Midterm Elections’ Impact on Healthcare

Mexico’s midterm elections held on June 6 revealed strong opposition views against President Lopez Obrador’s current mandate. With one of the highest participation rates in years, over 52 percent of the voters achieved a balanced-out representation in the Lower House of Mexico’s Congress, where MORENA, the president’s party, held a sizeable majority. MORENA kept its majority in the lower chamber, controlling 197 of the 500 seats against the 256 it held before the election. With this result, the party lost its absolute majority in the lower chamber and now it will require the votes of political allies PT and PVEM.

While there can be many reasons for this outcome, from the business side of things, particular decisions from the President have radically changed operations for many companies, including those working in the health sector. This shift in operations had good and bad consequences but when it comes to healthcare, the margin of error is very thin, MBN experts say.

Medicine Supply Uncertainty

Since the beginning of President Lopez Obrador’s mandate, the pharmaceutical industry suffered many changes related to public medicine acquisition processes. This led to a modification of the Public Sector Acquisitions, Leasing and Services Law (LAASSP) which, according to Rafael Gual, Director General of CANIFARMA, “excluded medicines and health supplies from public bids, which led the industry to file an appeal for protection and a large group of senators to submit an Action of Unconstitutionality to the Supreme Court of Justice of the Nation.” Medicine supply is now handled between INSABI and UNOPS for 2021, “setting the ground for foreign companies to participate in an open international bid, with no regards for the commercial agreements Mexico has signed,” added Gual.

The consequences of such modification were critical for Mexico’s health system. “Ever since, the system has suffered medicines and resources shortages,” exposed Karel Fucikovsky, Director Medical Care Mexico of Pierre Fabre Farma. As a result, the retail market will strongly continue to be driven by the increased penetration of generics and out of pocket behavior by patients and consumers. Fucikovsky expects the election results will speed up processes for authorities to comply with the rulings and results of the National Tender supported by UNOPS. “Now that MORENA won several governorships, the party will need to deliver a strong service level of health to keep the strong positive momentum it has,” said Fucikovsky.

Increased Certainty for Innovation, Investment

Greater confidence is expected after the results of the election, which could also boost industry development, according to Fernando Becerril, Senior Partner at Becerril, Coca & Becerril. Diversity in Congress is expected to generate business development in the country, while also attracting foreign investment to the country. “The future in the coming months promises to be more encouraging than what was perceived before the election,” said Becerril.

Investment is a subject with which many companies in the sector have struggled. This has been mainly driven by the modifications to LASSP but also by the general uncertainty created by Mexico’s regulatory agency COFEPRIS, which, during the current administration, has already gone through to two changes in commissioners, has been absorbed by the Ministry of Health and has reduced the number of authorized third-party collaborators. According to Becerril, this gloom scenario is likely to change after the election. “The balance achieved speaks of a positive future in the country and, consequently, an improved investment climate.”

A Stagnant Resolution for Cannabis Regulation

In some cases, however, the election will leave a very similar political to what it was before. In 2020, MORENA pushed through Congress the General Law for the Regulation of Cannabis, which seeks to legalize marijuana for recreational, scientific, medical and industrial uses, creating the world's largest cannabis market in a country plagued by drug cartel violence. The law initiative also included the creation of the Mexican Institute for the Regulation and Control of Cannabis as a decentralized body of the Ministry of Health. It is still up to the Senate to approve the project passed by Chamber of Deputies earlier this year. Meanwhile, the Supreme Court declared that it will erase all laws referring to cannabis, leaving the plant in a legal void. “It is not legal but it is not illegal either, which means all investment in Mexico’s cannabis industry is frozen until clear rules are published and a complete regulation is passed by Congress,” said Guillermo Nieto, President of ANICANN.