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Podcast: Health Care Compliance Check-up: Brazil

Time to Listen: 24:54 Practices: Health Care, Anti-Corruption / International Risk, Risk Management, Government Enforcement / White Collar Criminal Defense

The Ropes & Gray Global Health Care Compliance Initiative’s virtual trip around the world podcast series highlights our collaboration with our local counsel contacts, in particular the Local Law Comparison Guide. The Local Law Comparison Guide (the “Guide”) is a resource tool providing country-specific surveys that analyze legal, regulatory and industry requirements governing industry interactions with health care professionals. As part of this series, Ropes & Gray attorneys interview our local counsel partners, who are based around the world and helped develop the Guide. These discussions highlight notable health care regulations and developments impacting compliance in our local counsel partners’ respective countries. 

In this episode, we are joined by Ana Cândida, partner, and Maira Materagia, attorney, at Mattos Filho, our local partners in Brazil. Alison Fethke, counsel at Ropes & Gray, discusses with Maira and Ana Brazil’s regulatory regime and changes brought by the COVID-19 pandemic.


Alison FethkeAlison Fethke: Hello, and welcome to Ropes & Gray's virtual trip around the world podcast. I'm Alison Fethke, counsel in our health care group from our Chicago office. And together with my colleagues across the globe, I'm really excited to share with you the launch of our new Local Law Comparison Guide, which has been developed as part of our Global Health Care Compliance Initiative. This initiative is based on our practice group collaboration across Ropes & Gray, and importantly based on our strong connections with local counsel. This new Local Law Comparison Guide summarizes requirements and standards for typical activities across 19 key international jurisdictions. We've partnered with trusted local counsel on six continents to develop the guide. I am so excited to have with me here today two lawyers from our partner law firm of Mattos Filho in Brazil. Please let me introduce Maira Materagia and Ana Cândida. Welcome, Ana and Maira.

Ana CandidaAna Cândida: Thank you, Alison, and thank you everyone for hearing our podcast. It is a pleasure for us to participate, and thank you so much Ropes & Gray. We are really proud to be here with such amazing colleagues.

Alison Fethke: Today, we'd like to spend a little time talking with you and getting your opinions and views on important regulatory and compliance considerations for health care and life sciences companies in Brazil. So we'll just get things started, and let's start with a question about the regulatory framework in Brazil. For companies operating in Brazil, what are the laws or the trade guidance that companies really need to be aware of?

Maira MateragiaMaira Materagia: In Brazil, we have both public and private entities regulating the life science and health care industries. From the public side, we have a complex and strong government regulatory system here in Brazil, with multiple governance agencies inspecting and controlling such industries. And from the private side, we have the industry self-regulation, mainly led by the associations in which the industry companies are members. That being said, most important government regulators of life science and health care industries are the National Health Surveillance Agency on the federal level, and the state and municipal sanitary departments on the state and local levels. The Ministry of Health also regulates the industry, but in a few aspects requiring only registration of the companies, by means of data records. The National Health Surveillance Agency is the regulatory agency linked to the Ministry of Health, with competence established by federal law to regulate and promote health or related actions. The National Health Surveillance Agency is known as ANVISA and I may say that here in Brazil, ANVISA is the most important government regulator of pharmaceutical and medical device industries, such as manufacturers, distributors, importers, drug stores, and so on. Companies and products are required to be registered with such agencies in order to develop health activities and market health-related products in Brazil. And in this point, it is important to bear in mind that only Brazilian companies duly established in Brazil may develop health activities within the country, and only Brazilian manufacturers or importers certified through ANVISA can register a health-related product here in Brazil. This is all because ANVISA understands that for the purpose of product liability, the license holder must be properly established under Brazilian law.

Now, beyond ANVISA, state and local sanitary departments are responsible for promoting health within their jurisdictions, and the requirements may vary according to the location. But the state and local clinical departments usually require a local health permit to be issued on behalf of the companies then that do perform health care activities. In addition to the federal, state, and municipal sanitary authorities, professional councils also regulate and have power to enforce the compliance with their rules, which are more related to the professional activities and its ethical standards. And regarding the activities within the life science and health care companies, the relevant professional councils are the Professional Council of Medicine, or the Pharmaceutical Professional Council of the state where the company is established in Brazil. In case of possible violations of the federal, state, or local regulation, those public entities may impose several measures, by means of compliance enforcement of their respective regulation. They depend on the specific authority, but we usually see sanctions such as warnings, fines, facilities interdictions in some cases and even suspension or cancellation of applicable licenses. Of course, these sanctions may be challenged in court, but judges tend to favor the technical reasoning of health authorities.

