First Judicial Ruling on Ecuador’s Direct Drug Price-Setting Regime

Dr. José Meythaler
Mar 31, 2022
2 min read

Updated: 6 days ago

We present a legal case note on the first judgment issued under the Direct Drug Price-Setting Regime established by Executive Decree No. 400. The judgment was handed down by the District Administrative Litigation Tribunal in Quito and, as a key outcome, annulled a Price Council Resolution issued under this regime and set important parameters for the actions of this collegiate body.

Background: Direct Price-Setting Resolution Challenged

Meythaler & Zambrano Abogados filed an administrative litigation action against the President and Technical Secretary of the National Council for Drug Price-Setting for Human Use and Consumption, the Minister of Public Health, and the Attorney General of the State.

The purpose of the action was to obtain the nullity of a Direct Price-Setting Resolution issued by the Council.

The Resolution required one of our clients to sell a medicine at a price substantially lower than the price previously approved, based on the allegation that the company had violated the ceiling prices set by the Council. That allegation rested on a technical price-control report that was never disclosed to our client, thereby preventing it from exercising its right of defense.

The Tribunal’s Ruling in Favor of Our Client

The judges of the Administrative Litigation Tribunal ruled in favor of our client and held, among other points, that:

The price-control report used to impose the Regulated Price Regime is absolutely null, because the company’s right of defense was not guaranteed. As a result, the company should not have been forced to bear the burden of selling the medicine at a price arbitrarily imposed by the Council.
The Price Council itself should have ruled on the remedies filed by the company, rather than any other authority within the Ministry or the Council. For that reason, the Tribunal declared null all acts issued by officials of the Ministry of Health and by the Technical Secretary for Prices.
The Minister of Health serves as President of the Price Council, which is an entity attached to that Ministry.
The Council is subject to the Organic Administrative Code and the administrative procedure set out therein. This means it is obliged to notify the interested party of any technical report prepared in the processes of setting, reviewing, and monitoring drug prices.

Key Parameters for Future Price-Setting Actions

Through this decision, the Tribunal established that the Price Council must comply with the administrative procedure in any process involving the setting and review of ceiling prices, particularly when imposing sanctions for alleged infringements of the price regime.