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CADE has launched a preliminary probe into manufacturers and retailers of medical and pharmaceutical products

01.04.2020
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Brazil's Administrative Council for Economic Defence (CADE) has launched a preliminary probe into manufacturers and retailers of medical and pharmaceutical products.


The enforcer received a complaint from the Brazilian Association of Dialysis and Transplant Treatment Centres that said suppliers of face masks and sanitisers had implemented abusive price increases. 


Following this complaint, CADE has implemented a variety of measures in order to prevent anticompetitive behaviour and practices amidst the COVID-19 pandemic. It has initiated data collection to subsidise research in the medical and pharmaceutical products sector.


According to the press release on the CADE website, on Friday, 20th of March, the municipality began to collect information from the main participants of the health industry across the country. The objective is to investigate whether companies in this sector would be raising prices and profits in an abusive manner in the face of the high demand motivated by the COVID-19 pandemic.


After mapping the main participants of the health markets throughout the country, the Administrative Council of Economic Defense (CADE) started, sending letters to request data on the marketing of products and services related to the fight against COVID-19. The action forms part of the procedural instruction of the preparatory administrative investigation procedure, instituted by CADE on Wednesday the 18th of March, which investigates the medical and pharmaceutical products sector.


Hospitals, health plans, pharmaceutical networks, distributors and manufacturers of surgical masks, gel alcohol and drugs to treat the symptoms of COVID-19 were officiated. At the moment, some 80 offices were sent, covering a large part of these markets.


At this stage, CADE has requested the sending of tax notes relating to the marketing of such products from November 2019 until now, with the obligation, on a monthly basis, to continue presenting these notes to the municipality until July 2020. The objective is to verify any sharp increases in price and profit margin that may characterise competitive illicit activities, as required by Article 36 of law no.12.529/11.


Pharmaceutical retailers were requested to present spreadsheets containing the price changes for all medicines related to the treatment of symptoms of COVID-19, as well as alcohol-based sanitisers and surgical masks, over the aforementioned period.


Hospitals, whether or not linked to health plans, and clinical analysis laboratories were requested to provide the same information as requested from retail networks but focused on the marketing of examinations and treatments related to COVID-19.


Finally, the secretarias de saúde de São Paulo, Rio de Janeiro and Distrito Federal were also consulted at this time, to send information about the changes of prices paid to suppliers regarding all medicines related to the treatment of symptoms of COVID-19, as well as an alcohol-based sanitiser and surgical masks. 


The refusal, omission or unjustified delay of the information or documents requested by CADE constitutes an infringement punishable by a daily fine of R$ 5,000 to R$ 100,000, according to the economic situation of the offender. The deceit or falsehood of information, documents or statements provided to CADE will be punishable by a fine of R$ 5,000 to R$ 5 million, depending on the seriousness of the facts and the economic situation of the offender.