Want to know more about localization in Brazil? Read on! Prepared in association with Trench, Rossi e Watanabe one of Brazil’s most prestigious law firms, this is an extract from The Pharma Legal Handbook: Brazil, which can be purchased for USD 99, here.
1. Are there any rules or regulations requiring and/or encouraging localization in your country? What is the legal framework defining these localization rules and policies?
Yes, there are rules encouraging localization in Brazil, such as the Federal Law No. 8,666/1993 and the Federal Decree No. 7,713/2012, which provides for margins of preference of national products and services in the context of acquisition by public entities.
From a regulatory perspective, although the existent rules are not explicit for encouraging localization, only duly licensed Brazilian legal entities are allowed to hold marketing authorizations before the National Health of Surveillance Agency (ANVISA). As a consequence, imported health products may only enter into Brazilian market through a Brazilian importer.
Also, the intention of stimulating the local production of drugs (and of enabling Brazilian public laboratories to produce locally) and devices in Brazil involve Brazilian Productive Development Partnerships (PDPs). The PDPs are complex projects whereby a pharmaceutical company undertakes to transfer the technology for the production of a certain drug to a Brazilian state laboratory in exchange for an exclusivity of supply of such drug to the Government market for the period the technology is being transferred. Such exclusivity is materialized by a waiver of a public tender, which is an exception under Brazilian Administrative Law, the need of a public tender being the general rule under the Constitution and the Public Procurement Law (Law No. 8.666, of 1993).
Finally, in 2016 the Federal Law No. 13,243 (Innovation Law) was issued for remodelling and renewing the framework of scientific development, research, and the development of capabilities in science, technology and innovation. In this sense, the Brazilian Government must promote and incentive the research and development of innovative products, services and processes in Brazilian legal entities through the grant of financial, human, material or infrastructure resources.
Specifically regarding the health sector and in the context of the Innovation Law, in 2017 the Federal Decree No. 9,245 was issued for defining the National Policy of Health Technological Innovation (the PDPs, for example, are one of the instruments of such National Policy).
2. Have there been any recent significant changes involving localization rules? If yes, when did they take place and what did they involve?
There have not been any recent significant changes involving localization rules.
3. Is the process of obtaining a marketing authorization impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
Yes. Marketing authorizations (and sanitary permits) will only be granted by Brazilian authorities (i.e, ANVISA and local health authorities) to Brazilian legal entities. But there is no differential treatment for the place of origin, whether local or external.
4. Is the pricing process for pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
The pricing process for pharmaceutical products is not impacted by localization policies.
5. Is the reimbursement of pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
The reimbursement of pharmaceutical products is not impacted by localization policies.
6. Is the access to public or public tenders of pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
The access to public is not impacted. However, public tenders are.
The Federal Law No. 8,666/1993 and the Federal Decree No. 7,713/2012 provide for margins of preference of national products and services in the context of acquisition by public entities. Specifically regarding the pharma sector, the Federal Decree No. 7,713/2012 sets forth a margin of preference for the acquisition of certain drugs and pharma products (defined in the Decree) in public tenders conducted by the federal government, with the purpose of stimulating the national sustainable development.
The preference margin will be applied only for products manufactured in Brazil, according to certain Brazilian origin rules.
7. Are import tariffs, importation and/or exportation permits, trade and/or taxation of pharmaceutical products impacted by localization policies in your country? If yes, how so?
As a rule, no. However, preferential tariffs may apply upon import and export of goods in case the products originated from a country with which Brazil has a Free Trade or Complementary Economic Agreement. The origin of the product is determined based on the criteria provided in the Agreement, but usually it is connected to the place where the product was subject to the last “substantial transformation”.
8. Are there any other incentives or advantages offered by the current local localization rules in your country? If yes, what are they?
Yes. For instance, Brazil has a Free Trade Zone located in Manaus, State of Amazonas, which was designed to encourage manufacturing for export and local sales. Raw materials, parts and components imported or remitted to the Manaus Free Trade Zone enjoy different tax benefits, including tax deferral and exemption. Other specific tax incentives may apply depending on the specific circumstances of the case, such as the type of product, the purpose of the transaction and the location (State/Municipality) where the transaction is carried out in Brazil.
9. Are there discussions about the possibility of implementing localization policies in your country? If yes, what are the proposed reforms and when should they come into place?
There is currently no discussion as to new localization policies and we do not consider that there would be any changes to these in the near future. In fact, the current government has shown to be adverse to local content policies.