The Pharma Legal Handbook - Healthcare

REGULATORY, PRICING, AND REIMBURSEMENT OVERVIEW

1. What are the regulatory authorities with jurisdiction over drugs, biologicals, and medical devices in your country?

The authority responsible for applying and enforcing the regulatory framework in relation to drugs, biologicals, and medical devices is the Federal Commission for Protection against Sanitary Risks (COFEPRIS), which is a decentralized agency of the Ministry of Health.

2. What is the regulatory framework for the authorization, pricing, and reimbursement of drugs, biologicals, and medical devices?

The primary legislation for the authorization, pricing, and reimbursement of drugs, biologicals, and medical devices is the General Health Law (Ley General de Salud) (HL) and its Regulations. These laws and regulations are supplemented by Guidelines and Official Norms (NOMS) published by COFEPRIS.

Price control in the private sector is based on a scheme of self-regulated maximum retail price (MRP) only covering patented products, overseen by the Ministry of Economy. Pharmaceutical companies' participation is voluntary. Under the price control each product's MRP must not exceed an international reference price, estimated as the average price in six major markets, plus a market factor. There are no established sanctions for violations of the MRP. In private sector, there is no reimbursement in Mexico.

In the private sector, most payments are made on an out-of-pocket basis. Private insurers are improving the level of pharmaceutical coverage as the private market in medicines has grown considerably.

Public acquisitions are supported by the Committee for the Negotiation of Drug Prices (CNDP).

For direct purchasing of patented products, the CNDP analyses the effectiveness of the drugs and relevant therapeutic alternatives and the feasibility and implications of an eventual substitution with equivalent medicines. The CNDP also conducts an economic evaluation of the cost-effectiveness of patented medicines compared with potential substitutes.

For the ISSSTE, a prescribed medicinal product can be dispensed in a private drug store registered with a public insurer, provided that this is not available within ISSSTE facilities and under certain conditions. The ISSSTE reimburses the cost of that product according to previous agreements.

The political party currently governing in Mexico (MORENA) is promoting an amendment to the scheme of self-regulated maximum retail price (MRP), which consist, in general terms, that the Ministry of Economy in collaboration with the Ministry of Health shall guarantee, through a transparent process and taking into consideration differentiated policies, the access to medications and inputs to people in situations of poverty. In addition, the price control would be regulated and annually reviewed by these Authorities.

On August 11, 2020, the Mexican Congress published the Decree amending Article 1 of the Public Sector Procurement, Leasing and Services Law, through which the Mexican Government is now empowered to acquire medicines through intergovernmental organizations, such as UNOPS, without having to observe the procedures set forth in the applicable Law and Regulation on public procurement.

According to UNOPS' guidelines, the process is made up of different stages grouped within three phases identified as:

Pre-Bidding Process (market research, requirements definition and identification of potential suppliers).
. Bidding Process (publication of the bases and call for bids and/or invitations for negotiation, bid management, evaluation and award).
Post-Bidding Process (contract management and logistics). The distribution to the final destination will be in charge of INSABI.

Therefore, during these proceedings UNOPS is entitled to negotiate the prices of the supplies.

3. What are the steps to obtaining authorization to develop, test, and market a product?

Manufacturers must obtain a marketing authorization from COFEPRIS to sell any medicinal product. Requirements and timeframes vary among new molecules, biologics, and follow-on products.

The Health Law Regulations sets out the following approval timeframes for small molecules:

180 calendar days for medicines, including an active pharmaceutical ingredient (API)/therapeutic indication already approved in Mexico.
240 calendar days for medicines not approved in Mexico but which are approved abroad.
180 calendar days for new drugs (a meeting with the New Molecule Committee is required).

The approval timeframe for biologics and biocomparables is 180 calendar days. These timeframes may vary in practice.

3.A. NEW MOLECULES

Essentially, applicants for marketing authorizations must prove safety and efficacy of their products through standard clinical trials, according to the rules set out by the General Health Law, its regulations and NOMs of good manufacturing of medicines and active ingredients.

