CMED announces two-factor annual price adjustment formula for drugs

On January 12, 2022, the Brazilian National Health Surveillance Agency (ANVISA) released a decision made by the Technical-Executive Committee of the Drugs Market Regulation Chamber (CMED), that set the productivity factor value (X Factor) at 0% in relation to the price readjustment of drugs for 2022. As a result, the intra-sector relative price adjustment factor (called Z Factor) will also be equal to zero.

According to Technical Note 61193/2021/ME (Nota Técnica 61193/2021/ME), prepared by the Secretariat for Competition Advocacy and Competitiveness of  the Ministry of Economy, which is part of CMED’s Technical-Executive Committee, the series and forecasts observed and that influence the calculation of the X Factor indicate an estimated negative variation of -1.5% in industry productivity for the period from July 2021 to June 2022.

Below we reiterate the main aspects of the two factors:

Drugs Price Variation in Percentage (VPP) = IPCA – X +Y + Z,

 

  • X Factor: The X factor is the productivity factor passed on to consumers. It is established from the estimate of future productivity gains of companies that comprise the pharmaceutical industry in the country.
  • Z Factor: The Z Factor  aims to promote competition in various drug markets, adjusting relative prices between the least and the most competitive markets, and assumes three different amounts, according to market concentration (Herfindahl–Hirschman index).

 

The price adjustment is annual and usually occurs in March. The Council of Ministers still awaits the publication of the IPCA (Consumer Price Index) and Y Factor to define this year’s adjustment (percentage).

 

Demarest’s Life Sciences Team  continues to monitor activities in the sector and is available should you need any further clarification on this matter.