HETEROGENEOUS RESPONSES TO BRAZIL’S PHARMACEUTICAL PRICE CAP REGULATION: EVIDENCE FROM PRIVATE INSURANCES AND THE UNIFIED HEALTH SYSTEM
Author(s)
Jéssica Portal Maia, BSc, MBA1, GIACOMO BALBINOTTO, PhD2;
1Universidade Federal do Rio Grande do Sul, MSc Student, Brasília, Brazil, 2UFRGS/IATS, PORTO ALEGRE, Brazil
1Universidade Federal do Rio Grande do Sul, MSc Student, Brasília, Brazil, 2UFRGS/IATS, PORTO ALEGRE, Brazil
OBJECTIVES: Analyze whether sector-specific discounts on the cap-price translate into different quantitative responses in private insurance compared to the SUS.
METHODS: The data consists in a monthly panel for 2015-2023 by intersecting CMED caps with observed prices and quantities for items billed to private health plans and procured by SUS (680 products; 108 months). We estimate (i) fixed-effects regressions of log quantities on the log price-to-cap ratio and its interaction with a public-sector indicator, with product and adjustment-cycle fixed effects; and (ii) Double Machine Learning (partially linear models with 5-fold cross-fitting) that treats discount intensity as a continuous treatment and orthogonalizes it against high-dimensional covariates.
RESULTS: Fixed-effects estimates show that a 1% rise in the observed-to-cap ratio correlates with a 0.60% rise in private-sector quantities (p<0.001). The interaction with the public-sector indicator equals −0.64 (p<0.001), which implies a near-zero to slightly negative slope for public procurement (~−0.03). DML yields private-sector coefficients between 0.463 and 0.517 across learners. For the public-sector interaction, estimates imply small or negative slopes: −0.618 (Lasso, p<0.001), −0.484 (Random Forest, p=0.0015), −1.060 (Neural Net, p<0.001); −0.281 (XGBoost, p=0.283, not significant); and 0.450 (CART, p≈0.097).
CONCLUSIONS: Private markets align with margin-based incentives: higher price-to-cap ratios align with higher volumes. SUS shows muted or negative responses, consistent with budget constraints and centralized negotiation. Deviations from the cap align with higher quantities in the private market and lower or neutral quantities in the public market, revealing heterogeneous sectoral responses. These opposite patterns indicate misaligned incentives under Brazil’s price-cap rules for medicines and motivate targeted adjustments to reimbursement and discount pass-through. Limitations include the absence of an unregulated control group, price-quantity simultaneity may persist, and administrative data may contain measurement error. Interpret coefficients as conditional associations under the current regime.
METHODS: The data consists in a monthly panel for 2015-2023 by intersecting CMED caps with observed prices and quantities for items billed to private health plans and procured by SUS (680 products; 108 months). We estimate (i) fixed-effects regressions of log quantities on the log price-to-cap ratio and its interaction with a public-sector indicator, with product and adjustment-cycle fixed effects; and (ii) Double Machine Learning (partially linear models with 5-fold cross-fitting) that treats discount intensity as a continuous treatment and orthogonalizes it against high-dimensional covariates.
RESULTS: Fixed-effects estimates show that a 1% rise in the observed-to-cap ratio correlates with a 0.60% rise in private-sector quantities (p<0.001). The interaction with the public-sector indicator equals −0.64 (p<0.001), which implies a near-zero to slightly negative slope for public procurement (~−0.03). DML yields private-sector coefficients between 0.463 and 0.517 across learners. For the public-sector interaction, estimates imply small or negative slopes: −0.618 (Lasso, p<0.001), −0.484 (Random Forest, p=0.0015), −1.060 (Neural Net, p<0.001); −0.281 (XGBoost, p=0.283, not significant); and 0.450 (CART, p≈0.097).
CONCLUSIONS: Private markets align with margin-based incentives: higher price-to-cap ratios align with higher volumes. SUS shows muted or negative responses, consistent with budget constraints and centralized negotiation. Deviations from the cap align with higher quantities in the private market and lower or neutral quantities in the public market, revealing heterogeneous sectoral responses. These opposite patterns indicate misaligned incentives under Brazil’s price-cap rules for medicines and motivate targeted adjustments to reimbursement and discount pass-through. Limitations include the absence of an unregulated control group, price-quantity simultaneity may persist, and administrative data may contain measurement error. Interpret coefficients as conditional associations under the current regime.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
HPR125
Topic
Health Policy & Regulatory
Topic Subcategory
Pricing Policy & Schemes
Disease
No Additional Disease & Conditions/Specialized Treatment Areas