Concurrently, they have to request approval of their products as new molecules by the New Molecules Committee of COFEPRIS. A new molecule:

An active ingredient or drug not approved world-wide (new molecular entity)
An active ingredient or drug already available in other countries but with limited clinical experience or disputed information, without approval in Mexico
A drug which is a non-marketed combination of two or more active ingredients; and
An active ingredient or drug already available in the market, but to be marketed for a new therapeutic indication.

R&D companies can benefit from a special procedure for drugs to be approved for the first time in Mexico, if they have been previously approved by:

The European Medicines Agency;
The US Drug and Food Administration;
Health Canada;
The Swiss Agency for Therapeutic Products (Swissmedic); and
The Therapeutic Goods Administration in Australia.

In 2012, COFEPRIS published new rules to set out this procedure. This is essentially based on the dossier filed with the foreign regulatory agency, to reduce approval time frames by up to 60 working days. Industry participants have welcomed and used these new rules.

3.B. GENERICS

Applicants for marketing authorizations have to prove basically that their products are interchangeable to the innovator product. They have to provide information concerning dissolution profiles or bioavailability studies regarding the reference product. COFEPRIS periodically issues a list of reference medicinal products.

Recently, the NOM setting the test to prove that a generic drug is interchangeable with a reference drug was updated (NOM-177-SSA1-2013). Legally, COFEPRIS should not grant marketing authorization for generics breaching exclusivity rights.

There is a linkage system between COFEPRIS and the Mexican Institute of Industrial Property (IMPI), which aims to prevent the granting of marketing authorizations in violation of exclusive rights. According to the IP Regulations, every six months the IMPI must publish a gazette that includes patents covering allopathic medicines (Linkage Gazette). The initial IMPI position was that only patents relating to a compound were relevant to linkage review (excluding formulation and use of patents). In 2012, for the first time the IMPI included formulation patents in the Linkage Gazette, in accordance with a 2010 ruling of the Mexican Supreme Court (Jurisprudence No. 2a./J.7/2010, Federal Judicial Gazette, No. XXXI, page 135). Under the linkage regulations, at the filing of the application, the applicant must prove that it is the owner or licensee of the patent of the active ingredient of the product (recorded with the IMPI), or state under oath that their application does not violate the list of products published in the Linkage Gazette and observes patent law.

As a result of the entering in force of the USMA (July 1, 2020), and the New IP Law (November 5, 2020), the linkage system will be eventually modified.

The general terms for patent linkage were included in the new IP Law (similarly to the current linkage system). The wording establishes the listing of patents related to allopathic medicines in terms of the corresponding Regulation. Details and the battle on linkage will follow in the discussion over the eventual amendments in the Regulation.

The USMCA requirement of the notice to the titleholder should be included in the regulation.

Additionally, there are a couple of proposals pushed by the generic associations to limit linkage to compound patents and to patents covering only approved products by COFEPRIS.

3.C. BIOLOGICS (BIOTECH PRODUCTS)

The Mexican jurisdiction already recognises that biotech products deserve special treatment as a result of their distinct characteristics, such as their complex structures, their size in comparison with chemically synthetized drugs and, particularly, their susceptibility to variation during manufacturing. The regulatory scheme distinguishes from other biologics those products that have been manufactured by molecular biotechnology and provides a robust regulatory process to approve them.

The standards to approve biotech products are essentially the same as for other drugs in Mexico: they must be safe, effective and have appropriate quality. The biotech products, however, must comply with a number of additional dossier requirements, in view of their distinct characteristics. Applicants have to prove quality, safety and efficacy requirements under the General Health Law, its regulations and applicable NOMs, particularly, those for biotech products (NOM-257-SSA1-2014), for good manufacturing practices for medicinal products (NOM-059-SSA1-2013) and for active ingredients (NOM-164-SSA1-2013).

