(This summary has been automatically generated with AI, its content may differ from the original video in Spanish)
Costa Rica’s competition authority, COPROCOM, has challenged in court a proposed government decree regulating medicine prices, stating potential medicine shortages and the risks of collusion.
Background of the Complaint
Viviana Blanco, President of COPROCOM, explained in an exclusive interview that while the agency is part of the Costa Rican government, it operates with full technical, functional, and administrative independence. COPROCOM is empowered to challenge laws and regulations that conflict with the Constitution and competition law.
Earlier this year, COPROCOM published a market study on the pharmaceutical sector after nearly a year of research. The study revealed that while certain regulatory inefficiencies and barriers exist — particularly in the registration of medicines and consumer resistance to generic drugs — there was no evidence of competition issues at the distribution or pharmacy levels that would justify price or margin regulation.
Despite these findings, the government proposed a decree to regulate the profit margins of medicine distributors and pharmacies based on therapeutic groups, without conducting a competition assessment or providing technical justification. COPROCOM warned that the decree lacked a proper analysis of its potential to cause shortages, a legal requirement under Costa Rican law before imposing such regulations.
Risks Identified by COPROCOM
Blanco detailed the multiple risks associated with the decree:
- Price Distortion: If margins are set too high, prices could rise rather than fall, defeating the decree’s stated purpose.
- Supply Shortages: If margins are set too low, it could become unprofitable to import or distribute certain medicines, leading to shortages.
- Induced Collusion: Alarmingly, the final version of the decree included a provision encouraging distributors to coordinate and share sensitive information to divide margins among themselves — a practice considered illegal under competition law.
The decree, in effect since February 18, 2025, has created significant legal uncertainty for pharmaceutical companies. Firms are now faced with a dilemma: comply with the decree and risk violating competition law, or refuse to coordinate and face potential penalties for non-compliance with price regulations.
Potential Public Health Impact
Blanco emphasized that if the decree remains in force, Costa Rica could face a shortage of medicines, particularly for products where the fixed margins make distribution financially unsustainable. The concern is heightened by Costa Rica’s already high regulatory costs, lengthy approval processes (up to three years for new drugs), and absence of fast-track registration mechanisms.
The decree’s margin calculations were based on international averages, without adjusting for Costa Rica’s specific market conditions — a methodology COPROCOM argues is flawed and dangerous. As a result, small and medium-sized distributors, in particular, may exit the market, exacerbating supply problems and affecting vulnerable patients.
Legal Status and Outlook
Although COPROCOM’s complaint has been admitted by the Administrative Court, the requested interim measure to suspend the decree has not yet been resolved. Until a ruling is issued, the regulation remains in effect.
Blanco also noted that other entities, such as the Costa Rican Chamber of Health and various pharmaceutical companies, have filed their own legal challenges against the decree. Although their motivations may differ, the ultimate goal aligns: the annulment of the regulation.
COPROCOM’s Broader Efforts
Beyond this high-profile case, COPROCOM is actively addressing other competition concerns in Costa Rica. Recent initiatives include:
- Launching a guide to detect and prevent collusion in public procurement, in collaboration with the telecommunications regulator and the Ministry of Finance.
- Conducting market studies in critical sectors, such as sugar, professional services, transportation, and soon, the financial and electricity markets.
- Advocating for regulatory reforms to lower entry barriers and foster competition across the economy.
Blanco highlighted the importance of prioritizing sectors that directly impact the everyday lives of Costa Rican citizens, particularly given the agency’s limited resources.
As Costa Rica awaits the court’s decision, COPROCOM’s actions underline the delicate balance between regulation and competition. While the government’s goal of reducing medicine prices is commendable, COPROCOM warns that poorly designed interventions could ultimately harm consumers by reducing access to essential medicines.
The coming months will be crucial in determining the outcome of this regulatory dispute — not only for the pharmaceutical sector but for the future of competition policy in Costa Rica.
