English version

Legal battles by
pharmaceutical monopolies
A group of pharmaceutical companies has engaged in a legal war
against the government to continue its dominance of Peru`s multimillion dollar biopharmaceuticals market, which includes latest
generation medications for the treatment of chronic diseases such as
cancer. In recent years, members of the National Association of
Pharmaceutical Laboratories (ALAFARPE), including Roche, Pfizer,
Abbott, Bristol, Lilly and Merck among others, have sued the Ministry
of Health and blocked the entry of similar drugs on the basis that they
are unsafe. However, OjoPblico has learned that the publication of a
new regulation in coming days will reverse this situation and lead to
lower prices for existing drugs.
By Fabiola Torres Lpez
ojo-publico.com
Angelica, aged 43, is from Piura. Her life changed dramatically after visiting
the Institute of Neoplastic Diseases Lima (INEN) in 2011. The mother of two
young children, she was earning the minimum wage as a graphic designer and
had no health insurance. She left the clinic in tears shortly after reading the
results of her medical examination: breast cancer which had already spread to
different parts of her body. The diagnosis was depressing, until months later
she heard of a latest generation drug: the so-called biopharmaceuticals,
created to treat chronic diseases from the cells of living organisms,
manufactured since the end of the twentieth century thanks to advances in
genetics and molecular biology. A single dose can cost up to PEN 6,000 (USD
2,000) on the domestic market.
This product was her last hope.
"I didnt want to die and because of my children I did everything I could to
fight", the woman tells OjoPblico by telephone, her voice breaking as she
recalls the economic and emotional sacrifice she has experienced with her
family over the last four years. Angelica, who agreed to tell her story on the
condition that her identity was protected, is a victim of one of the most
common cancers in Peru and is also part of the 20% of the population without
health insurance. In the midst of this terrible situation, she faced another harsh

reality: the effective biopharmaceutical that was her treatment hope for
surviving the illness was too expensive.
Angelica would have to save her income over the next 50 years to pay for the
complete Herceptin therapy that she was prescribed. This drug is one of the
most exclusive and sought after oncological biopharmaceuticals and is the
flagship medication of the Swiss multinational company Roche. With no other
alternative to fight her disease, she made the hardest decision of her life: she
mortgaged her home to obtain a loan and undergo the treatment of 52
Herceptin ampoules in a private clinic. And that was how she paid PEN
365,000 for the biopharmaceutical. Her treatment ended, but she is still paying
the bank and perhaps will be doing so until the last day of her life.
What is the history of these drugs in Peru, and of the multinational laboratories
that produce them, and why are they so expensive?
LABORATORIES AND BIOPHARMACEUTICALS
OjoPblico has established that a group of more than 10 biopharmaceutical
companies has entered our country since 2000, after being progressively
imported by capital subsidiaries of the 10 largest pharmaceutical companies in
the world: Roche, Abbott, Bristol-Myers Squibb, Lilly, Merck, GlaxoSmithKline,
Pfizer, Sanofi, Johnson & Johnson and Genzyme. These are grouped together
under the Peru National Association of Pharmaceutical Laboratories
(ALAFARPE). The medications, after being authorized by the Ministry of Health
(MINSA) and receiving tax exemptions from the Ministry of Economy and
Finance in 2001, hit the domestic market, but with higher prices than those
seen in neighbouring South American countries.
The biopharmaceutical drugs that arrived in Lima were already the best sellers
in the world: the oncologicals Mabthera, Herceptin and Avastin by Roche of
Switzerland, which dominates the innovative anti-cancer product segment, and
the arthritis medications Humira and Enbrel, manufactured by Abbot and Pfzier
respectively. All these exclusive and restricted-use products, which are not sold
in pharmacies in any part of the country, began to be purchased by Essaludwhich officially services 10 million members and shoulders the highest burden
of expenditure on degenerative diseases treatment in the country, which
correspond to the insurances of the Armed Forces, the Police and private
clinics.
Fifteen years after the entry of the biopharmaceuticals, these 10 companies
dominate the local market and have been accused of monopolistic practices in
a business that brings them annual earnings of up to PEN 200 million for public
sector purchases alone, according to analysis by OjoPblico. The laboratories
have defended this position of dominance since 2008, when they filed the first
lawsuits against the state and a group of Peruvian pharmaceutical companies

