Brazilian Official Newspaper (DOU) – Section 1
Date: June 27th, 2003
Provisional Measure # 123 of June 26th, 2003
It defines the regulation guidelines for the pharmaceutical industry, creates the
Regulating Chamber for the Pharmaceutical Market – CMED, modifies Law #
6.360 of September 1976, and disposes on other matters.
The President of the Republic, by exercising its attributions granted by art. 62 of
the Constitution, hereby establishes the following Provisional Measure, which shall
have the same legal effects of a law:
Art. 1 – This Provisional Measure sets forth regulations for the pharmaceutical
industry for the purpose of promoting pharmaceutical assistance to the population
by means of mechanisms that encourage the offer of medical drugs and
competitiveness in the sector.
Art. 2 – This Provisional Measure is applicable to drug manufacturing companies,
pharmacies and drugstores, representatives, drug distributors, as well as to any
legal entity of public or private law, including associations of entities or citizens
constituted in fact or legally, even if temporarily, with or without corporate entity,
which somehow work within the pharmaceutical industry.
Art. 3 – For the purposes of this Provisional Measure, the following definitions have
I - pharmacy – commercial premises for the manipulation of complete and
prepared drugs, medicines trade, pharmaceutical inputs and similar products,
comprehending the dispensing and the exclusive service for a hospital or any
equivalent health care service, under the terms of clause X, art. 4, of Law # 5.991
of December 17th, 1973;
II - drugstore – commercial premises designed for the dispensing and trading of
drugs, medicines, pharmaceutical inputs and similar products in their respective
original packages, under the terms of clause XI, art. 4, of Law # 5.991 of 1973;
III – representatives and distributors – companies that direct or indirectly work in
the wholesale market of drugs and medicines in their respective original packages,
pharmaceutical inputs and similar products under the terms of clause XVI, art. 4, of
Law # 5.991 of 1973;
IV – medicines – all pharmaceutical products technically obtained or prepared for
prophylactic, healing or palliative purposes, or for diagnosis purposes under the
terms of clause II, art. 4, of Law #5.991 of 1973; and
V – drug manufacturing companies– industrial premises that, by processing raw
materials or intermediate products, modify the nature, finishing, appearance or
purposes of the product, thus creating medicines.
Sole Paragraph. Companies that import medical drugs from abroad and those
imported medical drugs must be registered at ANVISA – Brazilian Sanitary
Surveillance Agency – to be deemed equal to the companies that produce medical
Art. 4 – The drug manufacturing companies shall comply with the rules
established herein, as from the date of its issuance, when adjusting and
determining their prices. Any price changes that are not in compliance with
the provisions herein are forbidden.
1st § - Pharmaceuticals’ price adjustments shall be based on a maximum limit
price model calculated upon an index, a productivity factor, and upon a
related-price adjustment factor within the same industry field and among
different industries fields.
2nd § – The index used for the purposes of the adjustment foreseen in 1 st § is
the Broad Consumer Price Index – IPCA, calculated by the Brazilian Institute of
Geography and Statistics – IBGE.
3rd § - The productivity factor expressed in percentage is the mechanism that
allows passing on to consumers, through pharmaceuticals´ prices,
projections of productivity profits of the drug manufacturing companies.
4th § – The price adjustment factor, expressed in percentage, is composed of
I – a portion of the related-price adjustment factor within the same kind of industry
field, which shall be calculated based on monopoly power, asymmetrical
information and on barriers to imports; and
II – a portion of the related-price adjustment factor among industries, which shall
be calculated based on the variation of inputs' costs, provided those costs are not
recovered in the calculation of the index foreseen in 2 nd §.
5th § – The Regulating Chamber for the Pharmaceutical Market - CMED,
created by art. 5 –is liable for specifying the composition criteria of the factors
referred to in 1st §, and also for determining the degree of separation of those
factors, either by product, relevant market or group of relevant markets.
6th § - CMED will ensure transparency and publicity to all criteria referred to in 1st
and 2nd §§ in this article.
7th § – Prices shall be adjusted on a year basis.
8th § – The first adjustment based on the criteria set forth in this Provisional
Measure shall take place in March 2004, considering, for the purposes of
such adjustment, the following items:
I – the cost price for the medicine on August 31st, 2003; and
II – the IPCA accumulated as from September 2003, inclusively.
9th § - Exceptionally, the Cabinet may authorize an increase or determine a
decrease in prices on August 31st , 2003, holding as a reference the cost price in
effect on March 31st, 2003.
Art. 5 – It is hereby created the Regulating Chamber for the Pharmaceutical
Market– CMED, of the Government Council, the objectives of which are
adopting, implementing and coordinating activities related to the economic
regulation of the pharmaceutical market aiming to promote pharmaceutical
assistance to the population through mechanisms encouraging the offer of
medical drugs and competitiveness in the industry.
