State of the Industry

1State of the Industry

After almost two revolutionary years for the sector, providers continue to demonstrate their strength. The stage has been set, with the health system moving toward a patient-centric approach, supported by technology, a preventive healthcare culture and patient empowerment.

As healthcare becomes a national priority, universal access is key to offer comprehensive health services to all people and communities regardless of their financial capabilities. To achieve this, the sector has established close collaboration between different providers, which has boosted the impact of measures to face the ongoing COVID-19 pandemic, opening the door for collaboration to address the sector’s longstanding burdens, such as financial barriers and lack of infrastructure and personnel.

The government’s vaccination program and public health coverage through INSABI continue to move forward. While there are still gaps to be addressed, efforts from both the public and private sectors point to a solution.

Mexico’s health industry is and will continue to be an economic pillar for the country. To achieve the industry’s full potential, providers agree on the importance of digitalization throughout the entire supply chain, from manufacturing and development processes to direct contact with patients. Key stakeholders say this has and will reshape the way health is developed and delivered.

1State of the Industry

7 Analysis

Midterm Election Impact on Healthcare

8 Conference Highlights

Access to Health is a National Priority: IMSS

9 View From the Top

Martha Delgado | DM of Multilateral Affairs, Human Rights at the Ministry of Foreign Affairs

10 View From the Top

Cristóbal Thompson | Executive Director of AMIIF

11 Expert Contributor

Rafael Gual | Director General of the National Chamber of the Pharmaceutical Industry (CANIFARMA)

12 View From the Top

Rafael Maciel | Medical Director of Apotex / President of AMEGI

13 View From the Top

Patrick Devlyn | President of the Health Commission at CCE

15 Analysis

Public-Private Partnerships During the COVID-19 Pandemic

16 Infographic

Current State of the Health System

17 Conference Highlights

Public-Private Agreements Crucial for Healthcare System’s Future

18 Expert Contributor

Marcos Pascual | Commercial Director of the Association of Pharmacies of Mexico (ANAFARMEX)

19 Expert Contributor

Javier Picó | Partner at LifeSciences Consultants

20 View From the Top

Ana Riquelme | Executive Director of AMID

22 View From the Top

Alejandro Luna | Partner Litigation and Life Sciences Co-Chair at OLIVARES

23 Content Links

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Midterm Election Impact on Healthcare

Mexico’s midterm elections held on June 6 revealed strong opposition against President López Obrador’s current mandate. Over 52 percent of voters elected a more balanced Lower House in Mexico’s Congress. Although MORENA maintained a majority of seats in the lower chamber, it lost its absolute majority. Businesses mostly welcomed the result as some decisions by the president have radically changed the operations of many companies.

Since the beginning of Lopez Obrador’s mandate, the pharmaceutical industry has dealt with a plethora of changes related to public medicine acquisition processes, leading to a modification of the Public Sector Acquisitions, Leasing and Services Law (LAASSP) that excluded medicines and health supplies from public bids. Medicine supply is now handled between INSABI and UNOPS for 2021. The consequences of this modification were critical for Mexico’s health system. “Ever since then, the system has suffered medicine and resource shortages,” says Karel Fucikovsky, Director of Medical Care Mexico for Pierre Fabre Farma. The retail market will continue to be driven by the increased penetration of generics and out-of-pocket expenditure by patients and consumers. Fucikovsky expects the election results will speed up processes for the authorities to comply with the rulings and results of the national tender supported by UNOPS.

Greater confidence is also expected after the results of the election, which could boost industry development, according to Fernando Becerril, Senior Partner at Becerril, Coca & Becerril. Diversity in Congress is expected to generate business development in the country while also attracting foreign investment. “The coming months promise to be more encouraging than what was perceived before the election,” says Becerril. Investment is a subject with which many companies in the sector have struggled. This has been mainly driven by the modifications to LASSP but also by the general uncertainty created by Mexico’s regulatory agency COFEPRIS that has already gone through to two changes in commissioner, was absorbed by the Ministry of Health and has reduced the number of authorized third-party collaborators.

In some cases, however, the elections had a limited impact on healthcare practices. In 2020, MORENA pushed through Congress the General Law for the Regulation of Cannabis, which seeks to legalize marijuana for recreational, scientific, medical and industrial uses, creating the world’s largest cannabis market in a country plagued by drug cartel violence. The Senate has yet to approve the legislation passed by Chamber of Deputies earlier this year. Meanwhile, the Supreme Court declared that it will erase all laws referring to cannabis, leaving the plant in a legal void. However, the recent appointment of Olga Sánchez Cordero, former Minister of the Interior, as President of the Senate, is seen as a positive sign for the industry, says Erick Ponce, President of the Mexican Cannabis Industry Promotion Group (GPIC). “We welcome the return of the senator to the new legislature. We know that she will continue to promote her initiative from her seat. We believe that Mexico will have good news before the end of October in this regard,” says Ponce.