Speaking about the private sector, there are several self-governing bodies for companies that develop pharmaceutical products and medical devices here in Brazil. The most relevant ones are the Brazilian Pharmaceutical Industry Association, and the Health Ethics Institute. Such associations are private entities, and therefore are not entitled by the Brazilian law to regulate health activities within Brazil, so they have no legal consequence to enforce the compliance with the Brazilian health-related law. Self regulation is enforced mainly by these associations through requirements for companies to become a member of the association, which include, for example, the mandatory compliance with the association's guidelines, or codes of ethics or conduct. And in the case of non compliance, companies usually are subject to penalties by such associations according to the importance of the violation, such as warnings and membership suspensions, or debarment.

Just to finish here, as we can see, in Brazil we can see that government regulators and the industry trade groups have an important role in terms of compliance enforcement. But by means of Brazilian law, only public authorities are entitled to punish companies based on the Brazilian applicable regulation, and private entities, mainly associations, are limited to enforce the compliance of their own guidelines and ethics codes. And the maximum penalty that may be applied to their industry members are the membership debarment.

Alison Fethke: That is really helpful, Maira. In terms of the self regulation among the industry players, do most pharmaceutical and medical device companies, for example, do they join an industry trade society, such as the ones you described, Maira?

Maira Materagia: Yes, most of them join such associations. Actually, all of our clients are members of several associations, according to the activities they perform. For example, pharmaceutical companies are usually a member of the Brazilian Pharmaceutical Industry Association, which is their association here in Brazil, while medical device companies are a member of the Brazilian Medical Device Industry Association.

Alison Fethke: Now that we understand the regulatory framework, what do you see as really the key risks or the hot topics for our health care and life sciences clients operating in Brazil?

Ana Cândida: Well, needless to say, there are many hot topics in these areas. And I know that we will talk a little bit later about COVID-19 and the effects of the pandemic in the market, but for sure, this is the main hot topic and then we can talk about it a little bit later. But the first hot topic that I would mention is related to the change in the market with the digitalization of the interactions amongst health care companies, doctors and patients in general, which we call digital health. We have been seeing that trend before COVID-19, but the pandemic certainly sped up the whole process. So digital health is really playing a key role in the fight against the coronavirus in Brazil. And as we have seen in other jurisdictions as well, the importance of the social distance exposed everybody to the urgent need for improvement in remote health care assistance. In this regard, in the beginning of the pandemic so March last year, the Ministry of Health published a specific ordinance regulating telemedicine. This also provided that doctors could issue electronic prescriptions. Telemedicine was also regulated by the Brazilian Congress, by means of a specific law, which allowed the provision of health care services through telemedicine in a very general manner. It's important to mention that before that, telemedicine was used in Brazil only in a very restricted situation, such as in case of urgencies and emergencies. Currently, with the new regulation on telemedicine, it's allowed in a broader manner, however, with a very specific deadline, because the new regulation would be applicable only during the pandemic crisis. We don't know yet for how long we will be suffering with this outbreak, however, the regulation is specific for this time.

I think another hot topic that is worth mentioning is the new governance and compliance regulation for HMOs, the health maintenance organizations. So I think in early 2019, the Brazilian National Regulatory Agency for Private Health Insurance and Health Plans, which also regulates the HMOs, introduced a corporate governance manual for solvency purposes and new financial requirements for HMOs operating here in Brazil. These new regulations make the solvency requirements more effective, and encourage the HMOs to better manage their financial risk. And although the regulation will come into effect only in January 2023, HMOs may choose to start this new model early, and relief some assets that are currently blocked as financial assets to support the solvency requirements for HMOs.

Alison Fethke: We've also seen a move in the U.S., of course, toward more telehealth. It sounds like that's obviously been a big movement in Brazil as well. In the U.S., we do expect some of that expansion to extend even after the pandemic, so it will be interesting to see if it's the same. So Maira and Ana, can you share with us some recent enforcement trends? Any notable settlements or areas of enforcement interest occurring in Brazil?

