Development policy for the Brazilian health industry and qualification of national public laboratories

Technological innovations play a decisive role in societies’ development by contributing to economic growth and the population’s welfare. The state has a key role in this process by inducing innovative behavior, strategies, and decisions. This study addresses Brazil’s current policy for development of the health industry and its effects on qualification of national public laboratories by contextualizing different cycles of interaction between health policy and the industrial base, discussing the government’s development strategy and the transfer and absorption of health technology (through Industrial Development Partnerships), and presenting two current partnerships involving public laboratories in the production of medi-


Introduction
Technological innovations that generate new products, new production processes, and new organizational formats 1 play a decisive role in the development of societies, contributing to economic growth and the population's welfare 2,3 .Their importance has achieved wide consensus among governments, public policymakers, companies, and the scientific community in developed countries, where innovation policies have developed as an amalgam of science and technology policies and with the agreement that innovation is a complex, systemic phenomenon 4 .
The systemic nature of innovation processes refers to the influence exerted by factors that are external to the organizations, such as institutions (laws, regulations, rules, etc.), the political process, public research infrastructure (universities, research institutes, funding agencies, etc.), financial institutions, and professional training, among others 5 .These are the systems' principal components for the creation and commercialization of knowledge.Innovations thus emerge in such innovation systems, combining economic, political, social, organizational, and institutional factors that influence their development, diffusion, and use 6 .These aspects tend to act as incentives and/or obstacles to the innovative process.
Innovations generally occur in companies, but the state can strongly induce company behavior, strategies, and decisions pertaining to innovation 7 .Furthermore, recognition of the collective and social nature of innovation fosters the adoption of public policies focused on the public sector's specific role in this process, so as to contribute to the materialization of research and development (R&D) activities that would not have happened otherwise 8,9 .Various policy instruments are used for this purpose, including public financing for teaching and research institutions, infrastructure for innovation, technology transfer mechanisms, public demand, government purchases, etc. 10 .These instruments allow managing the risks associated with the innovative process (high costs, long timeframes, and uncertainties).They also have short and longterm direct and indirect impacts on the scientific, economic, and social fields 11 .
In the health field, the state can orient and fund specific R&D projects and favor the appropriate use of technologies by adopting a coherent set of public policies 12 : trade policies (which influence the creation of companies and their activities), R&D policies (which promote the development of technologies that can transform health services), and health policies (with a direct impact on healthcare supply, including regulation of the entry of new technologies in health systems).Various examples show the state's centrality in generating innovations in the health field.For example, 75% of all molecules approved by the U.S. Food and Drug Administration from 1993 and 2004 had received public funding 9 .
According to article 200 of Brazil's 1988 Federal Constitution, the Brazilian Unified National Health System (SUS) is responsible for promoting scientific and technological development in its area.However, several signs point to a mismatch between Brazil's health and innovation systems in recent years 13,14 : (a) the lack of organic relations between the services provision network and companies in the health industrial complex; (b) health policy centered on expanding the supply of services, with no major concern for the industry's capacity for innovation or thus the state's purchasing power in a development policy targeting domestic companies and laboratories; (c) a science and technology policy focused on the science system, overlooking links with an industrial policy for innovation and the health system's needs; and (d) absence of convergent regulatory policies for intellectual property and health surveillance.
Trade balance problems and the strong presence of non-resident patents are two indicators of the dissociation characterizing the Brazilian health sector's innovation system.There is a heavy external technological dependency in accessing new health technologies, as illustrated by the trade balance for these products: the cumulative deficit increased from some US$ 3 billion in 2003 to more than US$ 10 billion in 2012 15 .Meanwhile, 87% of the 2,972 patents obtained by Brazil in 2013 belonged to non-residents (foreigners) 16 , demonstrating domestic industry's weak performance in generating new technologies and the persistent immaturity of the Brazilian innovation system 17 .
The article analyzes the Brazilian health sector's current industrial development policy and its effects on the qualification of national public laboratories.It contextualizes the different cycles of interaction between health policy and its industrial base; discusses the Brazilian government's strategy for the development, transfer, and absorption of technology in the health sector (industrial development partnerships); and presents two current partnerships involving public laboratories for the production of antiretroviral drugs and influenza vaccines, respectively.

