Tug-of-War over Medicines in El Salvador

Edgardo Ayala

HAVANA TIMES, Nov 18 (IPS) — Two initiatives of the administration of President Mauricio Funes in El Salvador, aimed at increasing competition in the pharmaceutical industry in order to bring down the cost of medicines, are being fought by the opposition in Congress.

Lawmakers from the rightwing Nationalist Republican Alliance (ARENA), which governed El Salvador from 1989 to 2009, presented a draft resolution to modify article 14 of the Health Code, to make it clear that the Health Ministry and the Salvadoran Institute of Social Security (ISSS) must purchase only medicines that are registered in the country.

In October, the Health Ministry invited tenders from national and international companies for the procurement of 27 million dollars’ worth of medicines, with a novel twist: international companies were not required to have registered their products with the Higher Council on Public Health (CSSP).

The CSSP, a state body in which associations of healthcare professionals participate through oversight committees, is in charge of authorizing the use and sale of medicines in the country. The left-wing government and activists claim that it has been controlled by the pharmaceutical industry for decades.

According to these claims, the CSSP is an interested party because companies exercise influence within the Council to manipulate quality controls and secure registration for their products.

“Because of the influence they have on the CSSP, companies determine quality controls, and manipulate the register themselves,” Margarita Posada, head of the Citizens’ Alliance Against Privatization of Healthcare, told IPS.

One of the deputy members of the CSSP, Juan Ernesto Machón, is the son of the owner of Pharmator, a Salvadoran pharmaceutical laboratory, while Carlos Felipe Álvarez, another deputy member, is head of quality control at Vijosa Laboratories, owned by Víctor Jorge Saca, the uncle of former president Elías Antonio Saca (2004-2009), the fourth consecutive president belonging to ARENA.

The governing Farabundo Martí National Liberation Front (FMLN) criticized the move by ARENA and other conservative parties and said it was evidence that the right wants to extend the privileges enjoyed by the pharmaceutical industry.

The largest importer and vendor of medicines in the country is Droguería Santa Lucía, owned by former president Alfredo Cristiani (1989-1994), the first ARENA president and today the head of the party.

The market for medicines in the private sector is worth 190 million dollars a year, with 87 percent of market share going to foreign companies that have registered their products, according to El Salvador’s Association of Pharmaceutical Companies (INQUIFAR).

The public sector market, worth some 23 million dollars, is shared equally between national and foreign companies, according to INQUIFAR. Nearly 66 percent of the population receive healthcare from facilities run by the Health Ministry and the ISSS.

Because of the alleged private sector influence peddling at the CSSP, the government wants to obviate the need for foreign companies to register their products with the CSSP in order to tender for the medicines contract.

The authorities have invoked clauses from the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA) to defend the legality of their tendering process.

“The treaty is law in this country, and it gives us the tools to eliminate barriers to free competition in the matter of bidding for state medicine contracts in a public tendering process,” Health Minister María Isabel Rodriguez said in a communiqué.

Rodriguez quoted an August 2008 resolution by the Competition Regulation Agency, which stated that obstacles to the full development of competition had been identified in the pharmaceutical sector.

Under the new rules, although the medicines would not have to be registered locally, they would be expected to have sale certificates approved by the World Health Organization (WHO).

Carmen Estela Pérez, the head of INQUIFAR, said the government’s plan is in breach of constitutional principles, because national legislation stipulates that medicines must be registered locally. Furthermore, she argued, medicines are manufactured according to the climate of the areas where they are to be used.

“We see this as a campaign against the local pharmaceutical industry and in favor of foreign companies,” Pérez told IPS. She mentioned in particular the group of countries making up the Bolivarian Alternative for the Peoples of Our Americas (ALBA).

In 2009, ALBA launched the Supranational Medicine Regulation Centre (ALBAMED) project, involving Bolivia, Cuba, Nicaragua and Venezuela, aimed at selling medicines at lower cost.

The National Association of Private Enterprise (ANEP) is also opposed to the government proposal for a more inclusive tendering process.

The opposition parties are also fighting the Medicines Bill, sent to Congress by the government in February, which seeks to transfer the registration of medicines to the Health Ministry. The authorities point out that El Salvador is the only country in the world where the Health Ministry does not control registration.

The bill, blocked by rightwing parties, also seeks to break the industry’s control of pricing by transferring it to the state.

The WHO states that local prices of drugs should not exceed five times the international reference price.

But in El Salvador such medicines are sold to the public at 52 times the reference price, according to the 2006 report “Disponibilidad y precio de medicamentos esenciales en El Salvador” (Availability and Prices of Essential Medicines in El Salvador), the results of which are still pertinent today, the authorities say.

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