For this purpose, biocomparable applicants must submit essentially: i) in vitro studies/comparative non-clinical studies, ii) a report of comparative test of pharmacokinetics, if determined by the Ministry of Health, to show pharmacokinetic comparability on key parameters between both the follow-on and the product of reference, iii) pharmacodynamics test reports, and iv) comparative efficacy and safety clinical tests to show similarity between both the follow-on and the product of reference. Once approved, close pharmacovigilance should be followed.

3.D. BIOCOMPARABLES (FOLLOW-ONS)

Applicants must submit clinical tests and, when appropriate, in-vitro tests, to prove safety, efficacy and quality of this product comparable (similar) to those of the reference biologic.

The pre-clinical and clinical test used by an applicant for a biocomparable must use the corresponding reference biologic to perform comparative and physic-chemical studies. For this, the applicant must have to submit essentially:

In vitro studies
A report of comparative test of pharmacokinetics, if determined by the Ministry of Health, to show pharmacokinetic comparability on key parameters between both the follow-on and the reference biologic;
Pharmacodynamics test reports; and
Comparative efficacy and safety clinical tests to show similarity between both the follow-on and the reference biologic.

Although industry participants welcomed amendments to approve biologics, specific rules to approve follow-ons have caused debate. In Mexican domestic law, there is currently no indication of a data-protection period for biologics. The recognition of data package exclusivity rights for biologics has been achieved through litigation.

They have been introduced into the General Health Law and the Mexican Pharmacopeia. In practice, they are approved by a particular procedure, following rules for new molecules when applicable and appropriate, although they do not require approval by the new molecules committee. Specific rules are still pending. The draft of NOM requirements for granting marketing authorizations includes orphan drugs.

4. What are the approximate fees for each authorization?

Government fees for analyzing a manufacturing approval application are around US$3,000.

While Government fees for analyzing marketing authorization applications are around:

For new molecules/biologics: US$8,600.
Generics/biocomparables: US$4,800.

5. For how long are marketing authorizations/registrations valid? How are marketing authorizations/registrations renewed?

Marketing authorizations must be renewed every five years for medications of new molecules, generics, biologics (biotech products) and biocomparables (follow-ons), while orphan drugs must be renewed every two years.

Applicants must prove compliance with good manufacturing practices, safety and efficacy standards, pharmacovigilance, labelling standards and all other applicable provisions.

6. How does the authorization process differ between brand-name products and generic products? Are there differences for local manufacturers versus foreign-owned manufacturers?

The differences between the brand-name and generic product authorization process are mentioned in question 3. But in general terms the differences are that for brand-name products it is necessary to demonstrate the safety and efficacy and for generic products it is necessary to demonstrate the interchangeability and biocomparability. (Please see answer to question 3).

In Mexico, in general there should be no differences in the requirements to obtain a marketing authorization for local manufacturers versus foreign- owned manufacturers.

The Mexican President, in an effort to increase the supply of generic medicines and medicines from abroad, ordered the health authorities to take the necessary measures to expedite the granting of marketing authorizations based on the so-called Equivalence Decrees.

As a follow-up to the President's order, the Ministry of Health issued a Decree, published on November 18, 2020, in the Official Federal Gazette, ordering the following:

COFEPRIS must resolve the applications of marketing authorization of medicines and health supplies coming from abroad within 5 working days.
If an application is not resolved within the above-mentioned period, it will automatically be understood to have been granted (afirmativa ficta).
The period of 5 days will be suspended if COFEPRIS requires documents, clarification or additional information from the applicant, with the 5-day period being reactivated immediately following the presentation of the information.
COFEPRIS must carry out the necessary actions to guarantee the safety, quality and efficacy of the medicines.
The applicants, importers and marketers are not exempted from complying with the applicable provisions to maintain the marketing authorization.

The Decree has been highly criticized, because in addition to not going through a legislative process, as the nature of the matter requires, a period of 5 working days does not seem reasonable for COFEPRIS to ensure that the medicines and material acquired from abroad comply with regulatory standards that guarantee safety and efficacy for products of various kinds, such as biotechnological medicines, or that patent rights are observed within the framework of the Linkage System in force in Mexico, as well as protection of clinical data.

