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In Brazil, in addition to the general rules of Civil and Commercial Law, contracts signed in the pharmaceutical industry sector must comply with specific regulations, such as the Board of Directors Rules (RDCs) of the Brazilian Health Regulatory Agency (Anvisa) and other health legislation. In this article, we will explore the most relevant legal aspects for drafting and managing contracts in this segment.
The Relevance of Contracts in the Pharmaceutical Sector
Contracts affecting the industry formalize relationships among themselves, suppliers of goods, distributors, and service providers. Such agreements must consider the regulatory complexity that governs the sector. Anvisa, for example, is heavily involved in inspection and regulation to ensure the safety, effectiveness, and quality of products and processes.
In the contractual sphere, adjustments ensure compliance with these regulations. One example is RDC #658/2022, which establishes Good Manufacturing Practices (GMP). In contracts between manufacturers and suppliers of pharmaceutical goods, it is essential to include clauses guaranteeing that the goods acquired meet the quality criteria specified by the standard.
Fundamental Clauses in Pharmaceutical Contracts
- Regulatory Compliance
Contracts must provide for the parties’ responsibility to comply with all applicable regulatory standards. For example, a contract for the outsourced manufacturing of medicine must require that the contractor be duly licensed and comply with the GMP standards established by RDC #658/2022. The absence of such clauses may result in sanctions by Anvisa and financial losses for the parties. - Responsibility for Product Quality
The clauses must define responsibilities for guaranteeing the quality of goods, manufacturing, and distribution of products. The provision of regular audits and continuous monitoring plans, as required by RDC #658/2022, should also be considered. RDC #430/2020, which established good practices for the distribution, storage, and transportation of medicine, requiring all those involved in the logistics chain to guarantee the integrity of the product, was amended by RDC #653/2022 (in effect since March, 2024). Contracts with distributors must include clauses specifying the conditions of transportation and storage, requiring investments in on board technology in transport vehicles, such as temperature monitoring systems, sensors, and control devices, and provide for penalties for non-compliance. RDC #653/22 brought significant changes to the transportation sector, especially regarding the deadlines for adapting routes with the possibility of including the pharmaceutical company's risk assessment in their mapping. This makes rules on temperature control and transportation more flexible, allowing carriers to adjust their routes based on specific risk assessments, taking into account factors such as weather conditions, road infrastructure, and others. The time frame of transporting medicine to its final dispensation, which was previously restricted to an 8-hour limit by RDC #430, has become flexible after the revision, as long as companies carry out this mapping, including information with risk analysis of the routes and critical paths. - Supplier Qualification and Responsibility
Contracts aim to ensure that suppliers and third parties comply with the standards of RDC #658/2022, including clauses that:
• Demand GMP certifications and complete documentation.
• Provide for audits and compliance monitoring. - Risk Management and Product Recall
Contracts between pharmaceutical companies and distributors must provide mechanisms to deal with situations of quality deviations and medicines recalls, based on RDC #625/2022. This includes defining responsibilities for notifying authorities (Notification to Anvisa and consumers), recalling products from market, and paying for recall operations. Brazilian legislation imposes strict obligations in this regard, and contracts that fail to comply may lead to time-consuming litigation. - Intellectual Property and Confidentiality
The protection of intellectual property is crucial in the pharmaceutical sector, especially in contracts involving the development of new medicines. These agreements must contain robust confidentiality clauses to protect formulas, manufacturing methods, clinical trial results data, patient data submitted to trials, and other sensitive information, while also specifying ownership of trademarks, patents, and copyrights generated by the partnership. - Protection of Personal Data
The inclusion of robust personal data protection clauses, especially health-related personal data, which are considered sensitive, and the adoption of security measures, in compliance with Law #13,709/2018 (General Data Protection Act – LGPD), should also be provided for in contracts. - Penalties and Termination
Provide sanctions for non-compliance with contractual obligations and conditions for termination, such as: fines in the event of non-compliance with GMP, unjustified delays in the delivery of goods, management of remaining stocks with the partner, returns of products that may still occur, transfers or cancellations of registrations, etc.
There are also situations that are very peculiar to this market, such as the examples cited below:
1 - Contract for Supply of Goods
A pharmaceutical company contracts a supplier of raw material for the production of generic medicines. RDC #204/2006, which was amended by RDC #72/2007 and RDC #32/2010, regulates active pharmaceutical ingredients and requires all suppliers to be registered within Anvisa and to comply with safety and traceability standards. In this scenario, the contract must provide for:
- Requiring supplier certifications.
- Penalties for non-compliance resulting in regulatory sanctions or loss of licenses.
- Clauses guaranteeing periodic audits at the supplier's facilities.
2- Research and Development (R&D) partnerships
Companies in this sector often sign contract academic institutions or startups to develop new medicines. In this case, it is essential to include clauses that regulate:
- Ownership and licensing of technological innovations, in accordance with the Brazilian Patent Statute (Law #9,279/1996).
- Intellectual property on innovations and patents.
- Sharing of costs, revenues, and risks in the development of new medicines.
- Compliance with ethical standards, such as CNS’s Rule #466/12 on research involving human beings.
- Deadlines and deliverables in the R&D process.
- Confidentiality obligations to protect sensitive data.
Legal Challenges and Risks
Finally, it is important to consider that one of the biggest challenges in contract management in the pharmaceutical industry is the constant regulatory update. New RDCs may require adaptations to contractual and operational processes, such as changes in regulation, requiring contractual revisions to reflect the new requirements. Being aware of updates is the role of the legal professional who carries out contractual management to mitigate risks, protecting the parties involved and ensuring compliance.