Cycles of interaction between health policy and its industrial base
Capitalist development and health policy have interacted in such a way as to construct different formats in the organization of services, combined with the establishment of health's own industrial base, consisting of industries that have produced different technologies (sera, vaccines, medicines, equipment, materials, etc.) at each stage in history 13,18 .The degree of external dependency in this industrial base accompanies the historical patterns of capitalist development, in which countries with original (England) ors delayed industrialization (Western Europe and the United States) predominated -and still predominate -in production and technological development in a major portion of this industrial segment 19 .In the peripheral countries, or those with late industrialization 20 , e.g.Brazil, this industrial base has been very incipient and dependent on the development of the model adopted by the country.
Brazil's recent history has witnessed three emblematic models or arrangements between health policy and industrial production 21 : (i) the age of sanitation, during the First Republic (1889-1930), when the country developed a public industrial base devoted to the production of sera and vaccines by public institutes (Oswaldo Cruz Foundation and Butantan Institute); (ii) the age of individual or collective social security, in 1930-1988, when the policy's industrial base was supplied by the importation of nearly all the necessary inputs, along with the domestic production of medicines and equipment with low technological density; and (iii) the age of the SUS, post-1988, with the combined expansion of the public industrial base based on government laboratories and a model of public-private partnership in health, developing a synergy between expanded access and technological and industrial capacity-building in public and private institutions.
The main characteristics of the first model (age of sanitation) was the fact that it was public and national, since it consisted of public institutions and services, received government funding, and displayed a low degree of external dependency 22,23,24 .The model also opened the way for a genuinely national scientific development in biotechnology (sera and vaccines) 25,26 .This first arrangement focused on combatting major endemics and epidemics.It was launched and initially developed during the First Republic (1889-1930).The protagonists were government agencies engaged in the formulation and coordination of actions in the health field (at the federal and state levels) and public institutes of science and technology, created in the late 19th and early 20th centuries.
The second model (social security) was developed together with the social security health model, beginning in the 1930s 27,28,29 .Unlike the previous model, this arrangement was essentially private and international.Its financing was mixed (public and private), with a predominant supply of private services (hospitals and laboratories) and an internationalized chain of producers and suppliers of medical inputs, medicines and equipment.All this produced a scenario of major external dependency and growing trade balance deficits with these health products.
The third model (SUS) experienced major growth in the last decade, with the consolidation of a new model of interaction between state and market, centered on national development 30 .Various public policies were created, aimed at a new investment cycle in infrastructure and some industrial sectors, with subsidized credit and financing to foment innovation and scientific and technological development in specific areas, notably health 31 .
In the history of health policy, the first two models existed side by side during the developmentalist period (1930-1980).However, the predominant public and national model was gradually replaced by the private international arrangement, due to various factors: technological change (biotechnological products for fine chemistry and synthesis of molecules in the pharmaceutical sector); creation of private laboratories producing sera and vaccines (e.g., the Pinheiros Laboratory in São Paulo); the leading role of heavy industry and infrastructure investments on the development agenda; and internationalization of capital with the arrival of multinational industries in Brazil.
The two models coexisted during the 1980s and 90s, when neoliberal policies were adopted.On the one hand there were initiatives to foment the public model via public policies like the expansion of immunization (National Immunization Program -PNI), incentives for public production of inputs (e.g., the National Program for Self-Sufficiency in Immunobiologicals), and stimulus for healthcare based on primary care (the Family Health Program).On the other hand, private insurance and health plan companies were strengthened, which helped consolidate the characteristics of the social security model 32 : the supply of private beds and tests based on a strong increment in the importation of medicines and medical and hospital equipment, with private financing and government subsidies for expanding the supply and purchasing healthcare services.
In the current period, the first model (public and national) gained a new centrality on the government agenda.This period is illustrated by specific policies for promoting science and technology (S&T) activities and supporting domestic companies in the health industrial complex, alongside expansion of the public hospital and outpatient capacity, especially in the Northeast and Central regions of the country.However, there has also been a major expansion of the second model (privately oriented and internationalized) via an increase in the coverage of private health plans, favoring and encouraging the expansion and capitalization of health insurance and health plan companies.
The two healthcare production arrangements illustrate the historical tensions between health and development in Brasil 21 .While these arrangements contributed to the de-commodification of access to health services through the development of the SUS, they also allowed denser commodification of supply (salaried staff, incorporation of group medicine companies, etc.) and the development of health as a field of capital accumulation of capital accumulation 18 .These arrangements were not established or combined during the same historical period, but they coexist today in a complex way within the Brazilian health system (Table 1).

