PROVISIONAL MEASURE NO. 2.138-2, OF December 28, 2000.

Defines regulation standards for the drug sector, institutes the Parametric Formula of Adjustment Of Medications Prices- FRP, creates the Chamber of Medicines and gives other arrangements.

THE PRESIDENT OF THE REPUBLIC, in the use of the assignment that confers it on art. 62 of the Constitution, adopts the following Provisional Measure, with force of law:

Art. 1º This Interim Measles establishes standards of regulation of the medicine sector, with the purpose of promoting pharmaceutical assistance to the population, by means of mechanisms that stimulate the supply of medicines, the sector's competitiveness and price stability.

Art. 2º Considerate producing companies, for the purposes of this Interim Measure, the industrial establishments which, operating on raw material or intermediate product, modify them the nature of the finishing, the presentation or purpose of the generated product, by means of that process, medications.

§ 1º They have equated themselves with drug-producing companies:

I-the importing establishments of foreign provenance medicines that give way to such products; and

II-the establishments, albeit retailers, which they receive for marketing, directly from the apportionment that released them, medications imported by another establishment from the same firm.

§ 2º The deemed medicinal product every pharmaceutical product, technically obtained or drawn up, with prophylactic, curative, palliative purpose or for the purposes of diagnosis, in the terms of the inciso II of the art. 4º of Law No. 5,991, of December 17, 1973.

CHAPTER I

OF REGULATION ON MEDICATIONS

Section I

Of General Provisions

Art. 3º As of December 19, 2000 and until December 31, 2001, the drug producing companies will observe, for the readjustment of their prices, the rules set out in this Interim Measment.

Single paragraph. No elevations of drug prices will be allowed during the period between December 19, 2000 and January 15, 2001.

Section II

From the Parametric Formula of Price Readjustments of Medications-FPR

and of the Price Readjustment

Art. 4º The Medication Price Adjustment Parametric Formula-FPR, contained in the Attachment, sets the parameters for price readjustments of medications, as well as establish the conditions determined by the price regulatory regime of which it treats this Provisional Measure.

Single paragraph. The formula referred to in the caput will determine the maximum value of the Medium Price Readjustment-RMP for all drug-producing companies, to be allowed in January 2001.

Art. 5º Each company producing medications, classified as per the difference, in absolute values, between its Average Prices of Prices-EMP and the Parametric Index of Medicinal Products-IPM, set out in the Annex, is expected to present to the Chamber of Medicines, until the January 15 of 2001, Report of Commercialization, containing:

I-EMP verified, for each company, in the period between August 1999 and November 2000 and the elements used in its calculation;

II-a difference, in absolute value, verified between the EMP and IPM;

III-classification of the company as per § 2º of this article and, when couber, the price readjustment for each presentation of medicines it intends to practise for the month of January 2001 respected the parameters set out in the following article;

IV-list containing the maximum producer company prices, for each of the presentations of its medicinal products, obtained from the parameters defined in this Provisional Measure;

V-documentation containing the information referred to in art. 11 of this Provisional Measure, concerning the period elapsed between August 1999 a to November 2000.

§ 1º The prices set out in the list referred to in inciso IV shall be accompanied by the discriminated values of the following tributes:

I-Contribution to the Social Integration and Training Programs of the Public Server Heritage-PIS/PASEP;

II-Contribution to the Financing of Social Security-COFINS; e

III-Tax on Relative Operations to the Circulation of Goods and on Prestations of Interstate and Intercity and Communication Services and Communication-ICMS.

§ 2º The companies producing drugs will be classified in the following Groups:

I-Group I-composed of the companies that have submitted EMP of the period equal to or greater than the IPM;

II-Group II-composed of the companies Producers of medications that have submitted EMP from the lower period to the IPM.

