Life Sciences 2019 Comparisons

Last Updated April 12, 2019

Law and Practice

Authors



Pinheiro Neto Advogados has wide experience in major cases involving life sciences and healthcare, including M&A, compliance (regulatory, public law, criminal and competition), and PDPs. The Life Sciences & Healthcare practice of the firm has partners exclusively dedicated to the Brazilian Health Regulatory Agency (ANVISA) and Supplemental Health Agency (ANS) regulation, with a group of highly specialised lawyers fully dedicated to the health area who provide advice to several industries, such as pharmaceuticals, biologics, vaccines, medical devices, diagnosis, food, food supplements, cosmetics, crop defence, agricultural products, beverages, healthcare operators and hospitals. Pinheiro Neto provides specialised regulatory advice through the product life cycle, including discussing the best structure for the development of activities in the country, incorporation of a subsidiary, appointment of a distributor, licensing, purchase of product, or acquisition of companies, as well as R&D, clinical trials, and technology transfer, product development partnerships, PDPs, pricing, access (public and private markets) and recalls. The firm also assists clients in strategic regulatory issues regarding good manufacturing practice certification, the national immunisation programme, advertising, compliance, biotechnology and in administrative litigation before ANVISA.

The main regulatory framework governing pharmaceuticals and medical devices comprises Law No 5,991 of 1973, which regulates the commercialisation of pharmaceuticals (Law 5,991); Law No 6,437 of 1977, the sanitary infractions law (Law 6,437); Law No 6,360 of 1976 (Law 6,360), regulated by Decree No 8,077 of 2013, which regulates health surveillance in Brazil as applying to pharmaceuticals, pharmaceutical inputs, medical devices, cosmetics and cleaning products; Law No 9,782 of 1999, which created the Brazilian Health Regulatory Agency (ANVISA); and ANVISA’s resolutions.

ANVISA is the regulatory body tasked with applying and enforcing the regulation of pharmaceuticals and medical devices at federal level. ANVISA is an independent agency operating under a special regime and reporting to the Ministry of Health (MoH), created with the purpose of promoting and protecting people’s health. State and municipal health authorities apply and enforce regulations at state and municipal levels, respectively.

The decisions of regulatory bodies can be challenged by means of an administrative proceeding. ANVISA issues administrative decisions subject to review in courts.

The decisions issued by ANVISA arising from technical analysis may be challenged by means of an administrative appeal, which must be filed within the Agency in 30 calendar days as of notification of the interested party. If the decision is not reconsidered, the appeal is sent to the higher instance for decision. Decisions issued by the higher instance are still subject to review by the board of directors of ANVISA, which is the final administrative instance. Afterwards, it can be disputed in courts.

Appeals of decisions on sanitary infractions will follow the procedure provided in Law 6,437.

The above-mentioned administrative procedures apply in general for all products regulated by ANVISA.

Essentially pharmaceuticals differ from other products because of the active principle content and therapeutical indication.

When in doubt, companies can make a formal consultation with ANVISA requesting confirmation or clarifications on classification of a product.

There is no specific regulation on functional foods in Brazil, nor is there a definition in place for nutraceuticals, which are generally treated as ‘food’ for regulatory purposes.

There are specific rules on the labelling of functional foods as to the roles of the components in the human organism and alleged health properties.

In the latter case, the interested party must provide technical documents specifically supporting the alleged properties, subject to approval from ANVISA.

Under Brazilian regulation, special nutrition products are those intended for persons with specific metabolic and physiological conditions. These special nutrition products comprise those intended for specific diets and population groups.

As a rule, the expression ‘special nutrition product’ refers to conventional food governed by specific legislation, followed by its intended use and purpose.

Pharmaceuticals fall into different categories; eg, synthetic, biological, specific, dynamic and phototherapeutic products. For commercialisation purposes, pharmaceuticals may fall into the following categories: hospital use, special control and prescription-only or non-prescription.

Medical devices, in turn, qualify as invasive, non-invasive or active. For commercialisation purposes, medical devices can be intended for lay or professional use.

Clinical trials of pharmaceuticals and medical devices are regulated from an ethical and regulatory perspective.

From an ethical perspective, the National Health Council (CNS) regulates clinical trials mainly through Resolution No 466 of 2012 and Resolution No 251 of 1997.

From a regulatory perspective, ANVISA regulates clinical trials of pharmaceuticals through Resolution RDC No 9 of 2015 and, in the case of medical devices, through Resolution RDC No 10 of 2015.

A bill is under way in the Brazilian Congress to address the legal aspects of clinical trials.

To obtain ethical approval for clinical trial of pharmaceuticals and medical devices, the investigator must submit to the Ethics on Research Committee (CEP) of the institution where the trial will be conducted the clinical trial protocol together with the applicable documentation such as the Informed Consent Form. Depending on the trial scope, another approval of the clinical trial protocol is required from the National Research Ethics Commission of the National Health Council (CONEP). ANVISA approval is required if the clinical trial has the purpose of obtaining a marketing authorisation in the country, upon submission of specific dossiers by the sponsor, sponsor-investigator or the Contract Research Organisation (CRO), as the case may be.

For pharmaceuticals and medical devices, information on the clinical trials approved by CEP and/or CONEP are publicly available at the system Plataforma Brasil and the trials approved by ANVISA are disclosed on its website. There is no public database for results of clinical trials conducted in Brazil.

There are no restrictions on using online tools to support clinical trials.

If data resulting from clinical trials contains non-anonymised health data that is capable of identifying an individual or group of individuals, it must be treated as sensitive data for Brazilian legal purposes, subject to protection pursuant to 16 Privacy & Data Protection.

According to Law No 13,709 of 2018, known as the General Data Protection Act (LGPD), resulting data can be transferred to a third party or an affiliate provided that the requirements provided in Brazilian legislation are observed. As a rule, sensitive data can only be transferred upon prior consent of its owner, except if the transfer is qualified under a specific legal basis provided under the LGPD (including compliance with legal or regulatory obligations, execution of contracts and conduct of studies). The transfer of health data with the purpose of obtaining an economic advantage is restricted under Brazilian law.

