Inconsistent Medication Purchases Hurting National Sector

Q: What steps has ANAFAM taken to guarantee manufacturing and supply during the pandemic?

A: Our sector did not halt activities. However, in the area of raw materials, we did have a few issues in a number of cases. Some countries restricted the export of certain supplies. This was a problem when the supplier was bound to a specific SKU here in Mexico. In these cases, we asked the sanitary authority to authorize imports from a different supplier. These suppliers need to meet certain conditions, however in the case of generics you have different options. COFEPRIS provided some support on the issue but only to a certain extent. There were about 20 cases where imported supplies were at risk. Normally, companies can lean on their inventories and currently they are working to stock up. Thankfully, not one manufacturer ended up without supplies.

Q: Do you expect greater flexibility in adapting imports in the future?

A: We have a problem with the current regulatory situation, which is very complex and does not benefit the industry. During the COVID-19 crisis, the authorities have actually been introducing new regulations that place an even greater burden on companies in Mexico. These regulations do not have to do with COVID-19. Companies that have been waiting for procedures to be completed now have to meet new requirements that set back their plans. Instead of simplifying, the government is making things more and more complicated. We feel the government is not listening to the industry. There are about 48 urgent applications from ANAFAM laboratories that are under review by the government and after 2 months not even one has been approved. The government is taking action without transparency. Before, there was a process where they would tell us what new regulation they had in mind and we could provide input on what impact that would have on the national sector. Now, even when you have a meeting, you do not see any of your suggestions reflected in their decisions. These government officials are not actually inside the industry, they do not always know what is best.

Q: Where does medication development in Mexico stand at the moment?

A: We have some labs that have their raw material manufacturing here. One of our members specifically manufactures only raw materials. For Mexican manufacturers, it is better to focus on a specialized medical product that can be marketed in a smaller volume market at a higher price. This can provide a return without a major investment up front. If we wanted to compete with China or India in the large volume markets, we would need a great deal of capital. The Mexican market is relatively small compared to what these countries already have in terms of global sales. It would be hard to achieve competitive costs. There is an opportunity, however, in the area of specialized medication.

Q: What impact is the government’s approach to buying medication having on the sector?

A: Under previous FTA conditions, the Mexican government would set more requirements for public sector purchasing that would give preference to products that were more strongly integrated in the national productive chain. This was lost with the new free trade negotiations.

We support getting medications from elsewhere if there is no provider in the country. However, with many imports, this is not the case. I believe the government could still handle a not-so-costly mechanism where, in the case of two available providers, the government gives preference to the one with the larger national presence. I do not see this happening, however. López Obrador initially included the idea of strengthening the national sector in his policy plans, but the reality has so far proven quite the opposite. The openness to imported products from anywhere is adversely affecting national production. Products are being bought from countries that have lesser sanitary standards. Apart from a lack of consistency in pharmacovigilance, other countries could be subsidizing their industries, thus creating an unfair competitive advantage over Mexican companies. There is also the loss of taxes and work opportunities if the government decides to support foreign producers instead of Mexican producers.

Q: What actions are you taking to improve this situation?

A: We are filing an amparo against a disposition proposed by the government that lowers the import requirements for many products, particularly in the oncological area. The government is opting for direct purchases without any bidding process. Formerly, things happened according to structured bidding processes. Manufacturers would be informed of the demand from the public sector, which would allow them to plan their production. With the current lack of transparency and long-term announcements, manufacturers in Mexico are deciding to back away from new projects and products. We have also noticed that direct purchases have not led to lower costs than those achieved through the bidding processes, which was the justification provided by the government. We are talking internally to determine what other actions we can take.

Another issue is that there is a lack of clarity on who is responsible for medication purchases. According to new responsibilities, these should be handled by the Administrative Office of the Ministry of Finance, while now in practice it seems they are the responsibility of INSABI. However, INSABI has not really taken the reigns and there are still discussions on which dependency should be responsible for this. I believe the Ministry of Finance should coordinate all entities in the health sector. Right now, there is no clear indication of how companies can participate in new purchases. Not only this, we also do not receive permits to export and therefore we are losing business opportunities.

Q: How has the private sector evolved over the past few months?

A: We have seen a shift in demand from the public sector to the private market. This is particularly the case for chronic diseases, such as hypertension and diabetes. People are willing to pay the full price for a generic medication. Overall, there is growing demand for generics, which are not too expensive. This trend demonstrates that the government is not succeeding in its promise to create accessibility to a wide range of medications through the public sector.

National Association of Medicine Manufacturers (ANAFAM) strives to bolster Mexico’s independence in medication production and supply. Its membership includes both Mexican companies and multinationals with production activities in Mexico