Pharmaceutical Regulatory Affairs in Latin America: Harmonization or Convergence of Regulations?

While attending the Conference “Pharmaceutical Regulatory Affairs in Latin America” that took place at the London Cavendish Hotel from the 29th to the 31th October, my attention was drawn to the variety and complexity of approval and registration regulations in the various countries that were taken into analysis, and the regional efforts that were made on the front of harmonizing such varied regulations region wide.

Latin America Health and Pharmaceutical Market Overview
With its population reaching 6 million people in 2011 (WHO 2012)—Argentina Brazil and Mexico accounting for 60% of the population—Latin America is a fast growing region with equally fast growing economies. Brazil, Mexico, Argentina and Colombia are considered as the “top 4” Latin American economies and pharmaceutical powers. As a pharmaceutical market overview, Latin American sales in 2011 were at USD 62.9 billion, registering a 8.9% growth in 2012, which is particularly significant if considered within the wider picture of a global market value of USD 995 billion dollars in 2011 (source: WHO 2012).

In 2009, the national expenditure average in Latin America represented 85 of the region’s GDP, equivalent to a per capital annual expenditure of USD 671 USD divided partly into public expenditure and partly into private out-of-pocket expenditure and payments made through insurance schemes. Latin America is also experiencing a transition in major health risk trends, going from infectious diseases to more traditionally westernized health risk trends such as hypertension, obesity, cancer, ischemic heart diseases and diabetes. This significant change in demographics, disease patterns, economics and market size are creating new challenges for domestic and international pharmaceutical companies operating in the country. Companies are facing other considerations such as emerging science, new products and services, shifting demographics, evolving regulations and transformed business models which consequently trigger increased stakeholder expectations in the region.

Key Trends 
The main key pharmaceutical trends that have been detected for the region in the short to medium term are several, and one of the most important is likely to be the fast growing domain of the generics market in the region. By 2015, branded and unbranded generics are expected to be growing faster than patent protected and non-protected branded drugs. In the region, pharmaceutical sales are growing fast and especially in the areas of vaccines, oncology, high cost medicines, biologicals and rare diseases. In terms of demand, there is an increasing demand for drugs as more people move into middle class, urging the region to increase drug access in spite of intensifying cost containment measures taking place in most counties. Additionally, attractive opportunities have arisen for biopharmaceutical producers in Latin America, also due to the fist biotech drugs having gone off patent recently, allowing for the emergence of a new Biosimilars market that still represents a consistent regulatory challenge in many Latin American markets.

Regulatory Harmonization Efforts in Latin America: A Viable Possibility?
A topic at the centre of the conference was the recent efforts to harmonise regulation in Latin America. Specific attention was paid to the increasing number of challenges that Latin American countries are encountering on the path to harmonization of their regulatory environment on a regional level. Firstly, the issue of globalization must be analyzed as one of the main obstacles towards harmonization of regulations in the current regulatory scenario in Latin America: this is mainly because globalization has fundamentally changed the environment for regulating medical products in the region and has made it more difficult for Latin American countries to harmonize regulations. More foreign facilities and clinical trial sites are supplying primary data for Latin American drug marketing processes; there is an increasing volume of imported finished products and components in the drug production chain in Latin America; more outsourcing is used for the manufacturing of clinical trials from local entities that have not been historically engaged with Latin America; and most importantly the region is experiencing high import levels of products from countries with different levels of regulatory development, which creates a real hurdle for harmonization in the region.

Much progress has been made in the realm of harmonization of regulations in the United States, Europe and Japan over the past 20 years, but the process has been much slower in emerging markets including Latin America where such efforts only began to bear fruit in the past 5 years. Over the past 5 years, while some agreements have been reached on harmonization of pharmaceutical regulations in Latin America following the Pan American Health Organization (PAHO) efforts, the road is still quite long as pharma regulation in the region is strictly interlinked with politics, and politicians in the region are still at the stage of arguing what type of harmonization model can actually benefit the region as a whole.

First Steps
Nevertheless, some encouraging recent developments show that Latin America is starting to make its first steps towards full harmonization. On the 28th September 2012 the Chilean Public Health Institute and the Mexican federal Commission for sanitary Risk (COFEPRIS) subscribed to a cooperation agreement that will allow for the harmonization of requirements and regulatory aspects of drug production, including vaccines within the Americas region, breaking the barrier present in many countries. The agreement, which is still at the “memorandum of understanding”(MOU) stage, is a bilateral mechanism that is eventually expected to allow the mutual recognition of marketing authorizations, inspections visits and Good Manufacturing Practices (GMP) certification. COFEPRIS also holds equivalence agreements with Health Canada and the FDA for the regulation of drugs and medical device products. Mexico has also signed other equivalence MOUs with El Salvador and Ecuador, and a MOU is in the making with Colombia. MOU’s with Brazil and Argentina are expected anytime soon.

Despite the many harmonization efforts carried out by the major Latin American markets, the road toward total harmonization, if at all possible, seems steep and convoluted. The main reasons behind this is the size of the region and the great number of countries included in the area, each of them with different regulations and regulatory system, political background and different policy approaches to healthcare and pharmaceuticals. One proposal which is becoming quite popular in the country is that of “convergence” rather than “harmonization” in use in the Asia Pacific Economic Cooperation Area (APEC). With regulatory convergence, we mean a voluntary process where the countries in question will have their regulatory requirements similar or more aligned but it does not require a full harmonization of rules and laws, which encompasses changing the laws in each country and is therefore more difficult to achieve. Convergence of regulations can therefore be considered as the most viable solution for the Latin American region so far, an option that could also be applied for a future harmonization of drug pricing in the region.

Despite recent talks of harmonization of drug pricing in the region, this is considered as highly unlikely to be achieved in the near future, as most countries in Latin American have their own pricing regulations and market mechanics that would make harmonization on front unviable. The only possible “convergence” option may be the construction of a reference pricing database where countries can draw from. An African proverb cited at the conference by Dr Gonzales comes as perfect fit to this harmonization efforts in the making in the region: “If you want to go fast go alone. If you want to go far go together”, and this is indeed the case for Latin America.