Partnerships for industrial development in health: a brief institutional overview
In March 2004, the Brazilian government launched its Industrial, Technological, and Foreign Trade Policy (PITCE), establishing a framework for the resumption of policies to induce production and technological development in the country.The health field was basically contemplated in the pharmaceuticals and medicines sector.However, the structuring and implementation of the PITCE was embryonic and contained significant institutional gaps, in addition to dissociation from the prevailing macroeconomic policy, unfavorable to sustained growth 33 .In the subsequent years, with the creation of the Executive Group for the Health Industrial Complex (GECIS) and the Department of the Health Industrial Complex and Innovation in Health (DECIIS) under the Brazilian Ministry of Health, interaction between health policy and industrial policy gained institutional force, which allowed including on the government's agenda the importance of the health industrial complex and public production of strategic technologies for the SUS.

External dependency Low High
The PITCE was succeeded by the Industrial Development Policy, launched in May 2008, which proposed to overcome the preceding policy's limitations and expand the scope of action to include a broader range of sectors.Health was included as one of the strategic areas, with explicit goals related to the local production of strategic products for the SUS and reduction of the trade deficit in sectors comprising the health industrial complex.Despite progress in the governance model proposed in the policy area, with a clear definition of roles and responsibilities, the policy's implementation was jeopardized by the deepening international economic crisis, reversing the favorable conditions that had based its formulation and limiting the capacity to meet its goals 34 .
Based on recognition of an unfavorable conjuncture for Brazilian industry, the "Plan for a Greater Brazil" (PBM) was launched in August 2011, replacing the previous policy.With the overall objective of sustained economic growth (even in an adverse economic context), the PBM defined ten major program goals and adopted instruments to reduce the labor and capital costs (tax unburdening) and support innovation and defense of the domestic market (regulatory framework, credit lines, and government purchases).The plan contemplated the health industrial complex as one of the 19 strategic sector agendas, setting priority goals and measures for implementation.Although the majority of the system and sector measures were implemented 35,36 , preliminary assessments suggests that the PBM failed to achieve the expected results 37,38 .
Linked to these economic development policies, some measures were adopted by the Brazilian Ministry of Health to stimulate domestic production of strategic and priority items for the SUS.Examples of these measures include the creation of the Program for Investment in the Health Industrial Complex (Procis); the use of the state's purchasing power, with the application of a 25% preference margin in federal public bids for medical products; and the formation of Industrial Development Partnerships (PDP) between public institutions and private corporations for the production of strategic products to meet the demands of the SUS, with expected technology transfer and absorption.
The institutionalization of these measures involved a broad set of standards adopted in the last decade (Table 2).This regulatory framework was not built all at once, but by layers, reflecting the issue's centrality on the government's agenda in recent years.
Data presented by the Brazilian Ministry of Health in December 2014 point to 103 PDP under way, with 33 products registered with Anvisa (the Brazilian National Health Surveillance Agency) and 26 products acquired by the Brazilian Ministry of Health through these partnerships 39 .Also according to the Brazilian Ministry of Health, 74 institutions were involved, including 19 public laboratories and 55 private companies.This scenario provided a turnover of 3.8 billion BRL for the public institutions and a savings of 1.6 billion BRL in 2011-2014.By the end of the projects in the PDP phase, estimates points to a savings of some 5.3 billion BRL.
Despite the progress provided by the PDP, studies have identified limits and areas for improvement 40,41,42 : the Brazilian Ministry of Health's limited budget capacity to stimulate the market using its own purchasing power; the need to extend beyond the mere regulatory issues and sustain the state's active role in the promotion of development; the need to maximize the success rate of the established partnerships in terms of delivering products and actual technology transfer to domestic producers; the need to verticalize the industrial process for pharmochemical and pharmaceutical components involved in the partnerships; the need to guarantee the quality of the products involved in the partnerships; and the need to interrupt partnerships that are failing to meet the agreed-upon goals.Gadelha & Costa 43 identified other obstacles to the effectiveness of the PDP: lack of expertise in the processes of technology transfer from the private sector to the public sector and limitation of public producers in relation to technical competency, laboratories' management capacity, and good manufacturing practices of Anvisa.
Gaps and imperfections have also been identified in the new legislation on PDP 44 : unclear rules on choice of the private partner; lack of transparency in information on established PDP; and legal insecurity as to protection of intellectual property rights.Other equally controversial issues involve the direct hiring of partnerships (without the need for public bids); the possibility that partnerships may merely disguise the purchase of medicines as technology transfer agreements; and the fact that some of the products covered by the PDP are in a mature stage of development, with their patents already expired or about to expire, which would guarantee markets for transnational pharmaceutical companies involved in the agreements until domestic production is effectively implemented.
Despite these weaknesses, various representative organizations from the health industrial complex (Brazilian Association of the Fine Chemicals Industry, Biotechnology and its Specialties -ABIFINA, Brazilian Association of the Industry

