1. Executive Summary Policy Making and Administration in the Healthcare Sector... 4 Registration of Drugs and Medical Devices...

Transcription

1 Date 24 th June 2014

2 1. Executive Summary Policy Making and Administration in the Healthcare Sector... 4 Registration of Drugs and Medical Devices... 4 Pricing Policy... 6 Reimbursement Policy Money Flow in the Healthcare Sector Home Healthcare Human Resources in the Healthcare Sector... 9 Work Situation Doctors... 9 Lack of Healthcare Personnel Access to Medicine - Challenges Patents Challenges, Drug Patents The Division Between the Public and Private Health Sectors The Public Healthcare Sector Purchase Processes in the Public Healthcare Sector The Private Healthcare Sector Regulation Purchase Processes at Private Hospitals Challenges for Private Hospitals The Market of Medical Equipment and Pharmaceuticals Body Ideals: Plastic Surgery and Non-surgical Procedures Orthodontic Market ICT and Telemedicine in Health

3 The health state of Brazil s population is multifaceted. The country faces a mixture of health challenges associated with both developed and developing countries. On one hand, with its growing middle class, Brazil increasingly faces lifestyle-related illnesses and those associated with older populations whilst, on the other hand, a significant portion of health challenges derives from violence, poverty, and is linked to poor sanitary conditions, lack of access to medical help, medicine and clean water, in some cases. The healthcare system catering for the approx. 200 million inhabitants is split between a public sector serving roughly 76 percent of the population and a growing private sector serving the remaining 24 percent. However, in terms of expenditures, the public sector only accounts for approx. 50 percent, making the investment per patient much lower than in the private sector. Both the private and the public health sector are under pressure: a complex three-tier public system with a number of regulatory bodies across federal, state, and municipal levels, general bureaucracy and burdensome tender processes prevents this sector from operating efficiently. At the same time, the increase in welfare-related diseases challenges the healthcare service, literally taking the space of other less common diseases. The private sector is challenged too, as the increasing number of low-budget health plans, fierce competition within the industry and pressure from the insurance companies force the private hospitals to slim their cost structure and search for solutions that can help reduce expenses. At the same time, private hospitals and clinics are looking for technologies and services that can help them build up or sustain an image of offering superior quality. The Brazilian market requires commitment and understanding of the dynamics and regulations of the sector. However, it is a market of great potential owing to its sheer size, the growing middle class and the challenges lying ahead requiring cost-efficient, user-friendly and innovative solutions solutions that Denmark is a proven provider of. 2

4 The Healthcare Sector in numbers. Source: Livro Branco, BrasilSaude2015. Anahp (National Association of Private Hospitals) Indicators Data % of GDP allocated to healthcare 8.9% Life expectancy 73 years old General Data Total number of jobs in healthcare 4,326,014 % of total number of jobs in Brazil 4.5% % of total remuneration 7.8% % of formal jobs in healthcare 70.9% Hospitals Number of hospitals 6,266 Number of jobs in hospitals 267,977 Pharmacies Number of pharmacies 82,204 Pharmaceutical Industry Number of companies 576 Number of jobs in pharma industry 101,676 Industry of medical, hospital and dental equipment and products Number of jobs 79,354 % of international production in consumption 61.1% Research + Development + Innovation Institutions accredited or in process of accreditation to do experiments in animals Annual investment from the Ministry of Health in clinic research for SUS million BRL 3

5 The Ministry of Health detains 50% of the decision-making power when it comes to policy making in the Brazilian healthcare sector. The remaining 50% pertains to the National Health Council (Civil Society), as guaranteed by the Constitution. That half-half split is replicated at state and municipal level. The dialogue between those two decision-making bodies goes through the National Health Council once every four years at a national Health Conference. Such conferences also exist at state and municipal levels, whose outcomes are subsequently taken on to the national one. The Health Council s decisions are independent from the executive branch (ministry) and decisions are made according to its board composition as follows: 50% healthcare system users, 25% workers employed in the sector and 25% of administrative staff. Structure of the Ministry of Health (Ministry, two councils and six secretariats) The Health Surveillance Agency (ANVISA) is the Brazilian food and drug agency, responsible for the approval for drugs and medical devices. The agency was created in 1999 and as shown above, is connected to the Ministry of Health. For approval of medical equipment, Brazil uses a class categorization similar to the European. Compared to class 1 and 2 products, the registration process for class 3 and 4 products is lengthier and more costly, as inspection to ensure compliance with Brazilian Good Manufacturing Practices (BGMP) is required. Since 2013, class 1 and 2 products do not require BGMP certification. Previously, a lack of staff has led to a substantial backlog on ANVISA s handling of 4