Access to Health is a National Priority: IMSS

Dr. Manuel Cervantes Ocampo

Coordinator of First Level Medical Units at IMSS

Mexico’s Constitution enshrines access to healthcare services for all citizens but providing these services has been a consistent challenge for all players in the sector. For its part, the Mexican Social Security Institute (IMSS) is prioritizing the provision of universal access, says Manuel Cervantes Ocampo, Coordinator of

First Level Medical Units at IMSS.

According to Mexico’s National Development Plan (PND) 20192024, introduced by President López Obrador’s administration, “there are millions of people who do not have access to any institution or modality of the health system or who live in conditions without access to coverage.” The national priority, says Cervantes Ocampo, is to provide access to comprehensive medical services to all people and communities without distinction, regardless of their financial capabilities and with a particular focus on marginalized groups. To increase access, the sector requires appropriate and competent healthcare personnel, proximity services in communities “where people study, work or live,” equitable distribution of resources and financial support, says Cervantes Ocampo. The PND 2019-2024 tackles access through the Health for the Whole Population plan, which aims to reduce the number of people who do not have access to health services.

While previous administrations had introduced other initiatives to increase access, such as the now defunct Seguro Popular that was absorbed by INSABI, these plans failed to include conditions such as kidney failure or some types of cancer in its coverage, says Cervantes Ocampo. The main objective of the current PND is to provide access to effective, universal and free healthcare services. “The best example we have is the COVID-19 vaccine,” Cervantes Ocampo says. “We have guaranteed that people who are not affiliated to social security institutions have access to medical and hospital care, including medicines, healing materials and medical examinations.”

During the current administration, IMSS has prioritized its contribution to universal and free access to health services and medicines for the entire population, says Cervantes Ocampo. Likewise, the institute seeks to guarantee the quality and coverage of institutional services and benefits, “giving priority to disease prevention and health promotion.” Some services are now being provided as part of the IMSS Bienestar program, which is free for all Mexicans and prioritizes marginalized populations. The program operates in 19 states and provides health services to 11.6 million people in the country. One of the initiatives within this scheme involves providing health services to domestic workers, a sector that “not so long ago was left unprotected,” highlights Cervantes Ocampo. These workers and their dependents can now become beneficiaries of IMSS, which gives them access to medical attention and a retirement pension.

To guarantee access to health, IMSS is improving the quality of its services including the prevention of diseases and illnesses like overweight, diabetes, hypertension, breast, cervical and prostate cancer and HIV, as well as hepatitis C screening. The institute, said Cervantes Ocampo, plans to achieve these goals by expanding the institutional coverage of its services by targeting the most disadvantaged groups, promoting healthier lifestyles and encouraging the adoption of a holistic health model. “Access to health does not only refer to medical care in a doctor’s clinic or hospital but also includes disease prevention services.”

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Martha Delgado

DM of Multilateral Affairs, Human Rights at the Ministry of Foreign Affairs

Equality-Based Diplomacy to Fight COVID-19

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More about this person Q: Your department is leading the diplomatic fight against the pandemic. What were the initial steps to create a diplomatic and health strategy?

A: In mid-2020, the Ministry of Multilateral Affairs and Human Rights (MoFA) used its diplomatic channels to analyze the progress of therapeutics and medical devices around the world to introduce them early into the country and give priority access to the Mexican population. An air bridge was also established to facilitate the arrival of those urgent supplies and other donations.

Q: How do local authorities determine the final destination of donated material?

A: Mexico’s health authority developed the strategy that determined which supplies remained in the country and which could be donated to other countries. MoFA assisted them by facilitating their transfer to chosen nations. Local authorities also identified the specific needs of health institutions to expedite the acquisition or donation of medical supplies. We collaborated with Mexico’s health authority to accelerate regulatory processes.

Q: Your department has worked to improve COFEPRIS’s international standing. How does this benefit Mexicans?

A: To ensure the quality, safety and efficacy of health supplies it is essential to have a regulatory agency of the highest quality that is recognized worldwide. A health authority that is recognized for its strength and regulatory maturity ensures that the supplies used during the pandemic are efficacious, safe, highquality and meet the needs of the population.

Q: How will Mexico’s actions contribute to global vaccination and how will they influence other countries to follow the example?

A: Mexico has led the call for equity in vaccination not only in the region but in the world. The country has made this request at the highest-level forums, including at the UN meeting last year. These efforts have achieved the mobilization of supplies and vaccines to the nations that need them most and they have been replicated by multiple countries.

During the Community of Latin American and Caribbean States (CELAC), we introduced initiatives to strengthen the production and commercialization of health supplies using the capabilities of the region’s pharmaceutical industry and the regulatory strength achieved by some members.

Q: How has MoFA contributed to the development of Mexico’s COVID-19 vaccine Patria?

A: A multidisciplinary group has evaluated each of the vaccines being developed in Mexico and in accordance with their progress they have been supported through various mechanisms.

The Patria vaccine is one of the projects that can be financed by CEPI. Since the beginning of the pandemic, this project has been monitored in coordination with COFEPRIS to ensure it complies with each development stage until it is authorized for emergency use.

Cristóbal Thompson

Executive Director of AMIIF

Patient Outcomes Measure the Value of Innovation: AMIIF

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More about this person Q: As a representative of the innovation industry, what are the non-COVID-19 epidemiological trends the sector is trying to address?