The creation of a database as part of a clinical trial is conditioned to the subject’s consent (the owner of the personal or sensitive information). In the case of creation of a new database containing personal or sensitive data outside the scope of a clinical trial, the owner of the data must also have previously consented with such creation and the requirements provided in Brazilian legislation must be observed.

By definition, pharmaceuticals are “pharmaceutical products, technically obtained or prepared, for prophylactic, curative, palliative, or diagnostic purposes,” while medical devices are defined as “appliances, instruments and accessories used in medicine, dentistry and related activities, as well as in the activities of physical education, embellishment of aesthetic correction.”

In practice, if a product contains an active pharmaceutical ingredient, ANVISA will consider it a pharmaceutical.

There is only one type of marketing authorisation for pharmaceuticals and medical devices. There are, however, different pathways (registration or notification) to obtain the marketing authorisation depending on the category of product. ANVISA is in charge of the approval procedure.

The registration of a new biological product or biosimilar product manufactured in other countries depends on the prior regulatory approval of the product in its manufacturing country. Exceptionally, new biological products and biosimilar products not registered in the manufacturing country, but registered in another country due to epidemiological necessity, may be registered with ANVISA if the epidemiological impact of its use is confirmed in Brazil.

Approval of new biological products requires a complete technical and scientific registration dossier. Approval of biosimilars may follow the comparative development pathway (based on similarity with the innovator) or individual development pathway (full development). Regardless of the route of development used, when filing the registration application for a new biological product or biosimilar, the company must present the immunogenicity study report.

The marketing authorisation for pharmaceuticals is valid for five years (Decree No 8,077 of 2013). The marketing authorisation for medical devices under class of risk I and II is valid for an undetermined period (ANVISA’s Resolution RDC No 40 of 2015) and under class of risk III and IV for ten years (ANVISA’s Resolution RDC No 185 of 2001).

Marketing authorisation is renewable for equal periods, provided that the requirements under ANVISA’s regulation are met and the application for renewal is timely made. If no decision as to the renewal is issued by the expiry date, the marketing authorisation is automatically revalidated until ANVISA renders a decision confirming or denying the renewal (Law 6,360).

Failure to provide evidence that a pharmaceutical has been commercialised in Brazil serves as grounds for non-renewal of a marketing authorisation (Law No 13,411 of 2017). This is not applicable for medical devices.

The marketing authorisation for pharmaceuticals and medical devices can be revoked, suspended or withdrawn whenever the product poses safety or effectiveness issues, or exposes consumers to risk, or is not manufactured according to the marketing authorisation.

To apply for a marketing authorisation for pharmaceuticals or medical devices, the applicant must be a legal entity properly incorporated in Brazil and licensed according to the regulation. The registration application must be supported by specific documentation, which varies depending on the pharmaceutical classification or risk classification of the medical device.

It is not mandatory to conduct a clinical trial in the paediatric population or to obtain a waiver from this requirement, unless the therapeutic indication of the pharmaceutical is paediatric.

Post-approval variations for pharmaceuticals can be subject to ANVISA’s prior approval or can be immediately implemented upon communication to ANVISA. For medical devices, variations are subject to ANVISA’s prior approval.

ANVISA’s Resolution RDC No 102 of 2016 allows the transfer of marketing authorisation in the case of corporate transactions (spin-off, amalgamation and merger) or commercial transactions (any transaction that results in a transfer of assets). In this case, the assignee of the marketing authorisations must submit a specific statement to ANVISA within 180 days from the transaction (ie, from registration of the corporate act with the board of trade for corporate transactions, and execution of the assignment and transfer agreement for commercial transactions).

As a rule, pharmaceuticals and medical devices can only be manufactured, imported or used in Brazil after ANVISA’s approval. Exceptions to this rule are (i) experimental use, (ii) compassionate use and expanded use programmes, and (iii) direct importation by individuals.

The marketing authorisation-holder is required to carry on pharmacovigilance or technovigilance activities, as the case may be. Depending on the severity and potential health risks of an adverse event, a recall or field of action may be voluntarily put in place by the marketing authorisation-holder, or else required by ANVISA or consumer protection authorities.Pharmacovigilance and recalls are ruled by ANVISA’s Resolution RDC No 4 of 2009, Normative Ruling No 14 of 2009 and Resolution RDC No 55 of 2005. Technovigilance and field actions are ruled by ANVISA’s Resolution RDC No 67 of 2009.

In the case of pharmaceuticals, post-approval amendments to the marketing authorisation must be notified to ANVISA, as well as the suspension of commercialisation of a pharmaceutical (ANVISA’s Resolution RDC No 18 of 2014). These rules do not apply for medical devices.

Phase IV trials are not imposed by law as part of the marketing authorisation; however, upon approval of a new pharmaceutical, ANVISA may require further clinical data.

Third parties cannot access pending applications for marketing authorisations for pharmaceuticals and medical devices nor information disclosed by companies to ANVISA in the process of obtaining a marketing authorisation, since ANVISA must keep this information confidential for an indefinite period.

The protection of commercially sensitive data or information is governed by Law No 9,872 of 1999, Law No 9,279 of 1996 and ANVISA’s rules.

Activities with falsified pharmaceuticals and medical devices or illegal distribution of such products are deemed as sanitary infractions under Law 6,437 and are also typified as crime by the Brazilian Criminal Code.

See 11.1 Legislation and Procedures. The Federal Police in Brazil has intensified curbing activities (mainly in the borders of Brazil) by implementing a drug traceability system, having also made a public awareness campaign to warn about the risks of using counterfeited pharmaceuticals.

