the
regulation's provisions. In order to obtain ANVISA approval for
registering or re-registering medical devices, the new regulation
requires companies to provide commercial/pricing data on the
product. Companies are required to provide 1) the intended price
for the product on the Brazilian market; 2) the company's estimates
of the number of patients that would use the product; 3) factory
price and distribution margins; 4) expected sales and marketing
expenses; 5) a list of substitute or similar products and their
prices; and, 6) if the product is sold in any of ten specified
countries (Portugal, France, U.S., Germany, Australia, Canada,
Spain, Italy, Japan and the United Kingdom) then price at which it
sold in those markets must be submitted, along with supporting
documentation.

3. (U) Bernardo argued that the new regulation was simply the next
step in the process of regulating law 10742 of 2003. This law, he
said, requires that commercial and pricing data be provided in order
to register pharmaceuticals and medical devices. ANVISA began the
process by requiring the same information for pharmaceuticals,
which, he affirmed, the companies had been providing without
incident. It simply took ANVISA some time to grapple with how to
approach the less standardized medical devices sector. Bernardo
said ANVISA and the Ministry of Health had held extensive
discussions with government institutions, health insurance companies
and the industry to understand the market of medical devices.
After talking to industry and government, in December 2005, ANVISA
put the resolution 185/2006 for public comment until February 2006.
In November 2006 the resolution was passed and it goes into effect
on December 13.

4. (U) According to Bernardo, ANVISA consultations with other
institutions pointed up a number of information problems in the
sector. The federal agencies responsible for the federal health
system (SUS) and private health insurance companies stated that the
costs of medical devices have been a large factor in increasing the
costs of their operations. There also was considerable confusion
over pricing of devices and which devices are substitutes, Bernardo
affirmed. He alleged that they found in one case that the same
basic product has sixty different prices on the market from
different providers.

5. (U) ANVISA and Ministry of Health decided to apply the pricing
data requirements to about 5 percent of the medical devices on the
market, according to Bernardo. The products chosen are the ones
that have shown consistent price increases over the last five years
for SUS and health insurers. Health insurers and government are
responsible for 80 percent of the demand for these products,
Bernardo stated. ANVISA stated that current information is
asymmetric, making it difficult for customs and ANVISA to classify
products. Government also faces difficulties in correctly taxing
these products, Bernardo alleged. The products listed are for:
cardiovascular procedures; orthopedic procedures; clinical analysis

BRASILIA 00002606 002 OF 002


(laboratory procedures); kidney therapy; ophthalmological
procedures; hemotherapy procedures; and otorhinolaryngologist
procedures.

6. (U) Bernardo stated that ANVISA will use the information received
to put together a database and create a standards nomenclature to
simplify the process of customs processing and product registration
with ANVISA. Government will also use the information to correctly
tax the products. ANVISA will also use the information collected to
provide price and quality comparisons, allowing government bodies
responsible for procurement to make better decisions. Bernardo
affirmed that pricing information is public information and will be
released to entities with access to its database, but companies'
proprietary marketing strategy information would be kept
confidential.

SIPDIS

7. (SBU) Emboffs raised a series of concerns that industry has put
forward about the measure, including: 1) the difficulty of gathering
much of the information requested; 2) anti-trust considerations as
the regulation requires companies to provide pricing data on
competing products; 3) that the regulation would serve as an
additional obstacle to getting devices licensed, and thus would
reduce Brazilian consumers' access to the latest innovative
technologies; 4) the impression that this regulation creates that
Brazil is headed towards price controls for these devices; and, 5)
whether the regulation applies equally to imported and domestic
devices.

8. (SBU) In dismissing concerns over anti-trust law or that industry
would have difficulty providing the data, Bernardo argued that the
pharmaceutical industry has been providing similar data without
incident for over a year. The new requirements were not onerous, he
affirmed, and thus would not limit new product registrations.
Moreover, the law upon which the new regulation is based does not
allow for price controls on medical devices. It would take new
legislation passed by Congress to introduce such controls. Finally,
the regulation applies equally to imported and domestic products, so
there is no national treatment issue, Bernardo affirmed.

9. (SBU) Emboffs requested an advance copy of the form that
companies will have to fill out. The form is now also available on
the ANVISA internet site (www.anvisa.gov.br), along with an
instruction manual explaining how to fill out the form. Companies
may be required to submit supporting documentation in some cases.
After the resolution goes into effect on December 13, there will be
a sixty-day phase in period for companies to begin complying with
the resolution. Bernardo implied that, were there clearly serious
and justified difficulties in meeting the new requirements during
this period, ANVISA might tweak the procedures or requirements. But
it would be forging ahead with implementation, he said.

10 (SBU) Comment: In our own review of the text of law 10742, upon
which Bernardo said this measure was based, we did not find specific
mention medical devices (as opposed to pharmaceuticals). That does
not necessarily mean that the new regulation is without legal basis
in other legislation. It does suggest, however, that ANVISA's
ultimate intent is controlling costs in the public health system, as
law 10742 was clearly aimed at reducing pharmaceutical prices.

SOBEL

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