A: COVID-19 has been critical but we have neither forgotten nor left behind innovation in other fields. Mexico’s largest health challenge is non-transmissible diseases, which cause 80 percent of deaths in the country. This population was significantly more vulnerable to the pandemic. The innovative industry is developing gene therapies and personalized medicines to address numerous diseases. Many of our members are also endorsing regulations that would allow these two types of therapies to be introduced into the country.

Companies are also innovating on antimicrobial resistance (AMR). About 700,000 people die annually from AMR and it is estimated that if no innovations are made, over 10 million people could die from AMR by 2050. The industry is taking action internally but we are also approaching COFEPRIS and the General Health Council to build a joint response. Through the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), many pharmaceutical companies have provided millions of dollars to develop new treatments. Regardless of the company or country, anyone can join in the fight against AMR.

Q: How could Mexico enhance its investment in R&D and how would this impact its economic development?

A: Two years ago, global investment in innovation amounted to US$170 billion. This number has probably risen, considering the significant investment in R&D and infrastructure to fight COVID-19.

Mexico annually invests about US$250 million on innovation, which is significantly below global figures. We rank 29th in clinical research but we can improve by accelerating approval processes and making the market more competitive to increase investment in innovation. Early investment can greatly impact the development of therapies, making them more beneficial to patients.

Clinical research generates 4.4 direct jobs and every MX$1 (US$0.05) generates an economic impact of MX$1.64 (US$0.08). This dynamic sector is seeing the most investment globally. It would be strategic for Mexico to invest in the life sciences sector for its economic growth.

Q: How are AMIIF and its members developing pathways that accelerate access to innovation?

A: Through the ACCESS study, we analyzed the timeline and speed of introducing innovation to the Mexican market, which is about 4.3 years on average and has not improved in recent years. We approached COFEPRIS to speed up the process, which we expect will accelerate with new Commissioner Alejandro Svarch. The organization has taken significant steps to reactivate the New Molecules Committee, which has started operating efficiently, successfully reviewing 99 drugs. However, there is a long way to go. AMIIF’s members have 20 drug registries waiting for COFEPRIS’ approval even though they have been greenlighted by the Committee and by other international agencies, such as the FDA or EMA.

The Deficient Process of Medicine, Medical Devices Procurement

Rafael Gual

Director General of the National Chamber of the Pharmaceutical Industry (CANIFARMA)

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More about this person The results of the changes to the scheme for the procurement of medicines and health supplies in June 2019 under the charge of the Administrative Office of the Ministry of Finance and Public Credit (SHCP), and replicated later in December for the supply of 2020, left much to be desired. A serious lack of planning and knowledge about the operation and requirements to manufacture pharmaceuticals and medical devices were the main causes of these poor results, reflected in 62 percent unquoted pharmaceutical items in the June 2019 bid and 30 percent in December.

The procurement of medicines and medical devices was marked by a large proportion of direct adjudication, as much as 82 percent of the acquisitions, a figure that exceeds by far the less than 7 percent average of recent years. In light of this situation and the failure of the last two bids, the legal framework underwent significant modifications, the most important being the amendment to Article 1 of the Law of Acquisitions, Leases and Services of the Public Sector (LAASSP), which exempts the procurement of medicines from the bidding process.

Besides, modifications were also made to allow purchases through intergovernmental international organizations. The regulatory framework was reformed to recognize the equivalence of sanitary registrations awarded by foreign agencies, as well as to grant a sanitary registration to any foreign therapeutic product as long as it has such registration in its country of origin. These modifications were aimed at promoting the participation of UNOPS in the acquisition processes. By mid-2020, a cooperation agreement was signed between UNOPS and the Ministry of Foreign Affairs (SRE) and shortly thereafter, a contract was signed between the Institute of Health for Wellbeing (INSABI) and UNOPS for the procurement of health supplies for 2021.

These agreements with UNOPS were heralded as the ideal mechanism to guarantee the supply of medicines for Mexico and transparency in the fight against corruption. The results today leave much to be desired indeed. There is a dire shortage of medicines and medical devices.

It is evident that the process lacks adequate planning and transparency, since even though it formally began in August 2020 with the signing of the agreement, it was not until December that the first bid for patented, single-source products and critical supply products for the first months of 2021 was carried out. The first adjudications for these 381 pharmaceutical items were awarded in February, and the first contracts were signed in March, with some still pending.

On May 25, after more than three months, UNOPS sent individual communications to the companies to inform them of their assignments. However, these notification letters stated that the information was not legally binding, so they should not start any manufacturing process until there was a contract between the parties. More than four months after the submission of bids, UNOPS had not yet issued a decision. In June, UNOPS sent a communication to INSABI informing that 653 items were not quoted and, therefore, it was unable to acquire them, which represents 55 percent of the total to be procured, a result that is similarly deficient to that obtained by the Administrative Office of SHCP.

Rafael Maciel

Medical Director of Apotex / President of AMEGI

Exponential Growth Thanks to Fulfillment, Accessibility

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More about this person Q: How did the pandemic impact the use of generics in Mexico?