In Brazil, the price of pharmaceuticals is monitored by the Medication Regulation Chamber (CMED) and is governed by Law No 10,742 of 2003 and CMED resolutions. CMED is in charge of approving (i) the maximum product selling price to be adopted by the manufacturer and wholesaler to private entities (pharmacies or hospitals), and (ii) the maximum selling price of pharmaceuticals to consumers (PMC), to be observed by pharmacies and drugstores. Sales to the government are subject to a mandatory discount. Certain pharmaceuticals, mostly OTCs, may be released from price control at CMED’s discretion.

Prices for medical devices are not controlled in Brazil.

In general terms, once a pharmaceutical is approved by ANVISA, the marketing authorisation-holder must apply to CMED for price approval. The applicant must present an economic dossier informing the intended price, which must be calculated in accordance with specific criteria posed in the regulation for each product type (innovative, new, generic, new presentation, etc).

There is no formal negotiation procedure for the initial price in the case of a newly launched pharmaceutical. The price of new pharmaceutical, with a patented molecule in the country that adds value for a specific treatment in relation to pharmaceuticals already used for the same therapeutic indication, is defined based on the lowest price for the pharmaceutical in a basket of ten countries: New Zealand, Australia, Canada, Spain, USA, France, Italy, Portugal, Greece and the price in the country where the product is manufactured.

If the product is not marketed in at least three of such ten countries, CMED can establish a provisional price that will be reviewed every six months and the final price will be defined once the product is commercialised in at least three of the ten referred countries.

Other pricing rules apply for other pharmaceuticals in Brazil, such as non-patented new molecules, generics, branded generics and new concentrations or presentations.

Brazil has adopted the universal healthcare access system by which the State has a constitutional duty to provide the population with full and free access to healthcare, including pharmaceuticals and medical devices. Thus, costs are not reimbursed to the patient as the State is the direct payor of the products and services. There are several reimbursement mechanisms within the public healthcare system essentially from the MOH to the states and municipal health authorities. 

Private healthcare and insurance plans, which play a supplementary role in the Brazilian healthcare system, bear the cost of pharmaceuticals and treatments to beneficiaries paying for use of the private system rather than the public.

For new pharmaceuticals, the technology assessment can be made by CMED to determine the category of the product and consequently the price rule. CMED considers if the molecule is patented in Brazil and if the product adds value to the treatment in relation to other available products, based on effectiveness and cost criteria.

The MoH carries out a cost-benefit analysis to decide on adding a given pharmaceutical or medical device to a Clinical Protocol and Therapeutic Directive (PCDT) or to the official list of products. Only pharmaceuticals and medical devices included in a PCDT or in the official lists are supplied by the public healthcare system.

The prescribing of pharmaceuticals by physicians is regulated by the Pharmacy Federal Council and by ANVISA. Dispensing, in turn, is regulated by Law 5,991 and Law No 13,021 of 2014, which regulates the performance and inspection of the pharmaceutical activities, and by ANVISA.

Under the public system, physicians must prescribe pharmaceuticals by the active principle, while in the private system physicians are free to determine if the prescription should be by the active principle or by the commercial name of the pharmaceutical product. Reference products and branded generics can be replaced for a generic, and vice versa, by the dispensing professional.

In the public system, the prescription and dispensing of pharmaceutical products shall be made in accordance with the PCDT for the corresponding illness or specific official lists approved by the MoH.

For control of public expenditure on public health, pharmaceuticals and medical devices are acquired by the government via public procurement. The MoH also uses its purchase power to negotiate prices under centralised acquisition processes.

In the private market, the pharmaceuticals and treatments covered by private healthcare and insurance plans are defined in the agreement and on a list defined by the National Private Health Agency (ANS). Costs for pharmaceuticals and treatments not covered by the healthcare plan are supported by patients.

In Brazil, Law 6,360 and CDC generally govern the advertising and promotion of pharmaceuticals and medical devices. Advertisements of prescription-only products is restricted to healthcare professionals (HCPs). Only OTC products can be advertised to the public.

The advertisement and promotion of pharmaceuticals targeted at HCPs and the general public are specifically ruled by Law No 9,294 of 1996, as regulated by Decree No 2,018 of 1996 and ANVISA’s Resolution RDC No 96 of 2008. There are no specific advertising regulations in force for medical devices.

Under Decree 2,018 of 1996, advertising of pharmaceuticals is subject to an authorisation from the MoH, but the authorisation mechanism was not created nor enforced in practice. Scientific events with promotional content in connection with pharmaceuticals must be previously notified to ANVISA by the organisers of the event.

Associations of pharmaceuticals and medical devices industries – eg, INTERFARMA-Association of the Research Pharmaceutical Industry and ABIMED-Brazilian Association of the High Technology Medical Devices Industry – self-regulate advertising and promotion under an ethical perspective through their respective codes of conduct, which are solely binding on the respective industry association members. The Brazilian Advertising Self-Regulation Council (CONAR) has also issued an advertisement code containing sections applicable to health-related products.

Failure to comply with advertising and promotion regulations can expose the offender to civil liability and administrative sanctions such as a warning, suspension or seizure of the promotion and sales activities, imposition of a rectifying message, seizure of products and/or a fine. Under the Consumer Defence Code (CDC), abusive and misleading advertisement is a criminal conduct if the violator knew or should have known about the wrongful nature of the advertisement and is punishable with imprisonment for three to twelve months.

Competitors and third parties/bodies, as well as ANVISA, can trigger enforcement of advertising and promotion regulations. Usually, an investigation into advertising breaches is triggered by a report or complaint from competitors or consumers, being then subject to enforcement by a third party/body, including ANVISA, local health authorities, consumer protection authorities, industry associations, CONAR, courts and others.

Sanctions under the self-regulatory system applied by INTERFARMA and ABIMED vary from suspension of membership rights to exclusion of the member from the relevant association and/or a fine.

Under CONAR’s self-regulation code, sanctions vary from a warning, recommendations to change, correct or suspend the irregular promotion, and disclosure of the parties’ failure to comply with CONAR’s recommendations, as the case may be.

Administrative proceedings initiated before CONAR usually take 60 to 90 days to be decided. Temporary suspension of the promotion may be determined within five days from filing of the proceeding if the claimant requests an injunctive relief.

