Pharmaceuticals

This chapter presents a case study of the pharmaceutical industry in Brazil. Some core components of crony capitalism in Brazil are the government’s ability to micro-manage private-sector production, the incentive structure for bureaucrats and the fragmented nature of business interests. The case of the pharmaceutical industry provides the opportunity to look closer at these three components. This industry is heavily regulated by Brazil’s National Health Regulatory Agency, Anvisa, which imposes high regulatory costs. But the regulatory costs affect businesses in heterogeneous ways. The industry is divided by technology profile, ownership structure and business strategy. Given the fragmentation within the sector and the heterogeneous effects of regulation, reforms are not Pareto optimal, but rather zero-sum games. In this context, business fails to coordinate to push back against excessive regulation.