6 applications, posing a real entry barrier for companies trying to enter the market. However, the recent hiring of 314 employees in early 2014 for the approval processes alongside with pressure through several law suits and an increasing openness to engage in dialogue with the companies, all point towards a more positive perspective moving forward. A number of consultancy companies offer initial free-of-charge guidance related to the procedures, time and costs involved for specific products, and the Trade Council in Brazil is also available for guidance. Important for the companies wishing to enter the Brazilian market is to get a clear view of the registration process in order for them to evaluate time-to-market and plan a realistic entry strategy. Another important aspect is to consider who should be in charge of the registration process, as registration requires a legal entity in Brazil responsible of the product vis-à-vis ANVISA. Teaming up with a possible distributor may be tempting, but as the registration entity becomes the legal holder of the registration rights, other strategies should be considered, such as paying a consultancy firm to cater for this part too. Regarding drugs, the requirements for market authorization are: 1) safety and efficacy, which is evaluated by the office of drug registration; 2) price approval, which is given by the Executive Secretariat of the Pharmaceutical Price Chamber. Approval time for drugs is long, and as the table below shows, Brazil lags significantly behind other countries. Average time (in days) required for the approval of drugs. Source: Livro Branco, BrasilSaude2015. Anahp 5

7 The procedures related to approval of clinical trials of up to months mean that Brazil loses out on a number of opportunities to participate in trials. However, clinical trials from other countries are generally accepted. The pricing policies of medicine are defined by Pharmaceutical Market Regulation Chamber (CMED), an entity formed by five ministries and coordinated by the Ministry of Health. The daily work is done by the Office of Economic Regulation at ANVISA, which is the Executive Secretariat of the Chamber. ANVISA is responsible for the decisions regarding the approval of prices for new drugs in the market. The concepts of Health Technology Assessment (HTA) and health economics are applied on the price regulation of new chemical entities. The new drug/molecule is compared to the best treatment option existing in the market. If the new one is considered to be better than the comparator, a premium price is allowed, but this price cannot exceed the international ceiling price, which is the lowest price among reference countries. If there is no benefit over the comparator, then the cost of treatment cannot exceed the cost of treatment with the comparator, and the international ceiling price is also applied. For high cost drugs that are purchased by the government, a mandatory discount is applied over the factory price set by ANVISA. This discount is based on the difference between the Human Development Index of Brazil and the reference countries (source: Ispor). The National Committee for the Incorporation of Technologies (CONITEC) is responsible for guiding the Minister of Health about which health technologies and drugs should be provided by the Brazilian Public Health System (SUS - Sistema Único de Saúde). CONITEC has a maximum of 180 days to carry out its studies and make its recommendations. These recommendations are based on HTA reports and on budget impact analysis, and are subsequently sent to the Minister of Health, who has the final say. If the Minister of Health decides to incorporate the recommendations, the area responsible for the programme will proceed with the implementation. Some of the drugs are purchased directly by the federal government while others are purchased by the state and municipal governments, which receive funds from the federal government. Examples of important reimbursement programmes include Exceptional Drugs (high cost drugs for chronic diseases), Strategic Drugs (ex: tuberculosis, AIDS) and Farmacia Popular do Brasil (co-payment programme in private pharmacies). (source: Ispor) 6

8 The following table offers an overview of the money flow in the healthcare sector and the different sources of funding in both the private and public sector. Money Flow in the Healthcare Sector. Source: Livro Branco, BrasilSaude2015. Anahp 7