Gifts and sponsorships are subject to regulatory and ethical restrictions.

Exclusively for pharmaceuticals, ANVISA regulates these interactions with HCPs by:

  • prohibiting the offer of gifts, benefits or advantages, except for institutional items with no promotional content, and scientific and educational literature;
  • prohibiting any support for HCPs as a condition for prescription, dispensation or advertisement; and
  • requiring that sponsorships and conflict of interest relationships are clearly disclosed in scientific events by the industry and speakers.

From an ethical perspective, the interactions of pharmaceuticals and medical devices industries with HCPs are regulated by their respective industry associations (basically, INTERFARMA and ABIMED).

Interactions with HCPs that are governmental officials are subject to the specific probity, anti-corruption and conflict of interest legislation.

Disclosure of payments and sponsorships of scientific events is only required at state level under transparency laws in place and enforceable in the Brazilian state of Minas Gerais. Said laws have been challenged in court based on lack of clarity and proportionality grounds.

Most commonly, the issues in connection with pharmaceuticals relate to off-label advertisement and promotion. While off-label promotion is prohibited under Law 6,360 and ANVISA’s regulations, physicians are allowed to prescribe off-label indications. Accordingly, it is ethically permissible to have scientific discussions of a potential new indication, provided that the audience is professionally qualified and has been previously informed that disclosures refer to a non-approved product or indication in Brazil. In this scenario, defining an appropriate environment to discuss off-label use for pharmaceuticals may often fall in a grey zone and requires careful analysis on a case-by-case basis.

For medical devices, a relevant issue is the lack of specific regulation and guidelines for promotion and advertisement of such products, which is criticised for giving room for abuse and compliance-related issues.

Advertising of pharmaceuticals and medical devices is also subject to the CDC, which prohibits misleading or abusive advertising and considers such practices as criminal conduct if the violator knew or should have known about the wrongful nature of the advertisement.

Misleading advertising comprises any promotional piece that is false, or that induces the consumer to error as to any data or aspect of a product or service. Abusive advertising is any promotional piece that is discriminatory, or that incites violence, exploits or takes advantage of fear, superstition or judgment incapacity, or that disrespects environmental values, or might induce the consumer to harmful or dangerous behaviour.

Under ANVISA’s regulations – in particular, Resolution RDC No 185 of 2011 and Technical Note No 04 of 2012 – certain software can be considered a medical device if it is intended for prevention, diagnosis, treatment, rehabilitation or birth control purposes, which greatly depends on the review of the software functionalities and intended use. This regulation is currently under discussion in an initiative to keep up with the pace of technological advancements in the health sector.

The Federal Physicians Council regulates telemedicine under an ethical standpoint through Resolution No 1.643/2002, but has a strict interpretation of how it can be used. Physicians are not allowed to prescribe medical treatment without a direct examination of the patient, except in cases of justified urgency, emergency or impossibility. Likewise, medical assistance using mass media communication channels is considered unethical. Mere orientation with clarification purposes for already known patients is acceptable.

In the past years, more flexible telemedicine regulation was discussed and the Federal Physicians Council issued a new resolution in February 2019, which was open for consultation and comments from the medical community. Due to several criticisms on the ethical grounds of the new resolution, the Federal Physicians Council decided to revoke it and reinstate Resolution No 1.643/2002.

General promotion rules also apply to digital advertisement and, specifically in connection with prescription pharmaceuticals, advertisement cannot be directed at the general public, but only at HCPs that are allowed to prescribe or dispense those products. To that effect, companies must adopt access control mechanisms to restrict the public availability of advertising.

Brazilian law is silent as to electronic prescription. In general, electronic documents are deemed authentic and legally valid in Brazil if certified by an authorised agent pursuant to Provisional Executive Order No 2200-2 of 2001. Under MoH’s Ordinance No 344 of 1998, however, the prescription of certain controlled pharmaceuticals requires official medical prescription physical forms.

Online sales of pharmaceuticals are subject to restrictions. Sales must be made through electronic websites owned by pharmacies and drugstores duly licensed by public health authorities, as per regulatory requirements under Resolution RDC No 44 of 2009. In addition, pharmaceuticals subject to special control cannot be sold online.

Nothing in Brazilian law prevents online sales of medical devices, provided that the seller is a Brazilian entity duly licensed by public health authorities and the products are duly registered with ANVISA.

Electronic health records are regulated by Law No 13,787 of 2018 and regulations issued by the Physicians and Dentistry Councils, which establish the rules on digitisation and the use of systems that store and handle patients’ medical records.

As a rule, manufacturing sites for pharmaceuticals and medical devices must hold an authorisation issued by ANVISA (AFE), a sanitary licence issued by local health authorities (LF) and a Good Manufacturing Practices certificate (GMPc) for the site (the latter is waived for low-risk medical devices).

The processes for obtaining the refereed licence and certification for manufacturers of pharmaceuticals and/or medical devices starts with hiring a professional enrolled with a competent professional council, who will be in charge of the activities performed at the site. The company must also be enrolled with the respective professional council.

Issuance of an AFE, an LF and a GMPc are contingent on on-site inspections (including facilities abroad) and documental verification.

Wholesalers of pharmaceuticals and medical devices are subject to the same sanitary licences (AFE and LF) for distribution activities. For medical devices, the wholesalers must bear the AFE per operational site.

Pharmaceuticals are classified according to restrictions on use (target population), prescription (OTCs or prescription-only), destination (commercial, hospitals, institutions), or hospital use (administration restricted to hospitals).

Imports and exports of pharmaceuticals and medical devices are governed by Law No 6,360, Decree No 8,077 of 2013 and resolutions issued by ANVISA from time to time, mainly ANVISA’s Resolution RDC No 81 of 2008.