A: In the public sector, generics uses decreased by 22 percent in units and by 8.5 percent in value as a result of new medicine contracting processes, which caused many implementation challenges and led to medicine shortages. The decrease was mostly seen at IMSS, which was missing 30 percent of the units it required. The shortages drove patients to seek medications in the private market. The majority of the missing drugs were for cancer or other high impact diseases.

During this period, the demand for ivermectin, azithromycin and paracetamol skyrocketed. Paracetamol has been among the most in-demand drugs during the pandemic. Demand for medicines to treat COVID-19 symptoms grew by 66.9 percent, while molecules for non-COVID-19 diseases grew by 2.9 percent.

The market for generics grew 8.6 percent year-over-year in 2020, which represents an extra 94.6 million units, despite Mexico’s 8.2 percent GDP contraction during that same period. In July 2021, generics sales grew by 9.3 percent year-over-year, so the market is still growing. Generics are seeing double-digit growth and OTC products are also growing between 2628 percent.

Q: How has the biosimilar market grown in Mexico and how interested are your members in participating in this segment?

A: The market for biosimilars has experienced moderate growth because few companies are producing them. The legal background for the patents of these products is complex so the industry is hesitant to dabble in this market. Some biosimilars have reached the market but they are few. In the EU, biosimilars had a positive impact on diseases like cancer and rheumatology and they could also benefit patients in Mexico.

Biosimilars are a great opportunity for the pharmaceutical market and joint actions by the government and the private sector could facilitate the conditions for local companies to produce biosimilars.

Q: What opportunities does AMEGI see in API manufacturing, especially after the disruptions caused by the COVID-19 outbreak?

A: The API market is dominated by India and China, which manufacture products consumed by every pharmaceutical manufacturer around the world. API shortages could cause global disruptions, which remain a concern as there are COVID-19 peaks still going on in every region of the world.

Years ago, the pharmaceutical industry had more API manufacturers. AMEGI sees an investment opportunity in this segment but, to grow this niche, the government needs to promote Mexico as a producer of APIs and help the industry export them to our commercial partners. Strengthening this market would make Mexico a complete provider of the pharmaceutical market and make the country less dependent of foreign suppliers. WHO, WIPO and WTO are also working to diversify API manufacturing and propel their production in different countries.

Patrick Devlyn

President of the Health Commission at CCE

Fostering Public-Private Collaboration in Health

Q: What are the CCE’s priorities to support timely access to medicine and health services?

A: We have a very clear agenda, which we shared from the beginning with the current administration. This cross-cutting agenda that addresses the interests of 12 private sector organizations and is endorsed by FunSalud (the No. 1 health think tank in Latin America), the UNAM Faculty of Medicine and by Red de Acceso (a group that coordinates several patients’ associations), among other entities.

Our transversal agenda includes six main priorities. First, to implement a comprehensive prevention strategy to reduce chronic diseases. Second, to strengthen primary medical care by ensuring the quality of care. Third, to ensure that the public budget is allocated as efficiently and transparently as possible by integrating the private sector to cover investment gaps. Fourth, to measure the impact of public policy through key performance indicators to enable better decision-making. Fifth, given that the health system is highly fragmented, we want to promote the transition to a single system with significant private sector participation. We are facilitating and accelerating the adoption of technologies that allow an easier and more effective user experience through the system, such as the electronic health record. Sixth, we unanimously support universal health coverage, while being cautious with how it is implemented due to low public sector health spend and national finances that need to be kept in check, with a complementing participation of the private sector to fill this gap.

Q: How is the CCE collaborating with private hospitals to have their physicians vaccinated against COVID-19?

A: We see the importance of vaccinating healthcare workers who are exposed on a daily basis, regardless of whether they work in the public or private sector. Also, given the possibility of asymptomatic infections, it is critical not to differentiate between healthcare workers who are directly treating COVID-19 patients and those who are not. From our position, we support the vaccination plan and we want to help fulfill it to reestablish public health in our country and achieve a much-needed economic reactivation.

It is also important to recognize the role insurers have played throughout the pandemic by providing special coverage for healthcare personnel who have become ill and covering the costs for patients who were insured.

Q: How is the CCE prioritizing investments to support the public sector?

A: From the beginning of this administration, we identified issues that could be improved to help the country build infrastructure and health capacities to serve the population, especially those living in poverty or who are marginalized. However, this past year was marked by the pandemic and the priority has been on how to respond to that need. We already had a health system that faced lags and areas that needed strengthening and renovation. The pandemic emphasized these areas.

The country invests little in health as a percentage of its GDP compared to other countries. We believe that investment in health is good business because it yields results in the short, medium and long term, not only in terms of people’s well-being but also

in terms of productivity, innovation and employment. We also feel it is important to work as a team with the private sector because there are important capabilities in infrastructure, facilities, equipment, technology and trained health personnel. Just as an agreement was made so the government could use beds from private hospitals, there is other infrastructure that the government can use collaboratively. Examples of this are pharmacies and their clinics, the diagnostic capacity of labs and medicines provided by pharmaceutical companies. But collaboration is needed with clearer and more transparent processes and criteria for all participants. This becomes particularly important with the urgency arising from the pandemic.