The role of public laboratories in industrial development partnerships
An important issue for PDP is qualification of public laboratories, involving various previously outlined aspects for innovation and selfsufficiency in the health sector.According to the Brazilian Ministry of Health 46 , there are 21 government laboratories in the country which jointly produce 80% of the vaccines and 30% of the drugs used in the SUS 47 .These laboratories play relevant roles in price regulation; support in emergency situations; supply to strategic public health programs such as STD/AIDS and the PNI; and as partners in the development of new products and pharmaceutical formulations 48,49 .Despite the importance of public laboratories in meeting the needs of the SUS, some studies 50,51 have identified political, administrative, and operational problems, along with low technological capability and lack of qualified human resources.The low utilization rate of the installed capacity and lack of agility in meeting the SUS demand, due to the requirement of complying with the public sector's rules for bidding and purchases, especially for purchasing imported raw materials, also hinder the work by public laboratories 52 .
In order to discuss the influence of PDP on qualification of public laboratories, two partnerships were selected, one related to the National HIV/AIDS Program (antiretroviral drugs) and the other to the PNI (influenza vaccines).The criteria for selecting these partnerships were the products' relationship to strategic programs, participation by different public laboratories in their execution, and two recent studies that allow a more critical view of this process 49,53 .In the case of antiretroviral drugs, the existence of visible short-term effects such as the growth of financial turnover, greater availability of locally produced active pharmaceutical ingredients (APIs), and savings for public purchases and foreign reserves.The second case highlights the range of changes involved: construction of new installations; purchase and adaptation of equipment; and large-scale manufacturing processes, with strong participation by the government agency in all the phases.

