On June 21, 2024, the Ministry of Health (MoH) published MS Ordinances No. 4,472/2024 and No. 4,473/2024, which regulate Productive Development Partnerships (PDP) and the Local Innovation Development Program (PDIL), respectively.

The new regulations result from  Public Consultations No. 53/23 and No. 54/23, which received contributions between December 2023 and March 2024.

According to the MoH's announcement during the Health Industrial Complex (CEIS) Executive Group meeting on June 18, 2024, entities will have until the end of September to submit PDIL and PDP project proposals.

Current priority areas include preparation for health emergencies (e.g., dengue fever), products at risk of shortages, digital health, and contributions to More Access to Experts and Queue Reduction Programs (e.g., oncology, cardiology, orthopedics, and ophthalmology).

Main aspects of the new PDP regulation

According to Ordinance No. 4,472/2024, PDPs will involve cooperations between public institutions, ICT(s), and private entities(ies) for the development, transfer, and absorption of technology, as well as productive and technological capacity, having local production of strategic technologies and products to meet the demands of the SUS.

PDP solutions must be listed in the Matrix of Productive and Technological Challenges in Health and meet the following requirements to become eligible projects:

  • existing or expectation of marketing authorization within thirty-six months from the project proposal's submission date.
  • absence of a patent restriction affecting the proposed arrangement or loss of the restriction within thirty-six months from the project proposal's submission date.
  • possibility of centralized procurement by the MoH within the scope of CEIS; and
  • high dependence on importation or expected discontinuation of the product.

Public institutions (IPs) or Scientific, Technological, and Innovation Institutions (ICTs) and private entities that develop, own, transfer, or receive technology (EPs) are eligible to participate in PDPs. The EP may simultaneously act as a recipient and transferor of the technology in the same PDP project, as long as production occurs locally.

According to Ordinance No. 4.472/2024, the phases of the PDP will be as follows:

PDP project proposal. Submission of projects, analysis by the MoH, the Technical Evaluation Commission (CTA), and the CEIS Deliberative Committee (CD), with publication of the results and signing of the terms of commitment for approved projects. 

PDP project. Preparation for technology transfer between the partners, including training and completion of product development to absorb the scientific and technological knowledge involved in the partnership. This phase begins with publishing the statement of commitment in the Federal Official Gazette (DOU) by the MoH and ends with the publication of the instrument formalizing the first purchase of the product.

Technology transfer and acquisition by the MoH. The technology transfer stage involves national production, the acquisition of the product or service by the MoH, and the supply of the product covered by the PDP by the public institution/ICT. This phase begins with the publication of the instrument formalizing the first product acquisition by the MoH and ends after the deadline for the internalization of the technology has elapsed.

Verification of the internalization of the technology. Proficiency proof of the technology/strategic platform. This phase begins immediately after phase III and ends with the publication of the resolution extract in the DOU to internalize the technology.

In the process of evaluating and classifying PDP project proposals, the following criteria stand out:

  • shortest timeframe for internalization of technology and production by IP/ICT;
  • history of PDP internalization for products into the IP/ICT portfolio;
  • public investment forecast for the execution of the PDP, as well as investments by the EP;
  • availability of certified technological and production platforms compatible with the proposed project and activities to be carried out;
  • lowest overall price proposal, taking into account an initial and descending scale of prices throughout the PDP;
  • presentation of productive and technological solutions for the SUS that are additional to the transfer of technology, with synergy for future technologies;
  • Shorter timeframe for production of API, component or device;
  • alignment with the Production and Technological Development Program for Neglected Populations and Diseases (PPDN) or the Program for the Preparation of Vaccines, Serums and Blood Products (PPVACSH).
  • degree of verticalization of the production stages of the API(s), component or device associated with the pharmaceutical form for the national manufacturing park.

Main aspects of the PDIL regulation

MoH Ordinance No. 4,473/2024 establishes that solutions included in the Matrix of Productive and Technological Challenges in Health, and that promote production, technological, territorial development, and local innovation are eligible for PDIL. Projects must also promote training actions for ICTs, public laboratories, non-profit organizations, startups, and public companies, as well as contribute to the digital and ecological transformation and sustainability of the CEIS.

Local innovation under this new setting means the introduction of a novelty or improvement in the productive and social environment that results in new products, services, or processes or that comprises the addition of new features or characteristics to an existing product, service, or process that can result in improvements and have an effective gain in quality or performance for production in Brazil.

According to the new rule, PDIL can be implemented by promoting local innovation projects through arrangements, decentralized execution terms (TED), technological orders (which is not defined in the rule), public agreements for innovative solutions (CPSI), technological compensation agreements, or other instruments.

The following criteria will be considered when assessing the PDIL project proposals:

  • the excepted timetable for carrying out each of the project's stages and a detailed plan regarding necessary resources.
  • the technological and productive capability of the entities to carry out the project proposal, considering existing capabilities and the investments planned by the partners.
  • availability of qualified human resources to carry out the project.
  • innovative nature, clinical benefit, or relevance to the health system.
  • relevance of the counterparts for the SUS.
  • forecast of other sources of funding to make the project feasible; and
  • the technical and economic details of the proposed implementation plan.

The new rule authorizes the MoH to contract the supply of technologies or products resulting from the PDIL for a period of up to ten years, counting from the completion of the solution, provided that the stages and requirements relating to the technology development process, the regularization, the local production, and incorporation the solution into the SUS are met.

Impacts on current PDPs and strategic alliances

 

According to the new ordinances, technological development partnerships and technology transfer agreements entered until December 31, 2022, or those with a product acquisition instrument currently in force and aiming to supply products to the SUS must be adapted to the PDP model. These partnerships must be informed to the MS by August 22, 2024.

Similarly, existing strategic alliances for the local development of innovative solutions aimed at supplying products to the SUS can be adapted to the PDIL model until June 2025.

History

It's worth mentioning that a few days after the government announced the new strategy for the Health Industrial-Economic Complex (CEIS) last October, the Federal Audit Court (TCU) recommended the MoH to suspend new PDPs until measures were adopted to evaluate technological transfers and objective criteria for selecting private partners (case TC 034.653/2018-0) (check out our full analysis here). The Federal Attorney General's Office (AGU) filed a request for reconsideration of the decision.

On April 15, 2024, the MoH’s Secretariat of Science, Technology, and Innovation and CEIS department presented partial clarifications on the measures taken by the MoH to comply with the TCU's determinations, specifically that:

  • opened public consultations on the matters to promote dialogue, and legitimize transparency and social participation to obtain information, opinions, and criticisms regarding the PDP Program.
  • the internal regulations of the Technical Evaluation Commission (CTA) and the Deliberative Committee (CD) will be updated after the publication of the new ordinances.
  • considers that the points of merit that were the subject of the TCU's determinations were addressed in the draft ordinance that was the subject of the public consultation; and
  • all public institutions were informed, by means of a letter via e-mail, about the need to carry out a selection process, pre-qualification of the private partner, or adequate justification in the event of unfeasibility.

In addition, the MoH requested that the 180-day deadline for verifying compliance with the principles of public law among the criteria for approving PDPs - particularly those of publicity, legality, and morality - start to run from the publication of the new regulations. (Check out our previous analysis on the subject here).

Case TC 034.653/2018-0 had been included in the plenary agenda for April 17, 2024, but was then withdrawn without justification. No further developments have been announced so far.

The Life Sciences & Healthcare practice can provide more information on the subject.