In a post-COVID-19 era, there will be many opportunities: we can attract more vaccines, both for COVID-19 and other diseases; leverage technologies to provide greater access to healthcare without the need to build more hospitals and clinics; and encourage healthy lifestyles as part of a prevention strategy.

Q: What are the CCE’s views on the recent changes to the packaging of government-directed medicines and other measuresintroduced by COFEPRIS?

A: COFEPRIS has been able to position itself as a reference health agency, which allows medicine and device manufacturers to fast track into other markets once certified in Mexico. This opens the door to exports, opportunities for economic development, employment and investment. However, there has been a lag in procedures. Given that nearly 11 percent of national GDP goes through COFEPRIS, demand for its services is very high. Hence the need to move toward digitalized processes that can flow more quickly. This makes our economy more competitive, and also provides greater access to healthcare.

One relevant factor that has been repeatedly pointed out by this administration, is the importance of fighting corruption. Companies established in Mexico are serious companies that thrive in a transparent environment. Therefore, having an environment with more agile and transparent processes is a necessity for the health sector. We support the actions taken by the new commissioner, Alejandro Svarch, and we believe they coincide with recommendations we made previously.

We must ensure that the processes that have been implemented due to the pandemic are implemented on a level playing field between companies established in Mexico and those established abroad and, perhaps, even slightly favor those companies that have decided to trust, invest, generate jobs and pay their taxes in Mexico.

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Public-Private Partnerships During the COVID-19 Pandemic

Read the complete article Collaborative responses to face the COVID-19 pandemic have been the only way to reduce the impact of the pandemic. But it is also necessary to strengthen the programs already in place to drive healthcare forward, experts say. “We need to move to a simpler, more efficient health system, where the private sector plays a relevant role in improving access for everyone,” says Patrick Devlyn, President of the Health Commission of CCE.

Public-Private Partnerships (PPPs) have been a common and effective mechanism to address service provision in Mexico. These joint programs between Mexico’s public and private health sectors have been key to address testing, spread containment, reduce hospitalization, maintain active supply chains and advance the approval and packing of vaccines to combat the virus. PPPs are a multisectoral tool that predates the pandemic and is used to tackle many of Mexico’s largest projects, such as the rebuilding of the collapsed Line 12 of Mexico City’s Metro. PPPs are known to be more transparent contracts, as their information is publicly shared and updated. To date, Mexico has eight operational PPP contracts in the health sector.

Prior to the pandemic, experts like Raúl Jacobo, Health Manager of CHG-Meridian Mexico, shared with MBN that “beyond just focusing on infrastructure, PPPs have great potential for the provision of certain procedures in the public sector, which would greatly help public hospitals and patients.” These types of collaborations gained relevance during the COVID-19 crisis. “Mexico’s Hospital Consortium (CMH) established a partnership with the government to support patient care during the pandemic,” says Javier Potes, Director General of CMH. After analyzing the capacity of the private sector to collaborate with the public sector, CMH and the Private Hospital Mexican Association (AMHP) realized that private hospitals had wider capacity as already programmed surgeries were being postponed due to fear of contagion. “This allowed us to negotiate with the government and to collaborate by offering our services to treat non-COVID-19 patients coming from public institutions.” Through the initiative formally called Todos Juntos Contra el COVID-19 (All Together Against COVID-19), beneficiaries of INSABI, IMSS, ISSSTE, SEDENA, SEMAR and PEMEX were referred by their health institutions to private hospitals and clinics participating in the agreement. This initiative is, according to Héctor Valle, Executive President of FunSalud, “the most relevant example of public-private partnerships for hospitals.”

Infrastructure, technologies and human resources from the public and private sectors are required to close the access gap to quality healthcare services, Devlyn says. For Potes, structure and human resources to provide healthcare are the most immediate gaps to address. “Before COVID-19, the private sector would have around 40 percent bed availability, which could perfectly be used to treat patients from the public sector at referenced prices.” Potes says that under the right collaboration framework, the private sector could start investing in infrastructure to treat government beneficiaries, focusing on service provision rather than the building itself, as in regular PPPs. “This is a much more effective way to secure patient access in both sectors,” says Potes.

Current State of the Health System

Mexico spends around 2.7% of its annual GDP in healthcare. The OECD recommends a GDP expenditure of at least 8.3%. The federal government assigned 10.6% of its budget to healthcare in 2021

IMSS

(Mexican Institute of Social Security)

ISSSTE

(Institute of Social Security and Services for State Workers)

Social security institutes

PEMEX

(Petróleos Mexicanos)

SEMAR

(Ministry of the Navy)

SEDENA

(Ministry of Defense)

On average, out-ofpocket healthcare expenditure in OECD countries stands at 2.6%

of national GDP In contrast, Mexico spends

3.1%

of its GDP on healthcare

2021 BUDGET OF EACH PUBLIC HEALTH ENTITY (MX$ million)

350

300

250

200

150

100

50

0

MX$325.83

IMSS MX$63.19

ISSSTE MX$17.54

PEMEX MX$6.46

SEDENA MX$2.26

SEMAR MX$89.30

INSABI MX$141.04

SSA

SSA

(Ministry of Health)