with a single aim: blocking importation of so-called biosimilar medicines,

products similar to those of the biopharmaceutical companies, but
manufactured by companies located in India, South Korea and Brazil. The
argument was that these products are detrimental to the health of the
population because the countries where they are manufactured do not have
internationally adopted health standards.
Initially, the ALAFARPE corporations directed their fire against the Peruvian
importers of biosimilars, by making reports of unfair competition to the
Institute for the Defense of Competition and Protection of Intellectual Property
(Indecopi), to prevent those laboratories promoting products comparable to
their own. It was then the turn of the Directorate General of Medical Supplies
and Drugs (Digemid), an organ of MINSA that monitors the countrys
pharmaceutical industry, which received various judicial requests for it to reject
the registration of the biosimilars that were to be imported to compete with
biopharmaceuticals.
THE PHARMACEUTICALS vs THE STATE
The key moment of the legal battle occurred less than a year ago, when the
twenty-one ALAFARPE laboratories denounced Digemid. They then filed an
injunction with the judiciary to prohibit entry into the Peruvian market of all
products that were declared similar to any of their biopharmaceutical lines,
based on the argument that the importers had failed to prove the therapeutic
efficacy of the drug on the health of people, and that MINSA did not have
sanitation standards by which the medications could be evaluated.
In its defense before the court, Digemid said biosimilars admitted into Peru to
that point were not dangerous. Despite this, the state lost the battle against
ALAFARPE. On 19 May 2014, Judge Malbina Saldaa of the Seventh
Constitutional Court of Lima accepted the pharmaceutical guilds request and
the next day Digemid was unable to respond to more than 100 applications for
biosimilar medicines that needed health registration before being imported into
Peru. By the time this happened, the legal war initiated by the 10 laboratories
to maintain its market dominance had taken place across several fronts.
OjoPblico inquired into complaints presented by the ALAFARPE partners to
Indecopi and Limas constitutional courts and uncovered the following cases.
In 2008, Roche sued the Peruvian company Farmindustria through INDECOPI for
unfair competition for having registered and imported the drug Reditux,
produced by the Indian laboratory Dr. Reddy's, to compete with its
biopharmaceutical Mabthera.
This drug is used against non-Hodgkin
lymphoma cancer, which affects the lymph. The Swiss pharmaceutical giant,
which achieves annual sales of USD 1,300 million of Mabthera according to
figures from the international consultancy IMS Health, accused Farmindustria of

promoting a product as similar to its own without having proven this to be the
case. It has also prevented Essalud and other medical insurers from acquiring
the drug.
In 2013, Johnson & Johnson of Peru, a subsidiary of the US-owned company of
the same name, filed an injunction against Digemid and laboratory Olimed to
suspend the veterinary product Remsima, a competitor to its anti-arthritis
product Remicade, which brings in revenues of USD 607 million per year
worldwide. The action filed in the Fifth Constitutional Court of Lima was
dismissed, but this did not discourage the remainder of the multinationals from
following its controversial steps.
Also in 2014, the US corporation Pfizer presented two injunctions before the
First Constitutional Court of Lima against Digemid and the Peruvian
pharmaceutical companies Peru Lab and Qpharma. The lawsuit sought that the
MINSA office refrain from granting health registration for the anti-arthritis drug
Altebrel, promoted by these two companies as similar to the biopharmaceutical
Embrel, which generates revenues of USD 7,875 million annually for Pfizer
around the world, according to IMS Health.

MINSA REGULATION
These lawsuits have occurred not only in Peru, but also in Spain and in other
countries in Latin America. The group of 10 laboratories has brought a scientific
argument to the courts to maintain its dominant position in the
biopharmaceuticals market and to delay the entry of its competitors into a
business that brings in huge profits. The highest incomes for these companies
arise in sales of anti-cancer medicines, a disease which ranks as the second
leading cause of death in our country, with 45,000 new cases diagnosed each
year, according to the INEN. Many patients do not have the resources to cover
therapies with latest generation biopharmaceuticals and only receive palliative
medicine.
OjoPblico has learned that this complex situation will end in the coming weeks
when MINSA publishes regulations that are expected to establish specific
health standards and to open doors for biosimilars or replicas of the originals
whose entry and registration in Peru have been blocked by the
biopharmaceutical since the judiciary ruled in favour of ALAFARPE almost a
year ago. However, the Director of the association, Augusto Rey views this with
concern. In an interview with this journal, he said ALAFARPE opposes Digemids
draft regulation, believing it to contain transitional measures that are
concessional for importers of biosimilars. These, he says, allow them a period
of four years to bring in medications without strict quality controls.