PDP linked to the HIV/AIDS Program
Brazil is a world reference in the fight against HIV/AIDS.For 16 years the SUS has guaranteed universal access to medicines for treating HIV/ AIDS, in addition to tests and medical follow-up, benefiting 217 thousand persons, or 97% of all Brazilians diagnosed with AIDS.The production of antiretroviral drugs (ARV) in Brazil has reached important milestones, for example with Efavirenz, where the country declared compulsory licensing for the first time, guaranteeing more affordable prices based on domestic production of this drug 54 .
The As for the potential impact of PDP on qualification of public laboratories, some issues were identified that corroborate the results presented by Rezende 49 : a) Annual turnover: all the partners showed a two-to threefold increase in turnover after implementing the PDP; b) Innovative impacts: increased production or services provision capacity; opening of new markets and expansion of market share; and quality improvement in goods or services; c) In-house R&D activities: compares the number of persons occupied in R&D, showing relatively less growth in public as compared to private laboratories, but with a significantly greater share in fulltime R&D staff; d) Organizational innovations: adoption of new management techniques (revision of business processes, knowledge, total quality control, and training systems), marketing concepts and strategies, pharmacovigilance programs; e) Product innovations: the majority of the laboratories that innovated their products attributed such innovations primarily to the partnerships; f ) Process innovation: better performance of public laboratories compared to private.
Many of the problems and obstacles that were identified relate to historically constructed situations with important cultural and organizational issues: difficulty adjusting to standards, norms, and regulations; organizational rigidity; lack of qualified personnel; high costs of innovation; and lack of sufficient funding sources.Added to this are difficulties related to lack of an entrepreneurial culture (establishing a new vision of their role in national S&T policy) and positioning in terms of agility of processes and networking with other companies and research institutes 51 .

PDP with the PNI
Brazil has a long history of success in immunizations.The Brazilian Ministry of Health launched two important strategies in the 1970s and 80s: the creation of the PNI in 1973 and the National Self-Sufficiency Program (PASNI) in 1985.These strategies, especially the PNI, played a key role in consolidating the national health system, mainly in the following areas 55 : public health planning; methodology for operationalization of largescale mobilizations; detailed training methodology for public health professionals; progress in science and technology; promotion of quality of life and longevity; targeted approach to groups with increased vulnerability; and guarantee of citizenship.
Introduction of the influenza vaccine produced an important redefinition in the vaccination schedule.The decision was made in 1999, with two epidemiological approaches, namely benefiting the country's growing elderly population and including technology transfer from a foreign laboratory (Sanofi) to a Brazilian public laboratory, the Butantan Institute.
The technical assistance contract for the technology transfer was signed on October 1st, 1999.The contract was scheduled to end in February 2004 but had to be extended due to delays in the factory's construction, which was only finished in May 2007 because of problems with the bidding process 55 .Considering the process development and external and internal contexts, three different periods can be identified in implementation of the partnership: (i) 1994-2004: beginning of the transfer process and construction of the factory; (ii) 2005-2008: conclusion of the installations and beginning of the transfer per se; and (iii) 2009-2011: certification of the transfer, especially with formal creation of a PDP in 2010.
The partnership had the following positive effects on qualification of the Butantan Institute: expanded institutional capacity for technology transfer; qualification for large-scale influenza vaccine production; improvement in good manufacturing practices; command of new technologies; and possibility of developing innovations (in this case, the introduction of an adjuvant tested at the institute and institutional development capable of influencing the production of other vaccines).
Institutionally, the study shows the possibility of proceeding with this process backed by the preconditions that were identified, but also weaknesses related to prevailing science and technology policy strategies to support public institutions and the structure of these same institutions (the Butantan Institute in this case) and the limits imposed by serious structural obstacles to their development.
Nearly all of the institutions' administrative structures are heavily based on rules for direct government administration, insufficiently agile to meet the demands of technology transfers (ranging from purchase of inputs to retrofitting installations).Human resource policy in this area adopts job definitions and career paths that are inconsistent with vaccine production activities (where the commands and technical structure need to be clearly defined, with flexible management and development).

