Mexican government investigates monopolies in pharmaceutical sector

President Andrés Manuel López Obrador

’s decision to veto three drug distributors in the country fell in line with the Federal Economic and Competition Commission (COFECE) ’s revision of irregularities in the production, distribution, and marketing of medicinal products.

A few days ago, the COFECE’s investigative authorities presented a verdict on the probable responsibility of some market giants in unlawful practices.

However, the report will not be made public just yet since it is now undergoing a revision process to determine whether or not the companies involved were responsible for malpractice.

Whether the three companies that President López Obrador vetoed had any involvement in the investigation remains to be seen.

On January 9, 2019 , the COFECE’s investigative authorities concluded their investigation and began to structure their judgment to determine responsibility.

A document sent by the Executive branch to the head of the Ministry of Finance, Raquel Buenrostro , requested for an investigation of corruption and influence peddling on the part of GRUFESA pharmaceuticals, the DIMESA distributor of medicine and medical equipment, and Maypo , which sold MXN$34.28 million worth of drugs to Mexico’s Security and Social Services Institute for State Workers (ISSSTE) and Social Security Institute (IMSS) , representing 62.4% of sales to the public healthcare institutions.

“This is deeply immoral and goes against the Constitution’s Article 28, which prohibits monopolies,”

claimed President López Obrador.

Shortly after disclosing the report in a morning press conference, President López Obrador said that the measure was precautionary.

However, specialists have claimed that the distributors of pharmacological and medical materials that the president vetoed may file for amparo appeals since their market shares do not make them liable to sanctions.

The COFECE informed that the executive branch had no legal grounds to “sanction the economic actors for their market shares. The fact that they are in a dominant position in the market should not make them liable to sanctions by the LFCE. It is only when companies abuse said power to eliminate the competition that they incur in corporate malpractice.”

Claudia Lelo de Larrea, a specialist in academic and economic competition at Mexico’s National Autonomous University (UNAM) explained that, since there was no verdict that pointed to GRUFESA, DIMESA, and Mayco as responsible for malpractice or any other crime whatsoever, the companies could file amparo appeals.

She added that if the federal government really wished to open an investigation against the pharmaceutical companies under Article 28, they would have to ask COFECE to begin legal procedures.

The expert explained that monopolies followed a market structure and were thus not liable to sanctions, unless the government was able to find evidence of price-fixing, market segmentation, or collusion, which usually takes COFECE around two years’ time.

Through a press release, GRUFESA Pharmaceuticals responded to the letter sent by the executive branch, claiming that they were willing to cooperate with competent authorities to resolve any doubts and complaints regarding contracts signed with the federal government.

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