9 The average life expectancy of the Brazilian population is improving and at a much faster pace than in other developing countries due to the significant amount of people that have been lifted out of poverty. Within the next 20 years, the population over 60 will triple from the present 22.9 million (11.3% of the population) to 88.6 million (39.2%). In the same timeframe, the average Brazilian life expectancy will rise from the present 75 years to 81. Population pyramid of Brazil in 2013, and projections for 2040/2060 (IBGE) These trends mean that the home healthcare in Brazil has great potential, and the Brazilian Association for Home Care Medicine Abemid (Associação Brasileira de Medicina Domiciliar) expects the sector to grow at a two digit pace in the coming years ( Patients with access to a health insurance represent the largest percentage of end users of home healthcare services. The companies of the private home care sector usually work for the biggest health insurance companies in Brazil such as Amil, Unimed, Golden Cross, Sul America and Bradesco. It is estimated that homecare reduces the cost of patients treatments by 30%, but insurance companies are concerned about the longer period of treatment. The public health system provides homecare services through two different platforms: University Hospitals and Health Centres. As an example, in Brazil s largest city São Paulo, heart patients treated at INCOR (The Brazilian Heart Institute) are referred to the University of São Paulo s homecare unit after having finished surgery. The homecare unit is called Nucleus of Assistance of Interdisciplinary Home Care (NADI - Núcleo de Assistência Domiciliar Interdisciplinar) 8

10 founded in 1996 by the São Paulo University (Hospital Instituto Central do Hospital das Clínicas da Faculdade de Medicina da USP). Even though NADI has had a lot of success, the public sector is generally limited. The home healthcare services began in Brazil roughly four decades ago, although only in a limited manner. However, only 15 years ago the private sector in Brazil started providing the first home care services. Today, the homecare industry faces challenges. At first, there is a significant lack of information about this relatively new treatment. This input plays a role in several segments: for students in the health sector, there are no career plans or the recognition of the community about this type of job; and for potential consumers, there is a lack of confidence in the effectiveness of this treatment and misunderstanding in types of homecare. The sector also has problems with specific domestic regulations and jurisdiction. The home healthcare segment mainly focuses on treating and attending the 56 million Brazilians (about 28% of the population) who suffer from chronic illnesses such as diabetes, hypertension, rheumatism, respiratory problems, Alzheimer and heart surgery patients. Even though the homecare activities are focused on elderly people, there is room for the specialization of the service, for example, baby and kids care associated with post pregnancy period; and the prevention of illness. Due to the fact that Brazil s 200 million citizens are aging, and that there is a proportionately low number of hospital beds per person, the home care segment is expected to grow significantly during the next decade and beyond. The home care segment trend in Brazil is towards home services 24 hours per day. The market demands high-level technology for ICU (intensive care unit) at home, laboratory exam devices, management software for companies, and sophisticated databases for companies to monitor and control patient treatment. In the past it was common for doctors to be statutory public servants, meaning they worked in institutions with public administration (e.g. public hospitals and schools, ministries, court, police, etc.). Public servants in Brazil have special working conditions, such as work stability (lifetime work guarantee) and social security benefits (better pension and benefits in credit lines, among others). 9

11 However, today, to cut costs, public and private hospitals as well as insurance companies only seldom hire doctors as private individuals. Instead doctors are engaged as legal entities either a group or on an individual basis. To service the private sector, doctors need to be accredited by the insurance companies. One doctor can have credentials from several insurance companies without any cost for the doctor. It is more difficult for a doctor to be accredited by a high-end insurance company, as it only opens new places sporadically. From the doctor s standpoint, the main difference between high-end insurance companies and more simple ones is the fee paid by each medical appointment, which can vary from 20 BRL to 70 BRL. The majority of people covered by health insurance has very simple insurance plans and high-end insurance plans are scarce. The majority of doctors accredited by insurance companies work by volume, meaning their earnings depend on the number of patients attended. Doctors can also attend patients with health insurance plans other than the ones by which he/she is accredited. In this case, the doctor is paid not by the insurance company but by the hospital in which he/she is working and the fee per medical appointment is lower, as there is the margin for the hospital. Working as a legal entity with pay per service is cost efficient for the hospitals and clinics, but makes work for the doctors more precarious. Brazil suffers from a shortage of healthcare personnel including trained medical doctors. The average number of doctors is around 2.2 per 1,000 inhabitants against 3.4 in Denmark, and regional differences are significant, resulting in lower ratios in the more remote areas of Brazil. Moreover, there is a big difference between the public sector and the private, with far more positions available per 1,000 inhabitants in the private sector than in the public. The pressure for more doctors in the public health system led the Dilma government introduce a new programme, More Doctors early 2014, inviting doctors from other Latin American countries to work in the Amazon and northeastern states where the shortage is particularly severe. 10