The governmental entities in charge of applying and enforcing import regulations of pharmaceutical and medical devices at the point of entry are the Brazilian Federal Revenue Office (RFB) and ANVISA. Foreign trade control, on the other hand, is exercised by the Foreign Trade Department (DECEX) and the Foreign Trade Secretariat (SECEX).

The importer of pharmaceuticals and medical devices is the marketing authorisation-holder, or any third party duly authorised by the marketing authorisation-holder to import the product. The importer must bear sanitary licences to import pharmaceutical products and medical devices, as applicable, and be registered in the Integrated Foreign Trade System (SISCOMEX), which takes place with its enrolment with the System for Registration and Track-down of Customs Agents' Activities (RADAR) before the RFB.

The importation of pharmaceuticals and medical devices is generally subject to automatic licensing and requires ANVISA’s consent. In certain cases, ANVISA’s approval is also required before shipping the goods abroad. As a general rule, only pharmaceuticals and medical devices registered with ANVISA can be imported to Brazil.

ANVISA’s consent is not required for the importation of products by individuals for their own consumption. ANVISA does not control if products imported for individuals’ personal use are registered or notified before the Agency.

The administrative handling table indicates the need for import licensing (or other specific measures to be adopted upon importation) according to the tariff code of the product being imported under the Mercosur Common Nomenclature (NCM). Based on such NCM code, the importer may consult the administrative handling on the following website: https://siscomex.desenvolvimento.gov.br/tratamento/private/pages/consulta_tratamento.jsf

Brazilian companies exporting intangibles must register such transactions with the Foreign Trade Integrated System for Services, Intangibles and Other Transactions that Produce Equity Variations (SISCOSERV).

The exportation of so-called sensitive goods, which comprise, among others, goods of the chemical or biological areas (defined as those that may be relevant for warfare application and its precursors), as well as related services is regulated in Brazil. The goods related to the biological area that are subject to such export control are listed in Resolution No 13 of 2010 of the Interministerial Commission of Control upon Export of Sensitive Goods (CIBES).

Prior approval from the competent authorities is required for such exports, including end-use evidence. The administrative procedure for export authorisation is confidential. After receiving proper authorisation, the company must follow general exportation procedures and may be required to present further documents in support of the approval.

Brazil is a signatory to the Trade Facilitation Agreement of the World Trade Organization (WTO), which came into force on 22 February 2017 after its ratification by two thirds of the member countries of the WTO.

All decisions on the imposition of economic or other sanctions by Brazil are in accordance with the guidelines adopted by the UN and are described in Ordinance SECEX No 23 of 2011.

In the case of imports into Brazil, the countries with restrictions are North Korea, Eritrea, Libya and Somalia, regarding the manufacture of weapons and related materials, mainly. For exports from Brazil, the countries with restrictions are Iraq, Somalia, Sierra Leone, North Korea, the Democratic Republic of Congo, Sudan, Libya and Eritrea, also related to the manufacture of weapons, military equipment, combat vehicles and replacement parts.

Patents are regulated under Law No 9,279 of 1996, the Brazilian IP Law (IP Law), which is aligned with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement standards, incorporated into the Brazilian legal system by Decree No 1,355 of 1994. In addition to TRIPS, Brazil is a signatory to the major international treaties dealing with IP rights, such as the Paris Convention and the Patent Cooperation Treaty (PCT).

In Brazil, invention and utility models qualify for patent protection based on the attributive system and can be registered with the Institute of Intellectual Property (INPI).

The main issues regarding pharmaceutical and medical devices products’ patentability are generally in connection with:

  • ANVISA’s prior approval on patents;
  • second-use patents;
  • products not eligible for patent;
  • priority period under the terms of the Paris Convention; and
  • Bolar exception.

To be patentable, an invention must meet the following requirements: (i) novelty, (ii) inventive step and (iii) industrial use. Pharmaceuticals patents must be previously approved by ANVISA.

Second and subsequent medical uses of pharmaceutical products are patentable as long as the new use fulfils patentability requirements and does not comprehend subject matters not considered as inventions or non-patentable according to the IP Law.

Patent protection is determined by its claims and interpreted based on the specifications and drawings.

An invention patent is valid for 20 years (15 years for a utility model patent), counted from the filing date; however, the term for an invention patent cannot be fewer than ten years (seven years for a utility model patent) counted from the granted date, except in the case that INPI is impeded from examining the application due to a pending judicial claim or force majeure. There is no mechanism for patent extension under the IP Law and it is not possible to request a patent term extension to compensate for the time to obtain a marketing authorisation for the product by ANVISA.

According to the IP Law, the patent-owner has the right to prevent third parties from, without its consent, producing, using, offering for sale, selling or importing a product that reproduces the object of the patent and a process or a product directly obtained from a patented process. The patent-holder also has the right to prevent third parties from contributing to infringing acts committed by others.

The assessment of patent infringement is usually made through a technical comparison between the patent claims and the product, process or service put on the market by the alleged infringer.

Activities involving patents practised by unauthorised third parties for experimental purposes, related to studies or to scientific or technological research, do not characterise a patent infringement. In addition, the law allows the use of a patent during its life by a third party, for the purpose of obtaining marketing authorisation, which ultimately authorises the use of a protected patent, in order to conduct tests, researches, and produce necessary information and data in connection with a marketing authorisation.

The patent-holder may defend its exclusivity rights against any threat of infringement. It is not necessarily an 'imminent infringement'.

There are basically two defences in patent infringement actions: (i) non-infringement and (ii) invalidity of the patent. A patent granted in violation of any provision of the IP Law could be declared null and void.

The IP Law provides for a compulsory licence. To date, there has been only one case, concerning an HIV drug. Compulsory licences can be applied against a patent granted in Brazil in the following events:

  • abusive exercise of the patent rights or abusive exercise of economic power duly evidenced and declared by an administrative or judicial decision;
  • lack of exploitation of the patent in Brazil (except in the case of economic infeasibility to do so, a situation in which the importation of the product will be authorised);
  • commercialisation insufficient to meet market demand;
  • a situation involving dependent patents; and
  • national emergency or public interest events declared by the Brazilian federal government.