SESA

(State Health Services)

Public institutions and programs that serve the population without social security

IMSS-B

(IMSS-Bienestar Program)

INSABI

(Institute of Health for Well-Being)

Insurance companies Clinics and hospitals

Private sector

Medical professionals that work in private pharmacies Providers of alternative medicine services

CONDITIONS AND LIMITATIONS OF THIS SEGMENTED MODEL

+ Does not offer universal protection

+ It is financed through taxes, worker and employee fees + Services are provided through public social security institutions, the public sector and the private sector

+ Medical personnel work at different entities, including those in the public sector + There is no coordination between the sectors. Activities are duplicated. Different institutions offer different health services, leading to inefficient resource management + Primary care is provided mainly by the public sector and social security institutions

+ Patients have the freedom to choose their specialists and doctors

+ Long waiting lists in the public sector + Patient satisfaction levels differ depending on the institution that provided the services

Public-Private Agreements Crucial for Healthcare System’s Future

Héctor Valle

Executive President at FunSalud

Javier Potes

Director General at CMH

Patrick Devlyn

President of the Health Commission at CCE

Raúl Anaya

Director General of Certificación at Consejo de Salubridad General

Read the complete article The COVID-19 pandemic proved how successful publicprivate partnerships (PPPs) in healthcare provision could be. While PPPs are common in other sectors, they are unusual in the strongly divided Mexican healthcare system but implementing them could bring many benefits. “Healthcare provision for the entire population was a great aspiration in the 1980s but it also comes with a great number of challenges. We have to think beyond sectors and institutions. Mexico needs a real, global healthcare system with the collaboration of various actors, including public and private entities. The pandemic proved that it is possible,” says Raúl Anaya,

Director General of Certificación at Consejo de Salubridad General.

A sustainable and well-financed health system is crucial for every country to keep its population safe. WHO’s recommendation is to have an 80/20 composition between public and private spending. In 2018, public expenditure in healthcare represented 51 percent of the total health spending in Mexico, with the rest being financed by private parties. “Collaborations, such as that achieved during the pandemic, help to combine workers, infrastructure, medicines and devices in a timely manner to truly achieve healthcare access,” says Héctor Valle, Executive President at FunSalud.

While partnerships during the pandemic were successful and helped both parties have a better understanding of each other, collaborations must be planned long term, says Javier Potes, Director General of Mexico’s Hospital Consortium (CMH). “The private sector, including insurance companies, has to take some risks. We have to focus more on health than on diseases, working on prevention,” says Potes. In 2018, chronic-degenerative diseases, such as heart diseases and diabetes, caused 50 percent of the total deaths in Mexico, according to INEGI. These diseases, often called the “silent epidemic” by WHO, have to be targeted in Mexico through an integral prevention solution between public and private sectors, according to Patrick Devlyn, President of the Health Commission at Business Coordinating Council (CCE).

“We started to break down stereotypes that the private sector only seeks profit and is unethical or that the public sector is corruptible and riddled with advance-stopping bureaucracy. It has been proved that those stereotypes can be broken down,” says Anaya. To date, Mexico’s eight operational PPP contracts in the healthcare sector are hospitals in Guanajuato, Tamaulipas, State of Mexico, Nayarit, Chiapas, Yucatan and Mexico City. These contracts are considered more transparent thanks to monthly performance reports, which strengthen accountability for both public and private actors.

Pharmacies Report 15 Percent Shortage in Medicines

Marcos Pascual

Commercial Director of the Association of Pharmacies of Mexico (ANAFARMEX)

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More about this person Criticism of the public health system over medicine shortages has become a recurring issue. In many cases, the shortage obliges people who suffer from chronic diseases to appeal to support networks, social organizations and private pharmacies.

It is estimated that the Mexican Social Security Institute (IMSS) increased the percentage of assorted recipes from 5 percent to 12 percent from 2019 to 2020, which means that more than 10 million recipes were not sorted. Adding in the decline of medical care for chronic patients who stopped visiting their IMSS clinic and the situation becomes even more complicated.

However, the shortage of drugs is not limited to public entities. The private sector, which groups a network with more than 40,000 pharmacies, is starting to look affected by the absence of medicines that the population needs.

We have detected a 15 percent shortage, which we believe has been tripled in recent weeks. Two out of 10 patients are prescribed alternative medicines to their usual treatment by their doctors. Some important brands missing from the private sector are Afrin (a nasal decongestant), Caltrate (calcium and vitamin D) and Riopan (an antacid). This considerably increases the out-of-pocket expense for patients and their relatives by more than a 70 percent.

Logistical difficulties are among the elements that delay supply. In the past, the transportation and the distribution of medicines were left to private businesses with more than 250,000 square meters of storage facilities and 1,000 transport units to manage the cold chain, a necessary condition for many substances. This is in contrast to the installed capacity of the federal government. The private initiative dispersed nearly 2.4 billion units each year, which demonstrates that we have the capacity to guarantee supply. On a monthly basis, this is about 200 million units that can be distributed to every state institution.

