Promoting and regulating generic medicines: Brazil in comparative perspective

ABSTRACT Promoting the use of generic drugs can constitute a core instrument for countries’ national pharmaceutical policies, one that reduces drug expenditure while expanding health care access. Despite the potential importance of such policy measures and the differences among national practices, scholars embarking on comparative analysis lack a roadmap for determining which dimensions of generic drug policy to assess and compare. This report fills that gap by considering national rules and regulations across four dimensions deemed crucial to any evaluation: demonstrated therapeutic equivalence; pharmaceutical packaging and labeling; drug prescription; and drug substitution. Furthermore, this report examines how the diverse interests of public and private sector stakeholders might shape generic drug policy and its implementation. To illustrate the challenges and conflicts behind policy development and implementation, this report focuses on the case of Brazil.

To reduce the price of prescription medications, the World Health Organi zation (WHO) recommends that generic drug substitution be a component of every country's National Pharmaceu tical Policy (1). To that end, WHO es tablished guidelines for exchanging products, technical criteria to determine when one pharmaceutical product can be safely and effectively used in the place of an other, as well as policies to promote a higher rate of generic drug use (2).
A great deal is known about the vari ous policy instruments and mechanisms that countries can use to promote the de mand for and supply of generic drug prod ucts (1)(2)(3). And, anecdotal evidence and casual observation suggest that there is significant variation in national pharma ceutical policies with regard to generics (4,5). A challenge to comparative analysis, however, is the lack of agreement, espe cially on which particular dimensions of policy are relevant for understanding ge neric drug promotion and supply. This pa per advances a taxonomy of generic drug substitution systems that can be used for such an analysis. To illustrate its utility, the study applies the proposed taxonomy to the case of Brazil. Our taxonomy refers to regulation of chemically derived generic product. Regulation of biosimilar medi cines-that is a product of biological origin, usually with a complex structure, and large proteins-engage with different con flicts and challenges.

DIMENSIONS OF ANALYSIS
To understand the diversity of national practices regarding promotion and regulation of generic medicines, certain key questions must be considered. For ex ample, how have generic drug products been demonstrated to be therapeutically equivalent to originator products (equiva lence)? Are generic products allowed to display brand names (labeling)? Should doctors prescribe using the generic name or can they use a brand name (pre scription)? Are pharmacists authorized to substitute a generic product for an inno vator product (substitution)? These four dimensions are crucial to any evaluation i.e.: demonstrated therapeutic equivalence; pharmaceutical packaging and labeling; drug prescription; and drug substitution. The significance of these dimensions are explored below. be therapeutically equal to reference products, and how such equivalence is demonstrated. For drugs that need to demonstrate equivalency, this requires tests of bioavailability (BA) and bio equivalence (BE). BA measures the extent to which a drug is absorbed into the body and is available to act upon its intended target (the site of action). BE considers whether or not there is any significant difference in the rate and extent of avail ability of two drugs over a period of time, at the same dose and under the same conditions. Followon products that have the same BA as the reference prod uct are regarded as "generic" products, while those with differing BA are not (6).
Demonstrating BE is essential for ge neric drugs. A small difference in bioavailability may alter a drug's effect, and if so, cannot be considered equiva lent. The establishment of BE is particu larly crucial when considering medicines with highly toxic ingredients or in a Narrow Therapeutic Range (NTR), 3 i.e., where small differences in dosage can have toxic effects. National regulatory authorities have discretion to define how to measure a product's NTR, and also, to determine which medicines require BE testing (7). These are decisions each country must make for itself. BE has ar guably been associated with quality con trol (8), and determining which products need to undergo it has often been chal lenging (9). 4

Labeling and packaging
The second dimension for comparison pertains to a country's regulations regard ing labeling and packaging of generic products. Use of the generic name or in ternational nonproprietary name (INN), usually a simplified version of the chemi cal name, can remove the obscurities that brand names create. Not only may the INN be displayed on the pharmaceutical packaging, but also font size and presen tation will differ according to local regula tions. For instance, some countries require the INN to be no less than 30% -50% smaller than the font size of the brand name; some require that it be of equal size; while others still have banned the 3 NTR drugs have less than a 2fold difference be tween the minimum toxic concentration and min imum effective concentration in the blood. 4 An other issue that can vary among countries is how demonstration of BA/BE is to be accom plished specifically. This issue is not addressed here. use of brand names altogether (1). Regu lation of pharmaceutical packages and brands is very important since marketing strategies represent an important element of the product cycle (10). As further dis cussed below, this is true not just for "in novator" firms, but also for followon "generic" producers.