12 Distribution in Brazil of registered doctors (in the Federal Council of Medicine) for every 1,000 inhabitants (2013). Source: Livro Branco, BrasilSaude2015. Anahp Geographical distribution of doctors Source: Livro Branco, BrasilSaude2015. Anahp The government also announced that more medical schools would be established to train new doctors and that training would be extended from six to eight years, adding a second period of two years during which students would work in public 11

13 service posts. This last initiative is expected to add up to 36,000 doctors in the public health service by Both initiatives have been criticized by the doctors organizations, which claim that the lack of doctors in remote areas is primarily due to lack of infrastructure and supply, preventing a better distribution of doctors. As describe earlier in the report, the Brazilian Public Health System (SUS) is committed to offer a list of essential drugs free of charge aimed at treating the most prevalent diseases in the population. The mandatory list of drugs covered by the public and private health system alike is published by RENAME and the latest from 2013 is available here. Since January 2014 the complete coverage of anticancer treatment (oral chemotherapy total of 37 medicaments) is mandatory. The medicine to control the side effects related to chemotherapy has total coverage by the private insurance since May The complete list is available here. However, as the public sector struggles from an inadequate infrastructure and a lack of material and human resources, the medicine and treatments available are often based on older generation drugs with little access to innovation. To keep costs at a minimum, the public sector, through its regulatory bodies, subsidises locally produced generics. Charging patients for medicine is prohibited in the public system. In real life, nonetheless, medicine is often not available when needed. Studies carried out in Brazil have shown that, on average, 40% of the drugs prescribed in public primary healthcare were not available when needed. Although access to medicine in Brazil is relatively high, socioeconomic inequities exist. Despite the fact that lower income families receive more medicine free of charge from government-funded sources than the wealthier segment, 26% of the medicine obtained by the bottom income quintile of the population is paid for from their own budget. In order to compensate for the limitations in the availability of free medicine in the public sector, the Brazilian government launched the popular pharmacy programme in The programme provides medicine at low prices to the population, particularly those who use private health facilities but who have difficulty in buying their medicine in private pharmacies. There are two types of popular pharmacies : (a) those which are run by the state, city governments, universities or other health-related institutions. In these pharmacies, drugs from a list comprising approx. 95 molecules selected on the basis of the most prevalent health problems in Brazil as well as drugs, which are expensive for individuals to 12

14 acquire, are sold at cost price. The other type (b) comprises those, which are run in partnership with private pharmacies using a system of co-payments. This category was created in 2006 as a means to expand the popular pharmacy programme. In these facilities the government covers 90% of the price whereas the patient pays the remaining 10%. However, only a list of anti-hypertensive, anti-diabetic and contraceptive drugs are sold in this way. So far, private health schemes only rarely cover medicine, and out-of-pocket costs to medicine makes up a significant part of the private market expenditure. However, Pharmacy Benefits Management (PBM) was introduced in Brazil in the late 1990s and is a prescription drug programme typically offered by companies to their employees as a benefit. The reimbursement of expenses can be recovered from 40% until 100% of the pricing list depending on the case. In 2012, according to Saudeweb, some 3.5 million Brazilian employees benefitted from a PBM, but the number is expected to increase to approx. 20 million between 2013 and Patents are regulated by the Industrial Property Code (Código de Propriedade Industrial). The holder of a patent possesses ownership rights to the patented item under Brazilian legislation and international conventions. Titles to patents are transferable. The National Institute for Industrial Property (INPI- Instituto Nacional de Propriedade Industrial) issues patents for inventions, utility models and industrial designs. Protection is also granted to medicine of any kind, chemical and pharmaceutical products or preparations and to the processes for research or alteration of substances. To be eligible for patent protection the product must meet the following requirements: - Novel and not patented, known by or used in Brazil or abroad; - Of industrial use, that is, capable of being used or applied in an industrial process; - Not obvious from a technical development perspective. Patents are granted for the following periods, commencing on the day that the registration is filed with the INPI: - Inventions: 20 years - Utility Models: 15 years - Industrial design rights: 10 years, extendable for 3 consecutive periods of 5 years each 13

