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New national drug policy and Amendments

to Public Procurement Law in Chile

Healthcare and Public Procurement 

 

New national drug policy

During October 2019, President Piñera announced a new drug policy, focused on reducing drug prices. However, this policy also includes a series of obligations and the re-launching of bills associated with the pharmaceutical industry. 

 

The most important aspects of this drug policy are described below:

“Drug fractioning”: this policy encourages the pharmaceutical industry's obligation to implement drug fractionation, referred to in the Regulation of Law 20.724 “Drugs Law I” (the Regulation has not been enacted yet). According to “Drugs Law I”, the fractionation of drug packages is understood to be the act by which the number of dosage units required by a person is extracted from a secondary package, according to the prescription issued by a legally authorised professional.

“Law on Drugs II”: this bill has been given the utmost urgency, known as Bulletin No. 9.914-11. Recently, in the session of 22 January 2020, the Senate rejected in large part the indications made by the Chamber of Deputies, passing to the Joint Committee. Among the indications in comment:

  • Definition of “drugs” as essential goods for the general interest of the nation and the creation of a system that considers economic accessibility.
  • Establishment of restrictions on industrial property rights, such as the considerable reduction in the size of the proprietary name in comparison with the INN (international non-proprietary name) on product packaging, or the prohibition of all advertising of products, including OTC (over-the-counter) drugs.
  • Extension of the scope of voluntary licences, by incorporating elements such as “undersupply”, or “economic inaccessibility”.
  • Publication of prices and national observations, establishing, among other things, the obligation of suppliers of pharmaceutical products (i.e. laboratories, importers, distributors, pharmacies and/or warehouses) to inform the ISP (Institute of Public Health) and the Ministry of Health of the prices of their products.

“Approval and registration of medicines”: three measures associated with the facilitation of procedures and quality assurance are regulated:

  •  Simplification of the deadlines for the registration of medicines, up to a maximum of three months;
  • pproval of the bioequivalence of those drugs that are certified by a top-level agency, such as the FDA (Food and Drug Administration);
  • Mandatory certification of Good Manufacturing Practices (GMP) and certification of production plants abroad to ensure compliance with GMP.

 

Amendments to the Regulations of the Base Law on Administrative Contracts for the Supply and Provision of Services

On 21 January 2020, Decree No. 821 of 2 July 2019, of the Ministry of Finance, was published in the Official Gazette, amending the Regulations to Law No. 19.886 1, which regulates the Base Law of Administrative Contracts for the Supply and Provision of Services (hereinafter, the "Decree").

 

The most important of these amendments is described below:

“Coordinated purchasing” 2: two or more entities can combine their demands through a competitive procedure, in order to achieve savings and reduce transaction costs. Similarly, buyers can request that the Procurement Department represent them in the bidding for goods and/or services, whether coordinated or not.

“Identification of the supplier as a requirement for the offer” 3: the concept of the offer is modified to include, along with the detailed information of the products or services offered, the information of the supplier of the offer.

“Agile Purchase” 4: this direct purchase mechanism is incorporated, subject to obtaining three budgets, for acquisitions equal to or less than 30 UTM (unit of account used in Chile for tax purposes and fines). No resolution is required to justify direct treatment, and it proceeds to the extent that more advantageous conditions are obtained than those derived from a framework agreement in force.

“Restriction to “consortia” or joint ventures of suppliers”5: the purchasing agencies are empowered to prevent the participation of temporary consortia of suppliers, when it is reasonably considered that a risk may be generated, given the particularities of the industry that is the subject of the tender or the characteristics of the good and/or service to be procured. 

“Disclaimer of warranties”6: the possibility of exempting the bidder from the Faithful Performance Bond - even in contracts of more than 1,000 UTM - when considering, in cases described in the regulation7, that there are sufficient mechanisms to safeguard contractual compliance and when the contract refers to key and strategic aspects that seek to satisfy the public interest or national security.

“Access of entities to quotations” 8: purchasing entities may obtain quotations through emails, websites, electronic catalogues, lists or other similar means, freeing themselves from the need to do so via the Information System.

“Preponderance in function and performance over design” 9: as far as possible, the specifications should aimed at finding the best solution to the needs that the respective Entities try to satisfy with the contracting procedures, prioritising the performance and the expected functional requirements of the good, service or work to be contracted, over its descriptive or design characteristics.

 

Should you have any questions, feel free to contact the CMS expert in public procurement matters in Chile – Stephan Luhrmann. 

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1 Supreme Decree No. 250.
2 Article 2, No. 39 in relation to Article 104 bis.
3 Article 2, No. 35.
4 Article 10 bis.
5 Article 23, No. 4.
6 Article 10.
7 Articles 10, No. 4, 6 and 7 d), e), f) and k).
8 Article 7 bis.
9 Article 22, No. 2.
 

Authors

Stephan Luhrmann
Stephan Luhrmann, LL.M.
Senior Consultant
Santiago