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M&Z obtains the First Ruling on the Direct Drug Pricing Regime

by: J.D. José Rafael Meythaler

 

We offer for your consideration a legal review of the first ruling on the Direct Drug Pricing regime of Executive Decree No. 400, issued by the District Court of Administrative Litigation based in Quito, which mainly invalidates the Resolution of the Pricing Council issued under this regime and sets relevant parameters for the actions of this collegiate body.


Meythaler & Zambrano Abogados filed a contentious-administrative action against the President and Technical Secretary of the National Council for the Pricing of Medicines for Human Use and Consumption, the Minister of Public Health, and the Attorney General of the State to declare the nullity of a Resolution of Direct Pricing issued by the Council.

Under the argument that our client had violated the application of the ceiling prices set by the Board, the Resolution imposed the obligation to sell a drug at a price substantially lower than the one previously approved. The accusation was based on a technical control report that was never made known to our Client so that it could exercise its right of defense.

After our client´s defense, the judges of the Contentious Administrative Court ruled in our favor and declared the following:

  1. That the price control report, by which the Regulated Price Regime was imposed, is null and void because the Company's right of defense was not guaranteed. For the same reason, the Company should not have suffered the burden of selling the medicine at a price arbitrarily imposed by the Council.

  2. That the Price Council should have ruled on the appeals filed by the Company, and not any other authority of the Ministry or the Council. For this reason, it declares null and voids all the acts issued by officials of the Ministry of Health and by the Technical Secretary of Prices.

  3. The Council is subject to the Administrative Organic Code and the administrative procedure indicated therein. That is to say, it must notify the interested party of all fixing, reviewing, and control of drug price reports.

In this way, it is established that the Board must follow the administrative procedure in the processes of fixing and reviewing ceiling prices for the application of sanctions for alleged violations of the price regime.


We will be pleased to answer any questions you may have on these topics.