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CADE started collecting data to support investigation in the medical-pharmaceutical sector

Investigation

On 20 March, Cade started collecting information from the main players in the Brazilian health sector. The goal is to evaluate whether companies in this sector are raising prices and profits abusively in light of the high demand caused by measures related to COVID-19
published: May 05, 2020 05:04 PM last modified: May 05, 2020 05:05 PM
by International Unit

After mapping the main health-related companies throughout Brazil, on 20 March, the Administrative Council for Economic Defence (CADE) started to issue official letters demanding data on the trade of goods and services associated to the fight against COVID-19. This action is part of the investigation related to the Preparatory Proceedings for Administrative Investigations, launched by CADE on 18 March, to look into the sector of medical-pharmaceutical goods.

The agency notified hospitals, health insurance companies, pharmacy chains, suppliers and manufacturers of surgical masks, hand sanitizers, and medicines used to treat the symptoms of COVID-19. Initially, circa 80 official letters were issued, covering a large part of these markets.

CADE has asked for invoices related to the commercialisation of these products from November, 2019, until now. Companies were also requested to present invoices on a monthly basis until July, 2020. The goal is to verify possible sharp increases in prices and profit margins that may characterize illegal competition, as provided for in Article 36 of Law 12529/11.

Retail pharmacy chains were required to present spreadsheets informing the evolution of prices of hand sanitizers, surgical masks, and every drug used for treating symptoms of COVID-19 during this period.

The same information was also requested from hospitals, connected or not to health insurance companies, and clinical analysis laboratories, although, in their cases, the request was focused on the sale of tests and treatments connected to COVID-19.

Finally, CADE has asked the Departments of Health of the states of São Paulo and Rio de Janeiro, as well as of the Federal District to send information on the evolution of prices paid to suppliers regarding hand sanitizers, surgical masks and all drugs connected to treating symptoms of COVID-19. This is intended to assess whether possible anti-competition practices in the health industry are affecting not only end consumers but also the public health sector in such a fragile moment of a pandemic crisis.

The refusal, omission or unjustified delay to provide the information or documents requested by CADE constitutes a violation punishable with a daily fine of BRL 5,000 to 100,000, depending on the economic situation of the offender. Misleading or forged information, documents or declarations provided to CADE are punishable with a fine of BRL 5,000 to 5,000,000, depending on the importance of the facts and the economic situation of the offender, without prejudice to other applicable legal penalties.

The Preparatory Proceedings 08700.001354/2020-48 are public and can be followed at this link.