Prescription and substitution
Prescription and substitution are the third and fourth dimensions of this tax onomy. The use of the generic name facil itates the prescription and dispensing of pharmaceuticals to patients, as well as communication among health profes sionals and scientists (11). It also allows for easy "comparison shopping," as there might be different suppliers of the same pharmaceutical product. Depend ing on national regulations, physicians may be required to prescribe by generic name; or they may include the brand name and recommend that it be sup plied; or they may forbid substitution. Other regulations may permit pharma cists to consult the patients as to whether or not they prefer the brand name medi cine or the generic.
This discussion of prescription and regulation is, of course, closely tied to the previous discussion of labeling and packaging. After all, pharmaceutical firms invest heavily in distinguishing their brands, and actively promote their brands among physicians, pharmacists, and patients. These promotional efforts can create incentives to prescribe or sub stitute one product for another. Even if health professionals have no doubts about the quality of generic medicines, they may be disinclined to prescribe them, as may pharmacists (12).

APPLICATION OF THE TAXONOMY
Through the lens of the proposed tax onomy, the study examined the generic drug policies of Brazil. Findings were based on empirical data collected in 2007 -2015, including national govern ment documents (e.g., policy memos, of ficial speeches, etc.) and more than 400 newspaper articles and scientific papers. These data were supplemented by 60 in terviews with key informants who had participated in designing and imple menting Brazil's generic drug policies, e.g., regulators, government officials, and representatives of local and multina tional pharmaceutical companies.

Generic substitution in Brazil
Brazil is a case study that is crucial to understanding the regulation of inter changeable pharmaceutical products. Among Latin American countries, Brazil has the largest generic drug sector, repre senting almost 28% of the country's phar maceutical sales. While Brazil has witnessed high levels of generic market penetration, the process has been accompanied by a number of conflicts and challenges.

Equivalence
In 1999, the Ministry of Health of Bra zil took a decisive step in promoting generic equivalents by enacting the Ge neric Drug Act (13). This legislation re quired demonstration of BE as a condition for market entry. 5 It also pro moted a major reform of the parameters for registering offpatent pharmaceuti cal products in Brazil. The introduction of rules governing therapeutic equiva lence represented one of the most con tentious elements of the legislation, affecting the country's pharmaceutical sector and highlighting political contro versies surrounding drug substitution.
Brazil requirements are relatively stringent compared to those of other Latin American countries. A study con ducted by the Pan American Health Or ganization (PAHO) concluded that of the 86 drugs analyzed in Latin Ameri can countries, 51 required demonstra tion of bioequivalence in Brazil (11). No other national regulatory authority ex amined by that study requested bio equivalence for so many drugs (14). Many local pharmaceutical firms claimed they would be unable to com ply, given the high costs and complica tions of testing and a lack of expertise in Brazil. In response, the country's regula tory authority took decisive steps of supporting and advocating for bio equivalence tests and fostering close collaboration with local industries to help national producers meet the new 5 The rule on BE was introduced in 1999, but com panies were granted a 15year period to adapt. Medicines that proved to be BE could be commer cialized as generics (unbranded), but all drugs that were still awaiting validation as BE would be commercialized as "similar" pharmaceutical products (branded). The deadline for providing equivalence tests was 2014. requirements (15). For instance, the reg ulatory authority created a fast track ap proval process for firms prepared to register generic products. It also pro vided continuous consultation and sup port to local firms by clarifying and supervising changes to their regulatory departments. Whereas in 2002 only 27.3% of BE studies were conducted in Brazil, by end of 2009, 87.6% were per formed in the country (16).
Many local firms not only managed to adapt to the new requirements, but became market leaders in the pharma ceutical sector (15). The firms that adapted to the new regulations soon saw generic drugs as a valuable oppor tunity in terms of market share and im proved capability. Local pharmaceutical companies in Brazil now account for 88% of the domestic generic drugs market. Table 1, based on IMS Health data (1999 and 2001-2011) that includes both patent and offpatent products collected from the retail market only (excluding government data for pri marily essential medicines, AIDS treat ment, and other patented/high cost products) demonstrates the progres sive growth of the pharmaceutical sec tor and the currentday status of local firms.
Thanks to the gains in industry capa bilities brought on by the BE resolution, and the increased importance of local producers, the national pharmaceuti cal sector became a policy priority. Pharmaceutical sector representatives assisted the Government of Brazil in identifying bottlenecks to the sector's expansion (17). Since Brazil is highly dependent on the importation of key in puts for medicine production, e.g., raw materials and active pharmaceutical in gredients, this area was identified as an investment priority (17, 18). The con sensus among representatives of the pharmaceutical sector is now that the generic drug regulations, first seen as a threat to their survival, were ultimately instrumental in improving drug manu facturing plants and processes.