The Decree has also been criticized for granting facilities to companies and products coming from abroad, specifically, obtaining a marketing authorization within 5 working days, when the procedure for the pharmaceutical industry established in Mexico, according to the applicable regulatory framework, takes approximately between 180 and 240 working days (6 to 8 months). Additionally, for various reasons, including the COVID-19 pandemic, the procedures of such national or international companies established in Mexico have been considerably delayed.

7. How are combination products (drug + drug, drug + biologic, drug + device, biologic + device, drug + biologic + device) regulated?

Combination products must have marketing authorization from COFEPRIS.

Given their particular features, combination products can be classified as either drugs (drug/biologic) and/or medical devices (drug/device). Requirements and application timeframes differ in each case. Depending of the nature of the combination product, it may require separate drug or biologic and medical device approvals or not.

8. How is compliance with regulation monitored and evaluated? Is the regulatory regime comparable with the U.S. Food and Drug Administration or the European Medicines Agency expectations and requirements?

COFEPRIS has a permanent pharmacovigilance programme. This is based on information on possible adverse effects of the drugs given, among others, by:

Doctors and physicians, on a voluntary basis.
The pharmaceutical companies that manufactured the products and those who conduct clinical trials, who must both report any health risks.

Under the Health Law Regulations and the NOMs, COFEPRIS´s monitoring is focused, among other things, on the following:

Ensuring compliance with good manufacturing practices and standard operating procedures.
Ensuring the activities do not exceed the limits set by the authorization and do not differ from those activities which are authorized.
Ensuring the performance of validation analysis of the manufacturing processes and systems involved.

9. What is the potential range of penalties for noncompliance?

COFEPRIS is empowered to make on-site visits at any time to inspect premises and verify such compliance, and can initiate ex officio legal proceedings to sanction non-compliance. Ultimately, these legal proceedings can result in the revocation of the marketing authorization, ordering partial or total suspension of activities, services or adverts, and under certain conditions, COFEPRIS has statutory authority to revoke any manufacturing approval and/or impose sanctions, ranging from a fine of up to 16,000 times the minimum wage (about US$3,523), to closure of the establishment.

10. Is there a national healthcare system? If so, how is it administered and funded?

The public sector comprises of:

Social security institutions exclusively directed to formal workers, in which the funding comes from contributions by the federal government, the employer and the employee, such as the:
- Mexican Institute of Social Security (IMSS);
- Institute of Social Security for State Workers (ISSSTE);
- specialised public institutions for members of the military and navy force (ISSFAM);
- PEMEX Medical Services, for Mexican petroleum workers; and
Public institutions exclusively directed to attend people not covered by social security, in which the funding comes from the federal government, states and patients, such as the
- Wellness and Health Institute (INSABI). and
- State health institutions

The federal government pays 70 percent of the annual family premium, states provide 20 percent and patients provide 10 percent.

Public institutions exclusively directed to attend people not covered by social security, in which the funding comes from the federal government, states and patients, such as the:
- Wellness and Health Institute former People's Health Insurance; (INSABI) and
- State health institutions.

In the public sector, social security and public institutions provide medicines. However, if the medicine is not available when required, some public insurers allow private registered drugstores to supply prescribed medicines and to request their refund.

Other social security institutes for particular sectors, for example, for members of the military and for Mexican petroleum workers (PEMEX Medical Services).

The public health sector normally faces financial problems and implements measures to limit costs, for example, by pressing for price reductions in public bids and encouraging competition.

On July 31, 2020, the "Specific Agreement between the Institute of Health for the Welfare of the United Mexican States (INSABI) and UNOPS" was signed for the execution of the Implementation Project called "Acquisition of medicines and medical supplies" for the period 2021-2024.

Open international competitive bidding modality (national and international market companies) for the consolidated purchase of medicines under the procurement policies and procedures of UNOPS.

The Mexican Government transfers to UNOPS all the resources and UNOPS is in charge of implementing, tendering and contracting said activities, as well as managing the respective contracts with third parties.