The interested party must submit a request to the INPI, by proposing the licence terms and conditions. The INPI will notify the patent-owner, which must reply within 60 days. The case will be analysed by the INPI, which is also entitled to determine the remuneration (royalties) owed to the patent-owner if the parties do not reach an agreement.

The patent-holder (or licensees and parties with procedural interest, when authorised by the patent-holder) can sue for patent infringement. The procedure for patent infringement is the same as a regular civil procedure in Brazil regulated by the Brazilian Procedure Civil Code (claim, defence, evidences (with expert examination if it is the case), hearings, first-instance decision and appeals).

Remedies for patent infringement include equitable remedies (injunction), removal of the products from the market and payment of indemnification.

Depending on the outcome, the judge can grant a permanent injunction prohibiting the defendant from carrying out infringing acts and condemn him or her to pay an indemnification.

Indemnification for loss of profits can be calculated on three different bases, at the discretion of the claimant:

  • benefits that the patent infringer would have earned if the violation had not occurred;
  • benefits that the patent infringer actually earned; and
  • the amount due by the patent infringer to the patent-holder under a hypothetical licence agreement between the parties.

For invalidity claims, see 10.5 Specific Defences to Patent Infringement.

If a generic pharmaceutical reproduces one or more claim(s) of a patent then the patent holder will have the right of action. As previously mentioned, however, studies over a patented pharmaceutical and the application for marketing authorisation for a patented pharmaceutical to ANVISA are not considered infringement.

Apart from the IP Law, counterfeit of pharmaceuticals and medical devices is also under the scope of:

  • Customs Regulation – Decree No 6,759 of 2009 (Customs Regulation) regulates the seizure of counterfeit goods at Brazil’s borders;
  • Sanitary Law – Law 6,360 and Law 6,437 prohibit the manufacture, importation, distribution, advertisement and sale of pharmaceutical and raw materials that may cause potential harm to the public health; and
  • Criminal Code – typifies the falsification, corruption and adulteration of health-related products as a felony against public health.

Applicable penalties are administrative civil and criminal sanctions, including payment of fines and imprisonment.

Under the IP Law, any distinctive and visually perceivable signs not covered by legal prohibitions are eligible for registration as a trade mark.

On the sanitary front, Law 6,360 governs pharmaceuticals and medical devices names by prohibiting indications that can lead to error or false interpretation. ANVISA’s Resolution RDC No 59, as detailed by Service Guideline No 43 of 2017, also sets forth criteria regarding the formation of pharmaceuticals names and conflicts between them.

There are no restrictions under trade-mark law. In practice, however, such importation would not be possible as pharmaceuticals and medical devices can only be imported by their marketing authorisation holder or its designee in Brazil.

Trade dress in Brazil is protected by the IP Law under unfair competition provisions, which prevent the use of fraudulent means to solicit, for one’s own or someone else’s benefit, a third-party clientele and secure equitable remedies, as the case may be, and compensation for losses and damages. Likewise, CDC prohibits unfair competition practices that could lead consumers into error.

Moreover, under the marketing authorisation approval process, ANVISA reviews the layout of the packaging of the pharmaceuticals seeking to avoid confusion among the products.

There is no data exclusivity protection for pharmaceuticals or medical devices in Brazil, as available in other jurisdictions; however, data can be protected by confidentiality obligations, or on an unfair competition basis. ANVISA must keep non-public data confidential until they fall into public domain.

The Administrative Council for Economic Defence (CADE), the main competition authority in Brazil, is responsible for investigating and curbing alleged anti-competitive practices, including in the pharmaceutical and medical devices segments. Within its activities, CADE is entitled to commence administrative proceedings to investigate any conduct that could harm the competition environment. Anti-competitive conduct is subject to severe penalties, including criminal liability.

In the pharmaceutical segment, CADE has commenced a few proceedings related to sham litigation practices and abuse of IP rights. To a minor extent, within the industry CADE has also investigated and convicted companies for cartel formation.

There are no precedents issued by CADE in Brazil addressing pay-for-delay agreements on their merits. It is worth mentioning, however, that CADE is aware of this practice and even mentioned it in certain cases related to sham litigation investigations in non-binding technical opinions. Practices referred in the investigations include restrictions to the entry of generic drugs into the market and pay-for-delay.

As mentioned, precedents issued by CADE in Brazil addressing life cycle strategies of originators versus generic drug companies are mostly related to sham litigation aimed at preventing the development of activities by a competitor.

The Competition Act provides that an administrative investigation (pre-investigation) is initiated ex officio or in response to a grounded complaint made by an interested party when the indications of an anti-competitive conduct are not enough to initiate a formal administrative proceeding. Several investigations currently under way at CADE have originated from complaints made by potentially aggrieved third parties or from leniency agreements (when the matter relates to a collusive practice) (Article 66, paragraph 1, Competition Act).

CADE’s structure is composed of two main bodies: the General Superintendence, which is responsible for the investigative phase of an administrative proceeding; and the Tribunal, which is responsible for final rulings.

Administrative procedures to investigate breaches of competition law are initiated by the General Superintendence. The defendants are notified to present their defences and the discovery phase is initiated. Afterwards, parties are called to make their closing statements.

A non-binding opinion on the investigation is rendered, addressing all evidence produced and indicating whether there is actual evidence of an anti-competitive practice, and the role of each specific defendant in the misconduct. The case files are then forwarded to CADE’s Tribunal.

At CADE’s Tribunal an in-depth discovery may be conducted. CADE’s Tribunal then adjudicates on the breach of competition law, dismissing the case or imposing penalties on each defendant accordingly.

Tribunal decisions are not subject to review by the executive branch and must be promptly enforced but can be reviewed in court. Enforcement of CADE’s decisions may also be made through the judiciary, on the initiative of CADE’s general attorney.

Cases involving the pharmaceutical and medical device industries usually hit the headlines and are often subject to in-depth analysis and attention by CADE.