Labeling and packaging
The regulation of labeling of phar maceutical products is not a recent is sue in Brazil. Three attempts to regulate packaging and nonproprietary names have raised heated political debates. First, in the early 1990s, an unsuccess ful Congressional initiative (PL 2022/1991) proposed banning the use of brand names from all pharmaceuti cal products. At that time, there were two types of products in the market: reference products (usually the innova tor products) and similar medicines (copies of the reference product, but without equivalence tests), both types commercialized under their respective brand names. This proposal, which was motivated by the fact that 50 million people had limited access to medicines, would have required all pharmaceuti cal products in Brazil to be prescribed and commercialized using the INN, or in cases where INN was not available, the Brazilian nonproprietary name (BNN). Expecting that a reduction in the use of brand names would lower costs and facilitate interchangeability, the proposal would have only allowed brand names to be included on pack ages if they were presented in a font size smaller than the generic name; all public health service prescriptions would use the generic name.
In 1993, and concurrent to Congres sional negotiations, the Ministry of Health promoted a second attempt to regulate the labeling and packaging of generic drugs. The Ministry of Health sponsored Presidential Decree 793/1993, which required, among others, that the fonts used for brand names be no greater than onethird the size of the generic name, and that all drugs prescribed and procured by the National Health System use generic names. The pharmaceutical industries and drug retailers promptly reacted through the courts, arguing these requirements would harm their businesses (19), and neither the Con gressional initiative nor the Executive Decree survived (20).
It was only with the passage of the Generic Drug Law in 1999 that discus sions on INN and labeling progressed. The Law also stipulates that all generic drugs provide only the INN, and that packaging include a yellow stripe with the letter "G" to indicate the product is interchangeable. In contrast, for the

Prescription and substitution
During the debates in Congress that led to the Generic Drug Law, the pre scription rules for physicians were highly controversial. The Government and national and multinational phar maceutical industries, all disagreed starkly on this component of the bill. The multinational pharmaceutical in dustry demanded that generic drug substitution only be allowed by a doc tor's written request. However, the Government did not agree to negotiate this aspect of the bill; thus, if doctors do not agree with substitution, they must indicate "substitution not allowed" on the prescription (21). While doctors in the National Health System are obli gated to prescribe using the generic name, private physicians are not bound by this rule, and thus can continue to prescribe by brand name.

Effects and emerging challenges in Brazil
The prescription of generic medi cines by INN is still low, but has in creased over time, representing 20.9% of total prescriptions in 2006, compared to 11.8% in 2002 (22). Despite the growth of the generic drug market in Brazil, there is still low consumer awareness regarding drug substitution and slow acceptance by physicians (23). Studies suggest that there is confusion on how to differentiate between phar maceutical products (innovator, simi lar, and generic) and a lack of confidence in the quality of generic drugs (24,25).
In terms of generic drug prescription, academic studies, market assessments and a number of newspaper articles point out that health professionals still 6 The Generic Drug Law did not ban similar drugs from the market, but gave the local pharmaceuti cal industry a deadline (2014) to adapt to the BE requirement. resist prescribing generic drugs (26,27). For example, a survey conducted in 2006 in eight Brazilian cities assessed the opinion of 55 health professionals. Results showed that 44% of the health professionals believed that generic drugs were not as reliable as the origi nals, and that even among those who trusted generic drugs, 17% did not pre scribe them (28).