Another equally important element is that the pandemic has caused a shortage in raw materials globally. Mexico imports more than 80 percent of its raw material needs.

Finally, I believe the entities involved with the state and private initiative should think about their actual positioning. On the one hand, our industry has been subject to claims of corruption in distribution or manufacturing without any specific cases being named, no public complaints and no proof or investigation underway.

On the other hand, for many years and under different governments, the business sector has been delegated the responsibility for logistics and production, from manufacturers to brokers and businesses specialized in the supply of medicines. Today, that has changed. That is why the work of convincing the government of the importance of our sector should be constant. An example of a good dealmaker in the private sector is Carlos Slim, who with his experience and modesty has won over President Andrés Manuel López Obrador in the recent case of the collapse of a stretch of Line 12 of the subway in Mexico City.

In every crisis exists an opportunity. I am sure there is human talent in our industry that can succeed in the constructive dialogue that has been difficult to achieve during the 4th transformation.

Navigating Uncertain Scenarios

Javier Picó

Partner at LifeSciences Consultants

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More about this person I f there is one common aspect in the health systems of the Latin American region, which has been further underlined by the ongoing COVID-19 pandemic, it is the uncertainty among its managers, providers, funders and patients regarding which future scenario will establish itself as the

“new order” of health protection.

Uncertainty surrounds the pandemic in terms of when it will stop requiring most sanitary resources, allowing other “epidemics” like diabetes and cancer to be priorities once again. (This will supposedly happen once a minimum rate of vaccination is reached all over the world and not just in rich countries.)

There is also uncertainty about the impact that the lag in medical consultations in the last 18 months will have on the evolution of prevalent diseases and in the complications that will appear, resulting in a need to adjust health risk calculators.

There is uncertainty for managers around health spending planning in the midst of open fronts and budgetary constraints brought about by the economic crisis and its budding recovery process.

These uncertainties cloud the future. And that future uncertainty is blocking brave decision-making, which is vital for recovery.

It is, at the very least, doubtful that the next few years will provide clarity of information and criteria regarding sanitary planning decisions. As a result, the managers and players involved need to adapt to the new ways of working and making decisions in an uncertain environment, which, in turn, requires the facilitation of established working environments and processes.

Epidemiological health demand-estimation processes, average health services’ consumption estimation (clinical, drugs, medical devices) and evaluation criteria for new and current technologies are just some of the aspects that need to be managed with some flexibility to respond to the changing and uncertain scenarios that will present themselves in the next few years.

It has been widely said that the COVID-19 pandemic should make us reevaluate our health values, societies and even personal relationships. Beyond that, the health systems and social protection agencies should reevaluate their priorities, roles and processes.

This calls for brave leaders in health systems and social protection agencies who are capable of learning to navigate uncertain territories without being penalized by archaic rules and allowed to manage the risk of making mistakes and reacting accordingly.

More than ever before, only the most profound technical knowledge of effective health systems, together with organizational agility, can accelerate the recovery and redesign of the healthcare model that this new society is demanding.

Ana Riquelme

Executive Director of AMID

Domestic Medical Devices Consumption Propels Health, Investment

Q: The medical devices manufacturing industry is expected to grow 6.1 percent, globally. How will this increase reflect in Mexico?

A: This growth has been driven by the manufacturing of personal protection equipment. These are high-tech supplies that Mexico is capable of manufacturing, such as specialized face masks. To complement our efforts and boost our manufacturing capacities, AMID has requested a meeting with the minister of economy to attract more final assembly processes to Mexico. To achieve this, Mexico would need to increase is medical devices consumption, as the final assembly is commonly done at the product’s point of sale to avoid damaging the device. One example is ventilators, which are 80 percent manufactured in Mexico. However, the final assembly takes place where the device is sold.

Mexico needs to improve its 43rd ranking in medical devices consumption versus it eighth place standing in production. The solution to this is simple: the government needs to understand the benefits of medical devices and allocate more budget to these solutions. The execution is difficult, however, and AMID has been working on this for several years. Purchasing processes through UNOPS make this goal more complicated because we have unclear schemes and uncertain orders.

Q: Mexico is a large manufacturer of syringes. With COVID-19 vaccination campaigns, how has demand for these disposable devices increased?

A: Traditionally, the acquisition of healing materials, including different types of syringes, was through public tenders that included around 4,500 SKUs the government required. Demand remained quite stable around that number. However, we were surprised to see that the SKUs posted for the latest UNOPS acquisition process totaled only 600. We communicated our concern regarding the drastic decrease from 4,500 to 600 SKUs. Also, we asked how the remaining codes would be covered but we have not received an answer. Prior to this situation, UNOPS hosted a meeting, which was very encouraging. However, there were many subjects left unsolved and unclear, such as the planning of the tenders, which they explained was done through INSABI, while UNOPS was only in charge of fulfilling the request.