Art. 6º In January 2001, fully complied with the requirement that it treats the caput of the previous article, the price readjustments of permitted medicines for each company, will observe the following criteria:

I-for the companies ranked in Group I will not be allowed price hikes;

II-for the companies ranked in the Group II:

a) will be allowed RMP up to the limit of the difference, in absolute value, between the EMP of each of the companies and the IPM of the period;

b) will not be allowed RMP higher than the IPM value;

c) the price readjustments, per medication presentation, to be effected in January 2001, will not be able to exceed the value resulting from the multiplication by one integer and thirty five hundredths of the IPM, observed the limit set in paragraph? ?a?? of this inciso.

Single paragraph. In any case, the prices of medicinal products should be readjusted in accordance with the readjustment rules set out in the Annex.

Art. 7º The maximum prices set by the companies, for each presentation of medicinal product, in january 2001, they will not be able to be elevated until December 31, 2001 ressaved the provisions of the inciso I of the art. 12 of this Provisional Measure.

Art. 8º When there is the inclusion of new product presentations to the list of products sold by the company, initial unit prices will not be able to exceed the average unit prices of the already existing presentations, and nor to be elevated until December 31, 2001.

Art. 9º When there is the inclusion of new products to the list of products sold by the company, the starting price cannot be raised until 31 from December 2001.

Art. 10. They shall be incorporated into the calculations of the prices of medicinal products of the companies subject to the regulatory regime of this Interim Measure the changes that occurred in the tributes referred to in § 1º of the art. 5º.

§ 1º When the amendment referred to in caput results in a reduction of tributes, the benefiting company should be to effect the reduction in the prices of medicines achieved by the new systematic in the established form by the Chamber of Medicines.

§ 2º For the purposes of the special scheme for the use of the presumed tax credit instituted by art. 3º of Law No. 10,147 of December 21, 2000 shall be exempted from the celebration of commitment to conduct adjustment of conduct laid down in that device, the companies producing medicinal products that comply with the systematic established by the Chamber of Medications in the form of this article.

Section II

From the Reports of Commercialization

Art. 11. They become the companies producing medicinal products obliged to submit to the Chamber of Medicines the Report of Commercialization, containing the relationship, by presentation, of the medicines sold by the company, the quantity sold of each product, its respective maximum and average prices, deducted from the tributes mentioned in § 1º of the art. 5º, values paid in wages and charges, as well as gross and liquid invoicing with medications, without prejudice to other information necessary for the monitoring of compliance with the provisions of this Interim Measure.

CHAPTER II

OF THE CHAMBER OF MEDICATIONS

Art. 12. It is created the Chamber of Medicines with the following competencies:

I-judging requests for extraordinary price readjustments;

II-decide by the exclusion of groups or classes of medications from the incidence of the regulation regime of which it treats this Provisional Measure;

III-define the documents to be submitted by the medicines producing companies in the Marketing Reports, as well as periodicity of the sending of the reports and the respective procedures for delivery and analysis;

IV-receive the Commercialization Reports of the drug producing companies;

V-regulate the reduction of prices of the medications that are the object of tax reduction;

VI-decide on the application of the administered sanctions provided in the arts. 14 and 15 of this Provisional Measure, in the form of the regulation;

VII-elaboration of the internal regiment, by regulating its functioning, the criteria for granting extraordinary readjustment, as well as the procedures for presentation of the applications, instruction and judgment;

VIII-adopt the mediates required for the fulfillment of this Provisional Measure.

Art. 13. The Chamber of Medicines shall be composed of the Council of Ministers and the Technical Committee.

§ 1º Compose the Council of Ministers:

I-the Head of the Civil House, who will chair it;

II-o Minister of State for Justice;

III-the Minister of State for Finance; and

IV-the Minister of State for Health.

§ 2º Compose the Technical Committee:

I-the Secretary of Health Investment Management of the Ministry of Health;

II-the Economic Law Secretary of the Ministry of Justice;

III-the Secretary of Economic Monitoring of the Ministry of Finance; and

IV-a representative of the Civil House, designated by the Chief of the Civil House.

§ 3º The decisions of the Board of Minister will be taken unanimously.