Conclusions
Brazil was hindered for a long time by the lack of public policies to develop a national innovation system in health, strengthen public laboratories, and expand the installed capacity of companies belonging to strategic sectors of the health industrial complex.The result is heavy international technological dependency, making the country an example of a non-virtuous model of the association between health and development 56 .However, the more recent adoption of policies and programs to induce national development, with specific initiatives for the health field, sug-gest the emergence of a new model.The PDP are a prime example, since their design prioritizes a combination of positive forces to overcome the health system's external dependency and expand the population's access to priority products.
Despite the progress provided by PDP for interaction between health policy and production, it is necessary to identify the historical challenges faced by the public laboratories, which have been relegated to a secondary role during the long predominance of the private international model.The technology transfer process encouraged by PDP thus represents a potentially dynamic element for incremental innovations to be developed more effectively in the public laboratories, as demonstrated by two examples of partnerships discussed in this study.
Major challenges include the adoption of more transparent decision-making, investments in infrastructure and staff qualification in the public laboratories, adoption of mechanisms to monitor and evaluate results, and guaranteed continuity in the health policy's focus and dialogue with the industrial base, even during changes in government administration.Given the diversity of institutions involved in the management of public laboratories, an additional challenge is to establish a special support policy, considering the different realities and defining proportional targets for the respective stages, besides an on-going incentives policy.
A pressing issue is to guarantee the capacity of the current healthcare production arrangement to reconcile the public logic of collective welfare and social inclusion with the private and individual market logic.The answer necessarily involves recognition of the state's responsibility in defining and linking public policies for integration of the multiple dimensions of development in order to help combine the market's interests with public health concerns and needs.
Cad. Saúde Pública, Rio de Janeiro, 32 Sup 2:e00188814, 2016 Contributors A. L. dʼA.Viana participated on the conception and project of the article, writing, critical revision and approval of the final version for publication H. P. Silva, N. Ibañez and F. L. Iozzi contributed on the data analysis and interpretation, writing of the article and approval of the final version.

Table 1
Characteristics of arrangements for the production of health services in Brazil.

Table 2
Health policy and industrial production: principal legislation.
and Foreign Trade Policy".Article 3 presents the following objectives: "set priorities based on the technological demands of the Brazilian Unified National Health System, the target markets of the industrial sector, and the country's installed capacity; stimulate interaction between companies, universities, and science and technology institutes and the industry and encourage technological exchange among the industrial sectors; provide linkage to guarantee regulatory stability with Anvisa (National Health Surveillance Agency) and INMETRO (the National Metrology Institute); stimulate certification of products as an instrument to promote the sector's innovation and development; stimulate expansion of public and private investments in R,D&I.; stimulate the private sector to use the existing support instruments to expand technological development in the public and private sectors; stimulate training and capacity-building of human resources in biomedical areas; expand and modernize the infrastructure for Basic Industrial Technology in the sector; and propose the adoption of government bidding and procurement policies based on the inputs' quality and technology transfer" Defines a list of strategic products in the Brazilian Unified National Health System (SUS) in accordance with the development of the health industrial complex.Relevant provision on its key role with PITCE and PROFARMA (BNDES), especially as it specifies the Ministry of Health as the institution to back these two policies

Table 2 (
continued) Refers to the decision by the Executive Group of the Plan for a Greater Brazil (Brasil Maior) on the bylaws of the Executives Committees, Sectorial Competitiveness Councils, and Systemic Coordination Bodies December 21, 2011 Decree 7,646 Deals with the membership, competencies, and functioning of the National Commission for the Incorporation of Technologies in the Brazilian Unified National Health System (CONITEC) and further addresses the administrative process for the incorporation, exclusion, and alteration of health technologies by the Brazilian Unified National Health System (Article 1) S8 Cad.Saúde Pública, Rio de Janeiro, 32 Sup 2:e00188814, 2016

Table 2 (
continued) Brazilian Ministry of Health currently invests 850 million BRL in the purchase of 21 ARV.Of the 21 products, eight were the object of PDP between 2009 and 2012.The following public laboratories are involved in ARV production: