Mexico’s Cofece opens probe into possible collusion in drug production, distribution

19th October 2016. By Leah Nylen

Mexico’s antitrust authority said Wednesday that it was opening a probe into possible collusion in the production and distribution of drugs in the country.

Senior officials at Mexico’s Comisión Federal de Competencia Económica, or Cofece, also announced that they would refer to potential criminal prosecution the circumstances surrounding a recent transaction between Dutch fund Moench Cooperatif and drug distributor Casa Marzam SA, the country’s third-largest pharmaceutical distributor. The agency approved the deal earlier this year, but information emerged through the Panama Papers leak that the companies may have lied in their notification paperwork about a controlling stake in the fund held by rival drug distributor Nadro.

At a press conference in Mexico City, Carlos Mena Labarthe, head investigator at Mexico’s Comisión Federal de Competencia Económica, or Cofece, stressed the economic importance of the country’s drugs market.

“The pharmaceutical industry represented 2.7 percent of Mexico’s GDP in 2015,” Mena said. “Mexico is the main exporter of drugs in Latin America.”

Between 2010 and 2016, the prices for drugs increased 10.4 percent higher than the national consumer price index for all goods, Cofece said in a release concerning the investigation.

The investigation focuses on pharmaceutical production and distribution for both the public and private sector, Mena said.

Cofece has about two and a half years to investigate the potential collusion. Should the regulator find evidence of competition violations, it could seek fines of as much as 10 percent of a company’s income and debarment of individuals for up to five years. The authority could also refer the case to prosecutors for an additional criminal probe. If convicted, individuals could face up to 10 years in prison.

Cofece’s investigation may also look into the Moench-Marzam deal, though the issue of whether the parties lied to the authority is separate from the collusion probe, Mena said in an interview with MLex Wednesday.

As part of the collusion investigation, Mena encouraged parties that have experienced difficulties in entering the Mexican pharmaceutical market to approach the commission.

“People have been complaining about issues in this market,” Mena said. “We have heard [of parties] that wanted to enter the market and couldn’t, and we would be interested in them coming forward.”

Notice of the investigation also was published in the country’s official gazette Wednesday. The notice said the probe resulted from “public information” coming to the attention of Cofece, a nod to the Panama Papers.

In July, Cofece also initiated a separate market study into drugs with expired patents, looking in particular at why only one provider exists in the country for about 350 drugs when 63 percent of those drugs have no active patents.

	Eliot Gao