TDLC rules on Socofar S.A.'s consultation.

On July 3, 2023, the Court for the Defense of Free Competition (TDLC) issued a resolution regarding the consultation filed by Socofar S.A. This sought to examine whether the differential treatment granted by pharmaceutical laboratories, in determining the price of their products, both for public customers (institutional channel) and private customers ( retail channel) participating in the pharmaceutical distribution segment, is in accordance with free competition. retail) que participan en el segmento de la distribución farmacéutica, se encuentra conforme con la libre competencia.

In summary, the TDLC ruling states that it is indeed necessary to promote competition in the retail channel for the sale of medicines and to give priority to price as a determining factor. To this end, it indicates that pharmacies and drugstores may implement mechanisms for the purchase of medicines through tenders, without this implying an infringement of the restrictions on free competition imposed on laboratories and drugstores with respect to the sale price.

It should be noted that this resolution may be subject to appeals, so it is not yet final and enforceable.

However, the most important points to be highlighted in this resolution are as follows:

  1. The TDLC recognizes that there are indeed relevant price differences between the institutional and retail channels in the sale price of medicines. retail en el precio de venta de medicamentos.
  2. The observed price disparity cannot be fully explained by cost differences, such as those derived from different purchase volumes or from promotion and marketing costs, being factors of a factual-regulatory nature the ones that would explain it.
  3. In view of the structure of the industry, the incentives derived from consumer behavior, the existence of information asymmetries and the low substitutability of brand-name drugs, it is necessary to establish, in the opinion of the TDLC, measures to promote competition in the retail, so that a more relevant role is given to the price offered as a determining factor.
  4. Then, the TDLC states that the price advertising obligations imposed on laboratories and other suppliers are applicable only to the commercialization of drugs in the spot market and do not prevent the acquisition of drugs through tenders, whether they are public or private customers.

In conclusion, the TDLC concludes that the sale of drugs by laboratories and other suppliers in tenders, without being subject to the obligation to sell at published list prices, does not violate the provisions of Resolution No. 634/2001 or Article 2 of Law No. Law 20.724 (known as Drug Law I).

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