15 Fees vary for the initial filing, request for examination, issuance and maintenance. Policies encouraging generic drugs were included in the Brazilian legislation through law no /76 (on the sanitary guidelines to which medicine is subject), the Patent Act (no. 9279/96) and law no /99 (Generic Medicine Act). Since 2000 (the year when generic drugs were launched in Brazil) the market for generics has been growing with rates of over 10% per year and, consequently, increased its share of the overall Brazilian pharmaceutical market. Producers of innovative medicine report lack of protection of patent rights claiming that the TRIPs Agreements have been violated in some cases and information passed to local producers of generics. The government, on the other hand, claims law suits from the original producers are sham litigations, that is, practice of abusive lawsuits as barrier to hinder the production of generics and free competition. While the introduction of the Brazilian Public Health System, SUS, guarantees free access for all Brazilians to basic healthcare and medicine, the private sector is the preferred partner for those who can afford it. Today, about 24 % of the population is covered by a private health plan, and of this share, approx. 70 % of the plans are company paid schemes. The sector sees an increasing number of clients due to a growing middle class and Brazilians requiring better healthcare. In 2013 alone, the number of healthcare plans grew 4.6 %, which is an increase compared to 2012 (3.6 %) and 2011 (3 %). 14

16 Comparison of Expenditure between Public and Private Healthcare Sectors in Brazil ( ). Source: Livro Branco, BrasilSaude2015. Anahp Percentage of public expenditure in relation to total investment in healthcare (2011). Source: Livro Branco, BrasilSaude2015. Anahp 15

17 The public sector is a three-tier system with federal, state and municipal level involved in the planning, funding and execution of healthcare. At the federal level, the Ministry of Health is divided into six secretariats responsible for development, proposal and implementation of health policies. The public health also includes State and Municipal Health Secretariats, which are responsible for the delivery of health services, development of campaigns and all activities related to the public health system, SUS in each state and municipality, as well as local surveillance agencies, such as COVISA (Coordenação de Vigilância em Saúde) on city level. Whilst expenditures have risen sharply at all three levels, the municipalities and the states are gradually taking over more of the budget compared to the federal level. Growth in Public Expenditure per Entity (2011). Source: Livro Branco, BrasilSaude2015. Anahp (adaptation) The growing importance of the municipalities with regards to public health expenditures is also reflected in the fact that 70 % of the public hospitals are in the hands of the municipalities, while 27 % are run by the states and only 1 % at federal level. According to the public law nr. 8666, all purchases being made in the public healthcare sector have to undergo a bidding process, where the lowest bid amongst the products/services meeting the requirements wins the contract to supply the 16

18 equipment. To be considered, the company needs to have its equipment/material approved by the public authorities and be established in Brazil as a legal entity / have a legal representation in the country. For standard material and equipment, the requirements most often will be based on earlier purchases, which complicates access for newcomers. For new technology, a way to enter into a bidding process is to engage with the hospitals and their researchers in pilot projects and research programmes. For research projects there are usually no bidding processes, and if successful, equipment used in pilot projects may serve as basis for future technical specifications in bidding processes. Case Study 8.1 Investment Opportunities in the Public Healthcare Sector The demand for systems that deliver rapid, proven and cost-effective diagnostics in the Brazilian public health sector is growing. To address the needs of the Ministry of Health, Fiocruz Public Health Foundation and the Institute of Molecular Biology of Paraná (IBMP) have signed an agreement with GenCell Biosystems to partner in the development of new clinical screening systems. The three institutions together will develop clinical standard diagnostic systems in a two-year programme to diagnose infectious diseases in the Brazilian national public health system. The initial phase of the programme is valued in excess of USD 12 million (to be funded by both parties). In the long term the programme is expected to lead to significant follow-up sales for GenCell in Brazil. The systems will use GenCell's patented genetic analysis technologies and perform in vitro diagnostics (IVD) across a range of applications. GenCell's composite liquid cell (CLC) technology will be at the centre of a new instrument platform. GenCell technology will be used to screen for several different types of pathogen in a range of sample types, including bloods, augmenting current health programmes that depend on many different IVD platforms. Fiocruz will develop and provide key biological tests, assist in defining system features, and help GenCell to adhere to the stringent Brazilian regulatory requirements. Source: Business Monitor- 10 th February, 2014 As indicated previously, the private healthcare in Brazil is booming with an increasing number of people being covered by some sort of private health plan. The sector involves private hospitals, health insurances and diagnostic clinics some of which are organized as non-profit organizations. The sector is relatively fragmented with a large number of hospitals and clinics operating on an individual basis. 17