Maira Materagia: Sure. Recently our eyes are only focus on the COVID-19, so everything really recent is related to COVID-19. And in this sense, as I pointed out in the prior question, we indeed have a complex regulatory system here in Brazil, and this reflects on the regulatory framework that has been established to fight against the coronavirus. Vaccines, medicines, and testing related to COVID-19 are required to be registered with ANVISA. And due to the critical pandemic situation here in Brazil, and considering that the issuance of product registration is a long process, ANVISA has adopted extraordinary measures to enable faster access to vaccines for the coronavirus through faster tracker procedures. So in addition to the standard rule for market authorization for health products, the COVID-19 vaccine can be approved for use here in Brazil through two emergency procedures that basically consist in temporary permits for importing and using the vaccines in the country, provided that such vaccine is registered with one of the international agencies listed by ANVISA. But all allowed COVID-19 vaccines by ANVISA are currently required by the Ministry of Health to be used in the public vaccination program, and this means that as of now, all coronavirus vaccines must be destined to the Brazilian public health care system—it should be used in the Brazilian Innovation Program. Private entities were recently allowed to purchase the COVID-19 vaccines in Brazil, but the doses must be fully donated by such private entities willing to contribute to the Brazilian public health care system until the priority group of vaccination is completed. And even after the end of the immunization of such priority groups, the private entities must donate half of the acquired doses to the Brazilian public health care system. As far as the remaining doses, the company may use them at its own discretion, provided that it's free of charge. For example, companies may vaccinate their employees, but they may not charge their employees for that, or resell the doses to other companies. In this sense, there are also federal bills of law under related research and donation to the Brazilian public health care system by these private entities, and the most relevant bill of law is to revoke the obligations to make all the vaccine doses to the Brazilian public health care system. But in case such bill of law is approved, the vaccination process against COVID-19 will count for the private entities sooner than it is expected.

Ana Cândida: Maira, just adding one point to what you have just said. In addition to the ongoing vaccination efforts, there is also a huge concern with respect to investigations involving alleged fraud and overpricing of medical supplies. By the end of last year, the federal police had conducted several investigations related to overpricing of public agreements and fraud allegations. We have seen some movement in terms of providing assistance for a company that wished to participate in public bids, but feel somehow insecure about the possible risks of being investigated and sanctioned by the authorities. And in this sense, ANVISA has just released a new resolution, setting up a system for monitoring prices of medical devices. This monitoring will be implemented on a gradual basis that companies will be required to provide information about the prices of medical devices in general, and this will establish a price benchmark that could serve for a public procurement basis as well. And more than that, very recently, some days ago, the Federal Court of Accounts launched specific guidelines on the appropriate disclosure of data related to public agreements carried out without the regular public meeting procedure. This also may help mitigate some of the risk for the health care companies and the pharmaceutical companies in general that are trying to do business with public authorities. We know that there is no specific judicial decision or a final decision from all of these investigations related to the pandemic, and the release of requirements for project bidding for the supply of vaccines and medical products in general, but as we continue to fight against the pandemic, the purchase of health care supplies by the public government will continue, and it will certainly remain on the radar of the authorities in general.

Alison Fethke: That's really helpful. I think one of the things that is always of interest to our clients is special considerations when dealing with government officials or public procurement contracts. Are there any best practices that you can glean from the recent enforcement, or the guidance related to these contracts, for our health care and life sciences clients?

Maira Materagia: Yes, in fact there is. One of them is to follow the price benchmark for the product, so trying to keep up the information about the price that was being marked for this product at the time of the public bidding. Although there is no specific public bidding procedure, because some of the requirements have been relieved by the authorities to have a formal agreement, and to save all the data, all the emails, and all the information, and the exchange of information with the public authorities. Because we know for a fact that some years from now, the authorities will request a lot of information about what is currently happening.

Alison Fethke: That makes sense. So thinking ahead, Ana and Maira, what's on your radar for the next 12 months, assuming maybe we are moving out of the pandemic? What are the key compliance or regulatory considerations or risks that you see on the horizon?

Ana Cândida: In fact, we do see a lot of things related to digital health, as we mentioned to you. So the regulatory agencies regulated on a permanent basis the use of telemedicine, artificial intelligence on health care products and services as well, also medical prescriptions, and so on and so forth. But we also see a trend in ANVISA, our FDA-like regulatory agency, it published a public consultation in regard to the regulation of software and the medical devices. We'll be able to have a specific regulation for that, because currently, without these regulations, we are treating software as normal medical devices. So you can imagine that almost all the requirements that the regulation established for the registration, the market authorization of a medical device, is not even closely applicable to a software, so we really need to have a specific regulation on that. And ANVISA just released this public consultation, so we are hoping to have detailed regulations public as soon as possible. I will also point out the issue regarding the acquisition of vaccines by private entities. I know that this is something that is really specific for Brazil. Almost any other country all over the world has authorized companies to purchase the vaccine to apply to its employees and families in general, but it's happening in Brazil, and it's been very debatable issue between our Brazilian Congress and also in our judiciary branch.

Alison Fethke: Well, thank you very much for your time today. I'm so delighted that you were able to join me. We are so excited about our Local Law Comparison Guide that we developed in collaboration with you and your firm. And thank you for your partnership, we know this will be a valuable resource for both our clients. You can also subscribe and listen to this series wherever you regularly listen to podcasts, including Apple, Google, and Spotify. Thanks everyone for listening, and I hope you have a great day.

Mattos Filho and Ropes & Gray

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