Recent reforms and challenges in Brazil
In response to the lack of confidence in generic and similar medicines among public and health professional, in 2014 the Government of Brazil proposed new regulation to clarify which phar maceutical products are therapeutically equivalent. At the suggestion of the Ministry of Health, the National Regu latory Agency (ANVISA) proposed a new resolution to modify the packaging of pharmaceutical products (29). The new resolution would allow pharma cists to substitute the reference product for a generic or similar product.
To understand the challenges facing health policymakers in Brazil, keep in mind that, in contrast to the situation prior to the launch of the generics policy, most nonoriginator drugs have demon strated bioequivalence. Most similar drugs are now BE; very few drugs that have not demonstrated BE remain on the market. Yet most of these nonoriginator BE drugs continue to have brand names. These branded BE drugs, essentially like "branded generics" commercialized in retail markets in the United States of America and the United Kingdom, rep resent 47% of the pharmaceutical market (units), while formally "generic" drugs (i.e., BE and without a brand) represent 27% (Table 2). Yet, substitution is only allowed for generics; similar drugs cannot be exchanged once prescribed by a doctor. The Government's intention was to add the symbol "EQ"-a visual label meaning a product can be switched for another-to the packaging of inter changeable products.
In suggesting the use of "EQ," health authorities argued that this would increase consumer options among products with proven therapeutic equiv alence, thereby reducing price. The Gov ernment maintains that this regulation is a logical followup and response to Res olutions 133 and 134 passed in 2001 that established the year 2014 as the deadline for similar medicines to submit bio equivalent testing for agency approval. Different from the discussion in the early 2000s that centered on quality and man ufacturing processes, the EQ debate was only concerned with the labeling of pharmaceuticals. The announcement was made in January 2014 by the Minister of Health and this sparked heated debate among pharmaceutical industry repre sentatives. Technically, they argued, it was reasonable, since all products are the same and have the same active ingre dients and therapeutic responses (per sonal communication, Chief Executive Officer of a Brazilian pharmaceu tical company, February 2014). However, the EQ label would commodify reference products and similar medicines. Because these are brandname products, they rely on strong marketing strategies.
Therefore, pharmaceutical firms-na tional and multinationals-that sell their products under brand names feared that they would be adversely affected by this regulation, that the presence of EQ on the label would essentially send a mes sage to ignore brand markings. After much discussion, a resolution was is sued in October 2014, responding to the demands of the pharmaceutical indus tries: no EQ symbol would be added to Fonseca & Shadlen • Generic medicines in Brazil Special report labels, but rather, the leaflets found in side of pharmaceutical packaging would indicate if the product was interchange able. As a result of this compromise, however, this information will not be available until the product had already been purchased and opened. The debate over the EQ resolution is important for two reasons. The resolu tion intended to diminish the role of branding by emphasizing the equiva lence of equivalent products. In doing so it would increase the scope of substitu tion, and it was expected, reduce the price of drugs. Although the idea behind the EQ proposal has a strong public health rationale, the structure of the pharmaceutical market in Brazil creates economic interests that were able to di lute the measure-and may yet subvert this policy instrument. The debate also illustrates how Brazil innovates in ge neric regulation, not just using tradi tional instruments of interchangeability (i.e., the INN), but with additional infor mation in the package leaflet.

Conclusions
This analysis draws attention to the various dimensions of national generic drug regulations and their core policy instruments; it contributes to the litera ture by building new conceptual and empirical evidence on developing countries' compliance with generic drug guidelines. To understand re gional differences and regulatory choices, one must clarify the incentives and public health interests of these in struments and the institutional market ing opportunities.
In the Brazil case, these relationships were demonstrated through the regula tion of INN and prescription rules, and bioequivalence and pharmaceuti cal packaging. The case of Brazil also demonstrates that these are not just technical concepts, but rather, highly contested political decisions. The Ge neric Drug Law of 1999 was an oppor tunity to foster the use of the INN in Brazil as a prescription rule and im prove the pharmacology requirements to register nonpatent drugs. This paper also pointed to the strong political con flicts that can be generated by efforts to apply new regulations regarding generic drug instruments.
Taking a step back, core lessons and implications from applying the pro posed taxonomy to the Brazil case study are twofold. First, the diverse in terests of the public and private sectors stakeholders shape the design and im plementation of the core dimensions of any national generic drug regulation. Regulations that are effective and long lasting are designed with an under standing of the politics of drug substi tution, i.e., their effects on public health, business concerns, and strate gies. And secondly, that the task ahead is to think more clearly about the set of dimensions that influence national ge neric drug systems. This paper pro vides an initial step that is expected to encourage other scholars to evaluate, refine and apply the learnings in other contexts.