19 The private sector is regulated by ANS (Agência Nacional de Saúde Suplementar), an agency established by the Brazilian Government under the Ministry of Health to regulate, standardize, control and inspect the private health insurance sector in Brazil. ANS establishes minimum requirements related to medicine (see chapter about Access to Medicine ) and procedures and exams to be covered by private healthcare plans. A number of different types of healthcare plans exist, depending on the services offered. For each plan ANS establishes a minimum service to be included in the plans. The latest version of the coverage list released by ANS is from May 2014 and comprises a total of 5,000 items (covering procedures, exams, diagnostic exams+ other different types of attendance). Note that same list is covered by public healthcare system. The complete coverage list (in Portuguese) is available here. The different healthcare plans can be divided into the following groups: Outpatient Plan (code in coverage list = AMB): the patient can use the private clinics or outpatient clinics, except hospital admission or any kind of diagnosis exams that demands hospital admission. Hospital Plan (codes in coverage list = HSO/PAC 1 /DUT 2 ): the patient can use any kind of care in private clinics, outpatient clinics, hospital admission, any exams and/or diagnosis exam or procedures that demand or not hospital admission (81.5% of beneficiaries have this plan). Hospital Plan with Midwifery (codes in coverage list = HCO, PAC/DUT): the same coverage of the hospital plan plus procedures related to prenatal assistance, childbirth and assistance during the puerperal period. Dental Plan (code in coverage list = OD): in this case the plan can be added to the hospital plan or can be considered just for dental assistance, the patient can use the private clinics associated to Private Healthcare Insurance. Private companies are, by law, obliged to deliver services to the public sector, if requested. This way, the public healthcare sector is one of the main buyers of services from private sector hospitals and clinics. The relation is regulated through 1 PAC = High Complexity Procedure, needs prior permission to be performed 2 DUT = The procedure needs prior permission and should comply with some pre-requirements specific for each case 18

20 public law nr. 8666, demanding public bidding procedures for the contracts between the public and private hospitals. The purchase process in a private hospital does not involve a bidding process like the ones established for public hospitals. Normally private hospitals have a Product Manager or a Purchase Department which is responsible for monitoring the demands of the hospital. Even more than in public hospitals, the purchase process in the private sector relies on the relation with suppliers. Normally the sales force from the companies is very active keeping regular contact with the doctors. As many of the top private hospitals, such as Albert Einstein, also conduct research, co-developing pilot projects is also an applicable strategy in the private sector. Taking in more clients with low-budget private health plans, puts pressure on the private hospitals, which in numbers far outgrow the public (70 % against 30 %). It is there for of utmost importance for the private hospitals to keep costs low in order to maintain (or even increase) the margin of what they receive from the health plan companies. This may be through innovative solutions that at the same time serve as differentiator in a competitive environment. The intake of new clients also means expansion of existing or building of new private hospitals, and Danish companies should keep their eyes open for new possibilities. Over the past five years, the Albert Einstein Hospital in São Paulo alone spent around BRL 1.1 billion in updating and expanding their units and investing in new technologies. For the coming five years the hospital foresees expenditures around BRL 1.7 billion that will be used for infrastructure projects, a faculty of medicine and a new R&D centre (source: Valor Económico, 11 th June 2014). 19