§ 4º The Chamber of Medicines will have a Secretary-Executive, to be exercised by the Ministry of Health, with the following assignments:

I-receive the requests of the companies submitted to the scheme of which it treats this Provisional Measure, for the granting of increases extraordinary pricing;

II-instruct the requests, drafting the decision proposals, which will be submitted to the Technical Committee's appreciation, as defined in internal House Regiment.

§ 5º It shall exclusively compete with the Council of Ministers the competences referred to in the incisies I, II and VIII of the preceding article.

CHAPTER III

OF THE FINAL PROVISIONS

Art. 14. The Company that contravenes the rules on elevation and price reduction of medicinal products set out in this Provisional Measure shall be subject to the administrative penalties provided for in the art. 56 of Law No. 8,078, of September 11, 1990.

Art. 15. The refusal, omission, deceptiveness, or unwarranted retardation of information or documents required pursuant to this Interim Measure constitutes infringement punishable with a daily fine of R$ 10,000.00 (ten thousand reais), may be increased by up to twenty times, if necessary, to ensure its effectiveness.

Art. 16. They are convalidated the acts practiced on the basis of the basis in the Provisional Measure No. 2.130-1 of December 27, 2000.

Art. 17. This Interim Measure shall come into force on the date of its publication.

Art. 18. The Provisional Measure No. 2.130-1, of December 27, 2000.

Brasilia, December 28, 2000; 179º of Independence and 112º of the Republic.

FERNANDO HENRIQUE CARDOSO

José Gregori

Pedro Malan

José Serra

ANNEX

1-PARAMETRIC FORMULA OF DRUG PRICE READJUSTMENT-FPR:

1.1) If EMP ³ IPM then:

a) RMP = 0; and

b) Price January 2001 £ Prices November 2000.

1.2) If EMP

a) RMP = IPM-EMP, being mandatorily RMP £ IPM;

b) Upper limit for the readjustment of each drug presentation = 1.35 of the IPM; and

c) Price January 2001 = Price November 2000 x (1 + unitary rate of readjustment of the presentation of each medicine).

2-COMPONENTS OF THE FORMULA:

2.1) Average Prices of Prices-EMP

EMP = Sⁿ i= 1 (FPi x DPⁱ EMP),

Where:

a) i represent each of the presentations of the medicines produced by the drug producing company; and

b) Fpi represents the weighting factor of the presentation i and is calculated from the following mode:

FPi =	Fi
	SnF i= 1

where:

b.1) F i represent the invoicing accumulated between 1º November 1999 and October 31, 2000 obtained with the sale of the presentation i and is calculated as follows:

Fⁱ = S (Pⁱj x Qⁱj),

j=nov/99

where:

b.1.1) Pi is the average price of the presentation i in the month j, with j ranging between nobember of 1999 and outrubro from 2000; and

b.1.2) Qi is the sold quantity of the presentation i in the month j, with varying between November 1999 and October 2000;

c) DPi EMP represents the percentage change in price of the presentation i between 1º August 1999 and November 30, 2000 and it is calculated as follows:

DP i EMP = [Pⁱ nov / 00-Pⁱ ago / 99] x 100, where:

Pⁱ ago / 99

c.1) Pi ago / 99 is the maximum price of the presentation in the month deAugust 1999, and

c.2) Pi nov/00 is the maximum price of the presentation in the month of November 2000.

2.2) Parametric Index of Medicinal Products-IPM = 4.4%.

2.3) Average Price Readjustment-RMP, calculated as follows:

RMP = S (FPix DPi RMP),

where:

a) i and FPi are defined as in item 2.1; and

DP i RMP represents the percentage change of price of the presentation i between 1º November 2000 and January 31, 2001 and is calculated as follows:

DPi RMP = [Pi jan / 01-Pi nov/00] x100,

Pi nov/00

where:

b.1) Pi nov/00 is the maximum price of the presentation i in the month of November 2000, and

b.2) Pi jan / 01 is the maximum price of the presentation i in the janerio month of 2001.