Sole Paragraph. The composition of the CMED will be defined by means of an
Art. 6 - CMED is liable for the following actions, among others, required for meeting
the objectives of this Provisional Measure:
I – defining guidelines and procedures related to the economic regulation of the
II – establishing setting and increasing prices criteria for pharmaceutical drugs;
III – clearly defining the criteria for setting prices of new products or new drug
presentations under the provisions established in art. 7;
IV – choosing to exempt groups, categories and subcategories of pharmaceutical
drugs and pharmaceutical products from being subjected to the prices setting and
adjusting criteria as well as choosing to re-include them in those groups,
categories, subcategories of pharmaceutical drugs and pharmaceutical products
subject to the prices setting and adjusting criteria under the provisions herein;
V – setting sales margins fixation criteria for pharmaceutical drugs to be followed
by representatives, distributors, pharmacies and drugstores, including margins for
pharmacies that have the specific purpose of exclusively assisting hospitals or
other equivalent health-care providers;
VI – coordinating the actions of the agencies composing CMED that aim to
implement the objectives foreseen in art. 5;
VII – suggesting the competent agencies about adopting guidelines and
procedures for implementing a policy for access to pharmaceuticals;
VIII – proposing laws and regulations for the economic regulation of the
IX – giving opinions about regulations that involve the taxation of pharmaceutical
X – making sure that any modification made to the tax burden is effectively passed
on to the prices of pharmaceutical drugs;
XI – suggesting agreements and international conventions related to the
XII – monitoring, for the purposes of this Provisional Measure, the pharmaceutical
market, being able to request information about production, inputs, raw materials,
sales and any other information that may be deemed necessary to perform its
competency and that are held by public and private entities;
XIII – protecting the interests of pharmaceutical drugs consumers;
XIV – making decisions about the application of the penalties foreseen herein,
which are also related to the pharmaceutical market, such as those foreseen in
Law # 8.078 of September 11th, 1990, with no damages to the competencies of the
remaining agencies of the Brazilian System of Consumer Defense;
XV – preparing its bylaws.
Art. 7 – As from the issuance date of this Provisional Measure, the new products
and new drugs specifications that may be included in the list of products marketed
by their respective manufacturer companies shall comply with the criteria set forth
by CMED for setting their initial prices.
Sole Paragraph. For the purpose of calculating the prices referred to in the kaput of
this article, CMED will use the information provided to ANVISA whenever a
registration application or renewal is requested, with no damages to other pieces of
information that it may come to request.
Art. 8 – The non-compliance with the actions determined by CMED during the
performance of its competencies related to the regulation and monitoring of
the pharmaceutical market, as well as the non compliance with the rules
established herein shall be subjected to the governmental penalties foreseen
in art. 56 of Law no. 8.078 of 1990.
Sole Paragraph. Any refusal, omission, fraud or unjustifiable delay in providing or
delivering requested information and documents under the provisions herein or
upon CMED act shall be subjected to the governmental penalties foreseen in art.
15 of Law # 10.213 of March 27th, 2001.
Art. 9 – It is hereby extinguished the Chamber of Medical Drugs created by
Law no. 10.213 of 2001, the competencies and attributions of which are hereby
absorbed by the CMED.
Sole Paragraph. Any processes, documents and remaining items related to
competencies and attributions hereby absorbed by the CMED shall undergo the
procedural steps regulated by the latter.
Art. 10. Art. 16, Law # 6.360 of September 23rd, 1976 shall be in force henceforth,
with the following changes:
"Art. 16. The registration of drugs, pharmaceuticals, pharmaceutical inputs and
similar products, considering their sanitary, medical or prophylactic, healing or
palliative features, or even those drugs or medicines used for the purpose of
diagnosis, are hereby subjected, in addition to meet the proper requirements, to
the following specific requirements (NR):
VII – providing the following pieces of economic information:
a) the product price charged by the company in other countries;
b) the acquisition price of the product’s active substance;
c) the cost of a monthly treatment per patient using that product;
d) the potential number of patients to be treated with that medical drug;
e) a price list intended to be charged in the internal market, itemizing its tax
f) specification of a marketing policy for the product, including expenses foreseen
with sales efforts, advertising and merchandising;
g) the price intended for an altered product, i.e., a product that has undergone a
change, either in its formulation or any other kind of change; and
h) a list of all the substitute products existing in the market accompanied by their
respective prices." (NR)
Art. 11. The account conciliation to be carried out between the Government and
Petróleo Brasileiro S.A. – PETROBRÁS foreseen in art. 74 of Law # 9.478 of
August 6th, 1997 shall take place up to June 30th, 2004.
Art. 12. This Provisional Measure shall be in force from the date it is issued on.
Art. 13. Law #10.213 of March 27th, 2001 is hereby revoked, except for art. 15 and
the Provisional Measure # 2.230 of September 6th, 2001.
Brasilia, June 26th, 2003; the 182 nd anniversary of the Independence and 115th
anniversary of the Republic.
LUIZ INÁCIO LULA DA SILVA
Márcio Thomaz Bastos
Antonio Palocci Filho
Humberto Sérgio Costa Lima
José Dirceu de Oliveira e Silva