Usually, there is a trend in the number of syringes requested by the government through the centralized purchase scheme, which we estimate should have increased at least by 35 percent this year, considering the current vaccination program for COVID-19. With this number, we wanted to be very conservative, but with the missing 3,900 SKUs and the lack of answers from the public sector, this forecast seems to have turned around. We are still waiting for the information of an alternative acquisition or an explanation for this missing supply of syringes that will certainly be needed this year. We need this information to begin redirecting our efforts in case the acquisition has been covered by the government. If that is the case, we would begin exporting the syringes we have because the national demand would be covered. Many AMID members are multinational companies, so export requests for this device are already on our doorstep.

We had the same problem with ventilators last year, when many health systems globally had to respond to the growing peak of contagion and severe COVID-19 cases. During this period, we

waited for the government to request ventilators but the industry could not wait forever. It was in our best interest to supply the local government first and we did approach officials. However, we received no answer until months after.

Q: How does the medical devices sector contribute to the value-based healthcare model?

A: This is a priority for AMID and we have experts on the subject working with us. Putting the patient at the center of our work guarantees quality, efficiency, innovation and cost-effectiveness in the development and manufacturing of medical devices. However, medical devices are sometimes not accessible to all segments of the population. Value-based healthcare models are a way to break this barrier and provide patients with access to innovative solutions.

Many times, what guarantees the purchase of a medical device is the price, when it should be the benefit it provides to the patient. At AMID, we are in favor of free competition. However, without putting the patient at the center of our operations, we will not be able to close this virtuous circle. Aside from the benefits it provides to patients and health systems, value-based healthcare foments innovation.

Prior to the pandemic, AMID began a research partnership with IMSS that was focused on compiling real-world evidence. We want to prove that through the use of medical devices at public hospitals, we could generate better outcomes for the patient while also fomenting innovation. I am hoping we can resume our research this year and be able to measure the outcomes and the benefits of medical devices in this model.

Q: How are you working to strengthening the MexicoUS relationship, given that US President Joe Biden has expressed his desire to strengthen US supply chains?

A: We are looking forward to strengthening the good relationship we have with the US regarding medical devices. We want to attract more investment to Mexico to continue manufacturing for foreign companies. Moreover, we want to pour that investment into local medical devices companies. Mexico’s manufacturing capacities and good practices are among our most valuable assets in this sector. Devices like heart valves are handmade with such quality and detail that it is hard to deny the level of our production.

Mexico is also working toward sustainable practices, gender equality and competitive salaries. Companies are taking care of their talent and of their environment to remain a top choice.

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Alejandro Luna

Partner Litigation and Life Sciences Co-Chair at OLIVARES

Patent Waiving Is Not the Solution to Enhance Access: OLIVARES

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More about this person Q: Patent waiving for COVID-19 vaccines has been touted as a way to increase access to those jabs. How would such a measure impact global vaccination campaigns?

A: Patents are not responsible for the crisis or issues related to the mismanagement of health systems. It is easy to say that patents are barriers but this is incorrect. The technology developed to create COVID-19 vaccines is very complex and is recognized through legal protection. Patent protection should not be used as the argument to blame lack of access, neither for COVID-19 vaccines nor for any other medical development. If anything, patents help innovation reach the market and foment further medical developments.

For the COVID-19 vaccine, it is worth noting that the global demand is unprecedented, which alone is likely to cause delays in vaccine delivery. Production processes for these vaccines must be performed in specialized infrastructure with controlled environments for their manufacture, storage and distribution. Therefore, a strong and continuous supply chain and expert workforce are necessary across this entire operation.

Patent waiving will not solve any of the supply chain requirements or challenges in the manufacturing of the vaccine. Pharmaceutical innovation, protected by patents, is developing these unique solutions to a global crisis in record time. New drugs and new vaccines are not created spontaneously, it derives from the virtuous circle of innovation fueled by the patent system IP protection is a significant incentive for the pharmaceutical industry. Without this mechanism, COVID-19 vaccines could have taken up years to be developed. Vaccines are the result of many joint ventures and collaborations between two or more pharmaceuticals that combined technology and science to reach this goal faster. Without patent protection, investment on vaccines technology would have been out of the question.

To eliminate the limitations of manufacturing it is necessary for countries to invest in it. International mechanisms like COVAX could enhance vaccine production, without compromising innovation and efficacy.

Q: How will the new Federal Law for the Protection of Industrial Property impact the innovative medicine sector?

A: In general terms and with few exceptions, the new IP Law is positive for innovation. Regarding topics related with the pharma industry, the Bolar exemption has always existed. First it was an exemption to the law for the experimental use of a patent product and it was added to the Law for the Protection of Industrial Property, specifically for conducting tests for the approval process. This is a system of equity between the one who has the IP and the rest of the public. In the life sciences field, this exemption gains more relevance as it involves life-saving technology.

What happened in November, aside from the already-established protection rules for commercial purposes was a change in the time frame. In the past, experimental processes could begin three years prior to a chemical compound patent expiration, or eight years before in the case of a biological compound. These times have been eliminated. Therefore, processes can be carried out at any time. This is positive as long as manufacturers do not abuse the opportunity and begin the process for commercial purposes early.

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