Pharmaceutical, medical industry scrutinized for price gouging in Brazil after Covid-19's spread

Players in the pharmaceutical and medical industries are under scrutiny in Brazil for increasing their prices in a "non-reasonable and disproportionate way” in relation to product demand as Covid-19 spreads in the country, the competition authority's top investigator, Alexandre Cordeiro, told MLex.

"This case became CADE's number-one priority precisely because of this crisis that is not only installed in Brazil but worldwide," the Superintendent of the Administrative Council for Economic Defense said. "It passed in front of all the other cases we have and will be investigated by us very rigorously."

CADE started a preliminary probe today, saying it will query several market players "with urgency" on the prices they've been charging clients specifically for laboratory tests, alcohol-based hand sanitizers and surgical masks.

"We have evidence of price increase. We did research on this and figured out that prices for some products have increased in a non-reasonable and disproportionate way in relation to the demand,” Cordeiro told MLex, adding “We are working on proving that right at the beginning [of Covid-19's local spread] there's been an abusive price increase.”

Coronavirus has infected about 370 people in Brazil so far, reaching 18 Brazilian states and the Federal District, with most persons based in São Paulo city, according to data from state health secretaries. The last official statement of the Ministry of Health said 291 individuals have tested positive. The first death was recorded yesterday in the state of São Paulo.

In a document opening the probe, disclosed today in the case file, CADE's Superintendence said it will give hospitals, laboratories, drug stores, drugmakers and makers and distributors of alcohol-based hand sanitizers and surgical masks 10 days to submit invoices they issued for the products targeted in the probe from Nov. 1 to March 15, as well as monthly invoices to be issued from March 16 to July 31.

"In view of the situation of high demand for medical-pharmaceutical products due to the need for emergency care motivated by the increase in cases related to Covid-19, companies in the health sector may be increasing prices and profits in an arbitrary and abusive manner, being necessary, on the part of CADE, to ensure that such abuses, if effectively verified, are punished," the Superintendence said in the document.*

"CADE, within its institutional mission, tries to protect the consumer in such a way that none of the suppliers can abuse their dominant position or in any other way limit or distort competition," Cordeiro said. "The competition law expressly mentions prohibition on arbitrary profit increases," characterized as "an abuse on the part of opportunists, particularly at a time of crisis and social turmoil."

No companies have been cited in the probe because the investigation is still preliminary. But if CADE decides to open a formal investigation, companies will be formally notified they've been included in the probe.

*MLex translation from Portuguese.