The interaction between price regulation and innovation in international literature: lessons for Brazil in pricing new medicines

Abstract

Since 2003, the pharmaceutical industry in Brazil has been regulated, in terms of price, by the Chamber for the Regulation of the Medication Market (CMED). However, over the years, the established price regulation has come under fire, especially regarding innovative drugs. Therefore, this article aimed to show how international literature addresses the interaction between innovation and price regulation in the pharmaceutical industry, seeking to contribute to the early debate on this topic in Brazil. To this end, a bibliographical survey was conducted in the Web of Science, searching for articles addressing price regulation for new drugs. The main results obtained show that (i) free prices are not enough to encourage innovation in the country; it must be established an entire framework (innovation system) that fosters the emergence of innovations; and (ii) competition and regulation are complementary and must work together to achieve more desirable results in the Brazilian pharmaceutical market. This reinforces the need to update the pricing regulations in question and to hold discussions that can suggest improvements.