In 2014, a pharmaceutical company was sentenced to payment of a pecuniary fine of circa BRL4.2 million. CADE held that the company was involved in a collusive scheme to prevent the sales of generic drugs, harming the market and end consumers.

In another relevant case, companies were found to file contradictory and misleading court claims with the objective of obtaining exclusivity in the distribution of pharmaceuticals, ie, sham litigation. According to CADE, by intentionally changing the scope of their patent applications, the defendants obtained exclusive distribution rights over a chemotherapy medication. As defendants had temporary monopoly on the product, ANVISA could not authorise other competitors to distribute products similar to the chemotherapy medication, which would characterise an undue monopoly to the detriment of patients. As a result, the defendants were fined approximately BRL37 million.

As a general rule, whatever the transaction structure, the most important provisions in life science deals are those that ensure continuity of business after the closing.

As mentioned in the topics above, Brazil is highly regulated by a number of authorities, so it is always necessary to make sure that the target company or target business under negotiation (i) complies with the regulation in force and (ii) can be run by the acquirer as from closing, without disruption of activities.

As to item (i), a thorough due diligence process is always advisable, involving not only legal aspects, but also regulatory, quality control and other technical areas.

As to (ii), it is always important to make sure that the target company bears (or continues to bear) all necessary licences to operate the business as from closing. Change of control does not trigger the cancellation of sanitary licences. On the other hand, licences are usually not transferable, so whenever a new company is involved or it is not possible to transfer a company with all proper licences, the deal parties should sort out a transition/transfer phase.

The sanitary licensing process is time-consuming. In view of that, not all types of deals allow for the parties to wait until all licences are obtained to close the deal. In such cases, the parties should work on a transitory model to enable the transfer of economic benefit from one party to another while the closing has not occurred yet.

The most customary protections are escrow arrangements and holdbacks. However, such protections apply to the breach of representations and warranties, and other indemnification events, and not all deals allow the acquirers to be indemnified due to the valuation gap.

Price adjustments are usually based on inventory check and/or on the cash/debt and working capital levels. In certain deals, a portion of the purchase price is held back until the check is completed.

The most customary agreements are escrow arrangements and holdbacks.

Transactions need to be notified to CADE if:

  • they produce effects in Brazil, meaning if they are wholly or partially performed in Brazil, or may have effects in Brazil (for instance, effects are verified when there are sales into Brazil or the target owns a Brazilian company); and
  • at least one of the economic groups involved in the transaction has posted gross revenues in Brazil exceeding BRL750 million in the preceding year; and
  • at least one of the other economic groups involved in the transaction has posted gross revenues in Brazil exceeding BRL75 million in the preceding year.

The economic group for analysis of the turnover threshold, in turn, is defined as follows: (i) the companies under common control, internal or external; and (ii) the companies in which any of the companies referred to in item (i) directly or indirectly own at least 20% of the capital stock or voting capital.

Please note that a different approach applies to investment funds when it comes to defining 'economic group'.

The tax treatment tends to be more favourable to acquirers in share deals than in asset deals, as Brazilian law allows the amortisation of goodwill for tax purposes.

As for sellers, capital gain taxes apply when there is a gain, but asset deals may involve additional taxes (such as value-added tax) depending on the nature of the assets being sold.

Brazilian law does not afford special treatment for licensees, so the general rules must apply. In general terms, agreements involving guarantees tend to be more protective than those that do not.

The main focus of the current investigations is bid-rigging, kick-backs to physicians of public hospitals, over-pricing of products and services provided to the public healthcare system, therapeutic frauds (unnecessary and simulated surgeries) at the cost of patients and payers (private and public), use of medical devices beyond the quantity actually necessary and undue incentives for judicial access to healthcare.

The most important do's are to co-operate with public authorities, providing clarifications and documents on the investigated matters, and to provide technical/expert reports to the public authorities to demonstrate the regularity of the investigated products. The most important don'ts are to hide evidences from the public authorities and provide false information on the investigated matters. Certainly, these do's and don’ts would be applied to other industries.

There are several major cases involving pharmaceutical and medical devices industries either under investigation or judicial procedures. No landmark decision has been issued yet.

There is no substantial difference in the investigations related to the pharmaceuticals and medical device sector compared with other industry sectors. However, the penalties applied to pharmaceutical and medical devices would be higher (10-15 years of imprisonment) than in crimes related to other products (eg, the maximum penalty would be eight years of imprisonment in the food sector, for instance).

There is not a specific legal regime as regards the liability for pharmaceuticals and medical devices.

Consumer relations in Brazil are regulated by the CDC, which distinguishes two types of liability: liability as regards the product itself and liability for a flaw in the product. The first is related to the concept of a consumption accident (product liability). The latter is not a result of any damage caused to consumers, but from a flaw in the product itself, which renders the product unfit or inadequate for consumption, or from a reduction in its value or quantity.

Under the CDC, strict liability applies, regardless of whether liability arises from contractual or non-contractual relations. As a general rule, a consumer may bring suit against all those involved in the chain of production. Those who are not directly liable have a right of recourse against the liable party. Only under some circumstances expressly prescribed by law is there exemption from liability.

The vendor/supplier is held liable in the case of a breach of statutory obligations leading to a flaw in the product. As for consumption accident (product liability), the product must be deemed defective according to the legal concept.

As a general rule, the burden of proof rests on the claimant with respect to the fact supporting its right and on the defendant with respect to the existence of a fact impairing, modifying or extinguishing the claimant’s right.

As liability for the product itself is strict, consumers need not prove negligence, recklessness or unskillfulness on the part of the vendor/supplier. Consumers only have to prove (i) the damage arising from the product or service placed on the market and (ii) a chain of causation.

The burden of proof may be shifted to the vendor/supplier, at the court’s discretion, when (i) consumers are likely to prevail on their claims, or (ii) consumers are in a more vulnerable position as compared to the vendor/supplier. When technical aspects are involved, the courts may order the vendors/suppliers to submit proper evidencein lieu of consumers.