INSABI will assume responsibility for the actions in charge of UNOPS, and will hold it harmless, from and against any action, claim, process or liability of any kind filed by third parties against it.

11. How does the government (or public) healthcare system function with private sector healthcare?

It is worth mentioning that the public and private health sectors function separately, there is no interaction between one and the other.

Private health insurance generally covers professional, executive and higher levels of the private sector. Enrolment in private health insurance has increased considerably over the past few years.

The public health sector normally faces financial problems and implements measures to limit costs, for example, by pressing for price reductions in consolidating public bids (involving the most important health institutions) and encouraging competition.

12. Are prices of drugs and devices regulated and, if so, how?

Price control in the private sector is based on a scheme of self-regulated maximum retail price (MRP) covering patented products, overseen by the Ministry of Economy. Pharmaceutical companies' participation is voluntary. Under the price control each product's MRP must not exceed an international reference price, estimated as the average price in six major markets, plus a market factor. In 2008, the government created the

Committee for the Negotiation of Drug Prices (CNDP) to:

Support public acquisitions through a process of transparent negotiation between public insurers and pharmaceutical companies.
Evaluate cost-benefits of new medicines and therapies in view of prices and other comparable products in the market.

On the other hand, at the time this paper is being written, there is a proposal pending to be formally submitted before the Mexican Congress, that is focused on implementing regulation with respect to prices of drugs. The aim of this eventual regulation is to warrant access to health. In accordance with the proposal, the prices of drugs would be reviewed and evaluated every year or at any time if necessary, based on the economic, technical or therapeutic conditions.

According to UNOPS' guidelines, the process is made up of different stages grouped within three phases identified as:

Pre-Bidding Process (market research, requirements definition and identification of potential suppliers).
Bidding Process (publication of the bases and call for bids and/or invitations for negotiation, bid management, evaluation and award).
Post-Bidding Process (contract management and logistics). The distribution to the final destination will be in charge of INSABI.

Therefore, during these proceedings UNOPS is entitled to negotiate the prices of the supplies.

13. How are drugs and devices used by patients paid for? What roles do public and private payers play?

In the private sector, most payments are made on an out-of-pocket basis.

Private insurers are currently improving the level of pharmaceutical coverage as the private market in medicines has grown considerably.

14. Who dispenses drugs and devices to patients and how are those dispensers compensated?

Commonly, public insurers dispense medicinal products prescribed by their healthcare professionals. Products are prescribed from a basic medicinal products list, which public insurers essentially base on the National Formulary issued by the Ministry of Health. Public insurers acquire those listed products mostly by public tender processes. IMSS is the largest public sector buyer of drugs.

For direct purchasing of patented products, CNDP analyses the effectiveness of the drugs and relevant therapeutic alternatives, and the feasibility and implications of an eventual substitution with equivalent medicines.

Also, CNDP conducts an economic evaluation of the cost-effectiveness of patented medicines compared with those potential substitutes.

For ISSSTE, a prescribed medicinal product can be dispensed in a private drug store registered with this public insurer, provided that this is not available within ISSSTE facilities and under certain conditions. ISSSTE reimburses the cost of that product according to previous agreements.

15. What are the professional and legal responsibilities of those who dispense drugs and devices? What role do they play in providing patient care, information, and safety?

In Mexico, there is a General Health Council that, establishes the drugs that can be acquired by the Federal Mexican Government and can therefore be dispensed by healthcare professionals in the public sector, providing, in this way, information and safety related to such medications.

Additionally, the General Health Council is entitled to establish the Health Strategy in Mexico and hence is the one who decides the medications Mexicans should have access to, especially in public sector.

Under the called "Acquisition of medicines and medical supplies" for the period 2021-2024 through UNOPS. INSABI will assume responsibility for the actions in charge of UNOPS, and will hold it harmless, from and against any action, claim, process or liability of any kind filed by third parties against it.

Click here to continue reading . . .

Originally published by Pharma Boardroom.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mexico: The Pharma Legal Handbook