Regulatory, Pricing and Reimbursement
Important legal info for regulatory, pricing and reimbursement in Mexican pharma. Prepared in association with Olivares, a leading global law firm, this is an extract from The Pharma Legal Handbook: Mexico, available to purchase here for USD 99.
1. What are the regulatory authorities with jurisdiction over drugs, biologicals, and medical devices in Mexico?
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 law 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.
3. What are the steps to obtain 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. There is a NOM compiling the requirements for granting marketing authorizations for medicinal products (NOM-257-SSA1-2013). In addition, a NOM about the specifics of the stability test (NOM-073-SSA1-2015) was published in 2016. This NOM specifically addressed the test for stability to be carried out on drugs in Mexico (Climate Zone II subtropical with possible high humidity according to the OMS classification). Article 166 of the Health Law Regulations sets out the following approval timeframes:
- 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 Molecules Committee is required).
- The approval timeframe for biologics and biocomparables is 180 calendar days (Articles 177 and 177 bis 4, Health Law Regulations).
These timeframes may vary in practice, but can be reduced if the application has been pre-examined by a third health institution approved by COFEPRIS to do so.
a. New Molecules
Essentially, applicants for marketing authorisations 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 is (article 2, section XV Health Law Regulations):
- An active ingredient or drug not approved worldwide (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.
Applicants for marketing authorisations have to prove basically that their products are bioequivalent 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 authorisation 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 authorisations 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.
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.
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 authorisations 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 there are no differences for local manufacturers versus foreign-owned manufacturers.
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 Mexican health-care system comprises public (social security institutions) and private insurers, out-of-pocket payments and informal arrangements.
The major public segments of the Mexican health-care system are:
- The Mexican Institute of Social Security (IMSS). This represents social security for the self-employed and employees in private companies;
- The Institute of Social Security for State Workers (ISSSTE); and
- The Seguro Popular. This is a programme created in 2004 as part of a strategic reform to the General Health Law. It provides a public insurance scheme for those not covered by social security and other formal arrangements. The Seguro Popular was created to cover people with lower incomes. The federal government pays 70 percent of the annual family premium, states provide 20 percent and patients provide 10 percent.
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.
11. How does the government (or public) healthcare system function with private sector healthcare?
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.
It is worth mentioning that the public and private health sectors function separately, there is no interaction between one and the other.
It is worth mentioning that due to the recent change of government in Mexico, There is a new plan that will modify the current functioning of the healthcare system. In December 2018, Mexican President Andrés Manuel López Obrador released his initial healthcare strategy for Mexico, with the goal of providing universal and free coverage for medicines and medical care.
The following are the key goals outlined in his strategy:
- Federalization of the health system through the gradual signature of agreements with the 32 States, which will surrender their faculties to govern over health matters to the federation.
- The Mexican Social Security Institute (IMSS), the Mexican Civil Service Social Security and Services Institute (ISSSTE) and other State Social Security entities will provide equal and non-discriminatory services to all persons, regardless of social security status.
- The Federal National Formulary will be abolished.
- The United Nations will observe the public bids for acquisition of medicines, equipment and medical devices.
- Preference of national public bids over international (open to international companies or products).
- Increase of the health budget by 50 billion pesos but in the general national budget there was no significant increase to the health sector.
Needless to say, these new governmental policies will impact the life science industry. There is especially cause for concern with respect to the abolition of the national formulary, particularly since there was no announcement about which medicines and drugs will be acquired and dispensed by the Federal Government through the state institutions. In addition, apparently, there would be more discretion in public biding processes. The final goal of universal coverage looks laudable, but until now, there are no solid proposal to accomplish so difficult task.
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.
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, through its National Formula Committee, 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.