Giving surplus medicines a second life in Brazil

Under the current tax regime in Brazil, disposing of medicines is cheaper than donating them to people in need. Donations are categorized as sales and are therefore subject to ICMS (tax on the movement of goods, charged at an average rate of 34% on pharmaceuticals), while incineration is tax-deductible.

This policy is not the general rule elsewhere: for example, in the United States, contributions of inventory to charitable organizations qualify for an enhanced tax deduction (RSM, 2018). While the European Commission has launched a Voluntary Solidarity Mechanism to redistribute medicines between Member States (European Commission, 2023), there is currently no standardized framework in Europe that incentivizes drug manufacturers to donate rather than destroy surplus inventory. Brazil's restrictive tax regime is compounded by a second, organizational obstacle faced in many countries: the law requires end-to-end traceability of all pharmaceutical donations, including data on products, quantities and recipient institutions.

Beyond legal compliance, donors themselves demand traceability that extends all the way to the final beneficiaries — ensuring proper dispensation or disposal, and mitigating regulatory, environmental and misuse risks.

Prorede3 was founded by Marcio Lerner, who previously ran Prorede, a company specializing in the exchange of surplus inventory for advertising space. Working with pharmaceutical manufacturers gave him insight into the scale of this problem: "We realized that across the industry as a whole, thousands of metric tons of medicines were being incinerated, amounting to nearly €1 billion per year. We wanted to find solutions to this issue."

This led to the creation of Prorede3 in 2023, which aimed to provide the digital infrastructure needed to boost medicine donations across the entire country.

FID has awarded the project a pilot preparation grant, which will be used to automate the matching of donors with institutions, develop an AI-powered system to process dispensing reports, expand the partner network, and support advocacy work with public policy-makers to reform the current tax system.

The platform connects pharmaceutical companies with institutions authorized to receive donations of their surplus drugs. It currently comprises three modules: a marketplace where donors post their inventory and institutions submit their requirements; a traceability system that tracks each product from warehouse to patient; and an accountability module which records the number of beneficiaries reached, cost savings generated, and CO₂ emissions avoided.

Products are thus shipped directly from the laboratory to recipient institutions that have already been accredited to ensure their regulatory compliance. As of July 2026, this network is made up of 150 accredited institutions, including hospitals, NGOs and charitable health clinics, located across all regions of the country. Marcio Lerner explains how the platform works: "Let's say a donor delivers a thousand boxes of medication for high blood pressure or diabetes to a charitable hospital. The hospital then dispenses one pill of this medication to its patients a day. We receive the dispensing reports stating that a particular patient was given one pill on May 29, another on May 30, and so on. Everything is recorded on the platform." The system covers beneficiaries with a broad range of health needs: "We take whatever donors can provide, which ranges from toothpaste to cancer drugs. The demand is huge."

Since the platform was created, over 37,000 products have been distributed to between 40,000 and 50,000 beneficiaries — who receive them free of charge. At less than €2 per beneficiary, this figure reflects the total amount invested in running the platform divided by the number of people reached. "The final beneficiaries are low-income individuals from all regions of Brazil," says Marcio Lerner. "We don't target a specific group by age or gender; distribution is dictated by whatever products are available."

Eduardo Martins, CEO of Pharlab, a Brazilian generic drug company, has been working with Prorede3 since 2020 — even before the platform was formally created, in a pre-operational mode. He says that before the platform was launched: "We put a block on all inventory with less than six months before its expiration date. These drugs cannot be sold and would previously have been incinerated. That wasn't good for us because it brought added costs, was bad for the environment, and benefited nobody."

According to Martins, companies wanted to donate this medication but lacked a suitable mechanism: "No company was going to develop a traceability system simply to manage this problem." Today, the platform has enabled Pharlab to reduce costs compared with incineration, outsource the regulatory traceability work required by ANVISA (Brazilian Health Regulatory Agency), and access monthly reports on how donated products are used. "We no longer send anything—or virtually nothing–to be incinerated."

It takes time for companies to adopt a new system. Pharlab has been working with Prorede, the parent company of Prorede3, since 2016, but not on a continuous basis: "Initially, the system was still in development, and didn't support monitoring, tracking, and report generation," says Eduardo Martins. Pharlab stopped using the platform for two to three years until 2020, by which point the system had been upgraded to meet regulatory requirements.

Beyond these technical stumbling blocks, individual priorities also come into play. "Companies know that it's the right thing to do, but there's no sense of urgency for them," says Marcio Lerner. "There's still not enough outside pressure from the public or the government." If the model proves successful, Lerner aims to scale it more widely: "We hope that donating medication will become standard practice and the go-to solution for pharmaceutical companies in Brazil."

Prorede3 is based on a very simple idea: with the right infrastructure, what the industry sees as waste can become a valuable resource for the people who need it most.

Introduction sources:

• Coube M, Nikoloski Z, Mrejen M et al. "Inequalities in unmet need for health care services and medications in Brazil: a decomposition analysis" The Lancet Regional Health – Americas, 2023; 19.
• Leal, Adriana Amorim de Farias et al. "Access to medicines among the Brazilian population based on the 2019 National Health Survey." PloS one vol. 18,1 e0280599. Jan. 20, 2023.