Rey, who rejected that a pharmaceutical monopoly exists, maintained that if

the Digemid regulation is approved under these conditions, it will not be in line
with international requirements to ensure the safety and efficacy of the
products. The representative of the 21 pharmaceutical companies comprising
ALAFARPE stated, If published, no one will be able to celebrate. We cannot
allow them to enter the market if they do not meet health standards"
"I know they are opposed to the existence of a transitional period in the
registration and monitoring requirements for new laboratories wishing to enter
Peru (...) This will be a staged process. Health Minister Anibal Velasquez already
has the regulation in his hands for approval. This regulation is an A-1 priority
for the health sector. There are asymmetries in the pharmaceutical market we
have to resolve, with clear and transparent rules to ensure the registration of
safe medicines and create price competition,"revealed Csar Amaro, the head
of Digemid, in dialogue with OjoPblico.
The senior MINSA official is careful during the interview to not use the word
monopoly to describe the position of the pharmaceutical companies in the
biopharmaceuticals case. However, in the public debate, many individuals,
from former APRA Health Minister Oscar Ugarte to the former Prime Minister in
the current government Juan Jimnez Mayor, as well as officials from Essalud
and researchers from the NGO International Health Action, have talked about
monopolistic practices in the biopharmaceuticals market. Indecopi has also
investigated the question of collusive practices in the case of some of these
laboratories, but has not fined any of them for lack of evidence.

THE BIOSILIMARS 'BOOM'

As the end of market exclusivity for these pharmaceutical companies
approaches (several of their patents will expire between now and 2019) and
the biosimilar industry boom begins, the judicial blockage currently affecting
these products in Peru could be lifted with approval of the MINSA regulation
which deals with the registration process and defines the requirements to be
imposed on these medications as recommended by the World Health
Organization (WHO), the US Food and Drug Administration and the European
Medicines Agency. One of the main requirements is that the laboratories which
import these alternative products implement pharmacovigilance systems to
report to Digemid adverse reactions (if any) on the health of their patients.
And since their appearance, laboratories that produce similar drugs to those
marketed by the multinationals have faced a tough scientific debate about the
evidence of efficacy, safety and comparability of their products compared with
the original biopharmaceuticals, given that the manufacture of the latter (today
there are 93 of this type in the world) represents a process in which millions of

dollars are invested. But one aspect that today is in their favor is that German
companies like Merck (merged with Indian Dr.Reddy's laboratory in 2012) have
begun to develop their own catalog of biosimilar drugs, at lower prices. The
same director ALAFARPE, Augusto Rey, confirmed that several of its partners
are in the process of going into the business of copying biopharmaceuticals.
What seems to be clear is that entry into the Peruvian market of biosimilars
could, as has already happened in some European countries with strict health
monitoring, reduce by between 30% and 60% the price of the originals,
according to preliminary projections by specialists of the Ministry of Health,
who are preparing a report. These calculations are supported the evidence of
what occurred with Roches oncological product Mabthera, with the company
obliged to reduce its price by half (about PEN 5,000 to PEN 2,500 per dose)
with the arrival of competitor Reditux in 2008.
"A business of single suppliers allows harmful distortions in the prices of
medicines. Today there are products worth between PEN 1,000 and PEN 6,000
per dose, i.e. they cost up to 20 times their actual price", said Javier Llamoza,
pharmaceutical chemist of the research section of the NGO Action International
Health, which produced a detailed study in 2011 on the cost of the medicines
monopoly in Peru. That is why Seguro Integral de Salud (Comprehensive Health
Insurance - SIS), the state organ which subsidizes health care for 15 million
Peruvians with scant resources, has no budget to cover expensive
biopharmaceutical therapies.
Although not covered by SIS, Angelica, the woman who had to sell her house to
pay PEN 365,000 in order to afford her treatment for breast cancer, continues
battling to prolong her life, while the pharmaceutical companies play their last
cards to extend their dominance in the expensive biopharmaceuticals business.