Liability as regards the product itself is related to the concept of a consumption accident. In this case, the pharmaceuticals and producers of medical devices are only held safe from liability if it is proven that (i) the product was not put on the market; (ii) although it put the product on the market, there was no defect; or (iii) the accident occurred as a consequence of the exclusive fault of the consumer.

As for liability arising from a flaw in the product, producers of pharmaceuticals and of medical devices should be held liable if they prove that the product put on the market has no defect and is compliant with all regulatory requirements.

Finally, it is possible to argue that no civil liability should be imposed for adverse reactions when expressly informed on the product leaflet.

There are some court precedents acknowledging a regulatory compliance defence.

A claim is dismissed when it cannot be established which of several possible pharmaceuticals taken by the claimant caused the alleged medical condition. Market share liability does not apply in Brazil.

The five-year limitation period starts running when consumers become aware of a product defect or injury. If there is any fraud, the period for claiming damages relating to a product or service starts running only when the damaging act becomes known.

There is not a claim for information against manufacturers. The Public Prosecutor's Office can, however, under an investigation request information from the manufacturer if the information relates to the scope of the investigation.

A consumer can file court claims against vendors/suppliers for redress of property damage as well as pain and suffering (‘moral damage’). Under Brazilian law, no damages are awarded on a future or theoretical damage. Therefore, expenses incurred for medical monitoring are only recoverable if the damage has materialised. In this case, such expenses are factored into property damages.

Punitive damages are not available in Brazil. However, the theory of deterrence has been accepted recently, by which the award for pain and suffering is set at reasonable levels to discourage a similar misconduct in the future.

There is not a maximum limit of damages available for one claimant and/or available from one manufacturer.

In an important recent decision, the Third Panel of the Superior Court of Justice held, by unanimous opinion, that a pharmaceutical laboratory had no civil liability for adverse reactions when expressly informed on the product leaflet. This decision rendered by reporting justice stated that: “In the case of a product with inherent risk, where such risks are normal in view of the product nature (drug with adverse effects) and foreseeable (to the extent that consumers have been expressly warned about them), any damage caused by it to consumers will not justify the imposition of liability on the vendor/supplier since the product was not defective.”

Trial must be held by a judge. Under the Federal Constitution, a trial by jury is reserved for malicious crimes against life (homicide, infanticide, assistance or incitement to suicide and abortion).

There is not a disclosure obligation for documents or other evidence for the parties.

Currently, there is not a discussion regarding potential changes in the legal regime for liability for pharmaceuticals.

Brazil has recently enacted the LGPD, a privacy and data protection framework that is expected to come into force in August 2020. Drawing on the European privacy regulation, the LGPD creates a more robust protection landscape for personal data in Brazil, laying down rules on personal data processing activities in Brazil or abroad, whenever the activity is intended to offer services or to process data on individuals in Brazil, or the personal data is collected in Brazil. Among others, the LGPD creates rules that affect all industries and business, including provisions as to the legal basis for processing, protection of sensitive data, rights of the data subject, cross-border transfer of data, data security, data breach and cease of data processing.

The creation of a National Data Protection Authority (DPA) was envisaged in the LGPD bill, but the relevant provisions were vetoed by the President of Brazil on constitutional grounds related to law-making process. The creation of the DPA was reinstated by means of Provisional Executive Order No 869 of 2018 (MP 869), published in December 2018 to amend the LGPD. This MP 869 is currently pending congressional review and ratification to be signed into law.

The DPA, once operational, will be tasked with applying and enforcing the LGPD. Meanwhile, in the absence of a data protection authority, the Public Prosecutor's Office (and, sometimes, the consumer protection authorities) is to apply and enforce the privacy and data protection legislation and regulation in Brazil.

Health-related information is considered sensitive personal data under the LGPD and, unlike the data privacy framework in the USA or Europe, it is not a defined concept under Brazilian law. Given the inherent exposure and discriminatory potential of this information, the LGPD affords stricter protection to sensitive data. The legal basis for processing is limited as compared to non-sensitive data. In addition, if sensitive data is processed based on consent, the LGPD requires it to be specific, conspicuous and defined for particular purposes. Further, the LGPD restricts the communication or sharing of sensitive health-related personal data among controllers for obtaining an economic advantage.

Failure to comply with the LGPD subjects the offender to civil liability and to a range of administrative sanctions: a fixed or daily fine capped at BRL50 million per offence, disclosure of the offence, and blockage and/or elimination of personal data to which the offence refers.

No special requirements apply, although in the future, the DPA might put in place restrictions for this type of data processing. Currently, sensitive data can be transferred and stored in cloud platforms.

Pinheiro Neto Advogados

Rua Hungria, 1100.
01455-906

+55 11 3247 8622

+55 11 3247 8600

akung@pn.com.br www.pinheironeto.com.br
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Pinheiro Neto Advogados has wide experience in major cases involving life sciences and healthcare, including M&A, compliance (regulatory, public law, criminal and competition), and PDPs. The Life Sciences & Healthcare practice of the firm has partners exclusively dedicated to the Brazilian Health Regulatory Agency (ANVISA) and Supplemental Health Agency (ANS) regulation, with a group of highly specialised lawyers fully dedicated to the health area who provide advice to several industries, such as pharmaceuticals, biologics, vaccines, medical devices, diagnosis, food, food supplements, cosmetics, crop defence, agricultural products, beverages, healthcare operators and hospitals. Pinheiro Neto provides specialised regulatory advice through the product life cycle, including discussing the best structure for the development of activities in the country, incorporation of a subsidiary, appointment of a distributor, licensing, purchase of product, or acquisition of companies, as well as R&D, clinical trials, and technology transfer, product development partnerships, PDPs, pricing, access (public and private markets) and recalls. The firm also assists clients in strategic regulatory issues regarding good manufacturing practice certification, the national immunisation programme, advertising, compliance, biotechnology and in administrative litigation before ANVISA.

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