Mexico's plan to import medicines collides with the dearth of free commerce agreements
An employee shows packages with the antiviral Avifavir.Russian Direct Investment Fund / Reuters

The coronavirus crisis caught Mexico in open war with its pharmaceutical companies. In his attempt not to buy from companies that were monopolies in the country, according to President Andrés Manuel López Obrador, the Executive has done everything possible to import, without the endorsement of the health authorities, medicines from abroad. A decision that experts warn will be expensive and may even be unfeasible because many of the producing countries do not have a free trade agreement with Mexico.

Upon his arrival to power at the end of 2018, López Obrador made public his intention to get rid of drug distribution companies in the country, since, he said, a small group of them controlled the market under the protection of previous authorities. He then concentrated the purchase of medicines in the Ministry of Finance, which generated a shortage in hospitals of the public health system for which, to date, doctors and patients of diseases as serious as cancer are protesting.

Also, between February and March, at least eight workers from the parastatal Petróleos Mexicanos (Pemex) died because in a hospital that exclusively cares for company employees and pensioners, they administered a contaminated medication. Weeks before, López Obrador celebrated the decree that eliminated the endorsement of the health authorities, specifically the Federal Commission for the Protection against Sanitary Risks, as a requirement to import medicines from abroad. “It has already been published in the Official Gazette that medicines can be purchased abroad when there are monopolies in the country, or sabotage,” the president said on January 30. Now “we buy medicines in any country in the world.” Mexico went from importing drugs approved by the United States, Switzerland, Australia, Canada or the European Union, to importing those that are approved by the World Health Organization (WHO). This opens the door to products from India, China, Turkey, Argentina, among others.

Last week, López Obrador announced that his government is seeking to contact Russia to learn more about Avifavir, the drug to treat covid-19 that Russia introduced on July 10. The president did not specify if his interest is to buy the drug for marketing in Mexico or if it is only to carry out his own research protocol in the country. Although it is true that India and Russia sell, in many cases, medicines at lower prices, it would be expensive for Mexico to buy them from those countries since there is no trade pact with those countries, says Juan Carlos Baker, independent consultant and former deputy secretary of Foreign trade. Only the tariff would be 15% to 20% on the price.

“Some of the largest drug producers are in countries with which we do not have free trade agreements, such as India, Pakistan, Brazil and even Russia,” says Baker, who led the negotiations for the new T-MEC by Mexico. “In an emergency such as the one we are experiencing, the Government could use mechanisms to reduce the cost, such as eliminating the tariff, but Russia is where it is and India is where it is and the cost of transportation, putting it into the distribution channel and the payment to the intermediaries, that will not change if you eliminate the tariff ”.

The elimination of the tariff will also result in lower tax collection for the Government. “Although your budget is very necessary for emergency situations like these, the medications you bring must not fail to meet the health requirements that the rest of the other products have,” says Baker.

The Government assures that it is not necessary for the national authorities to give the green light to the medicines that it will import since they will have the endorsement of the WHO, but it does not work exactly like this, says Rafael Gual, director general of the National Chamber of the Pharmaceutical Industry (Canifarma ).

WHO has a basket of pre-approved products, including medicines and medical devices, but it is a small basket. Mexico currently consumes about 1,800 different products, of which only 87 are in this basket, says Gual. “That is why we think that importing medicines from abroad can be disastrous for the country,” says Gual, “it is unfeasible and it could be disastrous in the sense that they are not going to be able to do it and will generate a greater shortage.” The Canifarma, along with three other industry associations, published on July 14 a joint letter to the president in which they assure the industry “it is not concentrated in a few firms and there is great competition.”

“Discretionary purchases abroad do not solve the supply problem by themselves and can cause great damage,” say the signatories. Canifarma data indicates that Mexico produces about 80% of the drugs consumed in the same country, the rest is imported. The country has developed in recent decades one of the most important pharmaceutical industrial plants in Latin America, which allows it to source almost entirely. This newspaper tried to obtain, without success, the position of the Ministry of Finance and the Ministry of Economy.

In 2018, the Government spent 58,000 million pesos in the health sector and the total figure for 2019 is not known with certainty, Gual assures, because instead of doing public bids for drug contracts, it changed to a system of direct awards. In August last year, President López Obrador announced that the Health budget would be increased to 80,000 million pesos. “In the end, we did not have or have any visibility of what is being spent in 2020, due to this situation of direct awards,” says Gual.

Read original article here.