DRUG PROCUREMENT CHANGES COULD POSE HEALTH RISKS

UNCLAS SECTION 01 OF 02 SAN SALVADOR 002239

SIPDIS

STATE PASS AID/LAC
COMMERCE FOR 4332/ITA/MAC/MSIEGELMAN
COMMERCE ALSO FOR 3134/ITA/USFCS/OIO/WH/DDEVITO/BARTHUR

E.O. 12958: N/A
TAGS: ECON SOCI KIPR ETRD ES
SUBJECT: DRUG PROCUREMENT CHANGES COULD POSE HEALTH RISKS

Reftel: 2004 SAN SALVADOR 2037


1. Summary. The Salvadoran Chemical and Pharmaceutical
Manufacturers Association (INQUIFAR) is pushing the
Salvadoran Social Security Institute (ISSS) to relax its
requirements for the procurement of seventy medicines for
which the ISSS now requires the manufacturer to either
submit evidence of registration with certain foreign drug
regulators (the U.S. Food and Drug Administration, for
example) or submit a bioequivelancy study. ISSS Director
Mariano Pinto insists that for most of the seventy drugs,
ISSS will not lower its standards, citing health concerns
that could arise if medicines of dubious quality are given
to persons suffering from AIDS or other serious illnesses.
U.S. and multinational pharmaceutical companies, represented
in El Salvador by the Central American Federation of
Pharmaceutical Laboratories (Fedefarma),make an argument
similar to Pinto's, citing health concerns, not intellectual
property rights, as nearly all of the medicines in question
are not patent protected in El Salvador. We propose
supporting Fedefarma's position but seek Washington
feedback. See action request in para. 7. End summary.


2. The Salvadoran Chemical and Pharmaceutical Manufacturers
Association (INQUIFAR),which represents local manufacturers
of pharmaceutical products (including one owned by Personal
Secretary to President Saca Elmer Charlaix),recently

SIPDIS
launched a public campaign to push the government-affiliated
Salvadoran Social Security Institute (ISSS) to relax its
requirements for the procurement of certain medicines.
Currently, for about seventy drugs used to treat illnesses
such as hypertension, AIDS symptoms, or cancer, ISSS
requires that a manufacturer present one of the following
before making a purchase: (a) evidence of approval and
registration in at least two of the following countries: the
United States, Canada, England, Germany, France,
Switzerland, Holland, Sweden, Denmark, Norway and Japan; or
b) certification from the European Agency for the Evaluation
of Medical Products (EMEA) or c) the results of
bioequivalency and bioavailability studies.


3. INQUIFAR President Jose Ancalmo told econstaff that the
ISSS standards are a technical barrier to trade that exclude
local manufacturers from participating in ISSS tenders.
INQUIFAR claims that medicines they manufacture are
evaluated and approved by the National Public Health
Council, and that what is good enough for the council should
be good enough for ISSS. Ancalmo also argued that
bioequivalency studies, which cost $30,000 to $50,000 each,
are too expensive for the local laboratories to afford.
Finally, he claimed that there exist no studies showing that
locally made medicines are not safe.


4. ISSS Director Mariano Pinto told econoff that he has
serious concerns regarding the quality of medicines produced
by local laboratories and therefore will not lower ISSS
standards for the seventy drugs included in "Category One."
Pinto explained that ISSS assigns each drug that it procures
to one of four categories, with category one reserved for
drugs for which effectiveness cannot be compromised, such as
drugs to treat hypertension, AIDS symptoms, or cancer.


5. Pinto complained that the local regulatory agency, the
National Public Health Council, does not do a credible job
of ensuring the quality of the medicines. The Council
quickly approves most new drug registrations, often relying
on other firms' test data or no test data at all to evaluate
the drugs effectiveness and safety (reftel). He noted that
local laboratory owners comprise the Council's Board of
Directors. Pinto added, however, that the list of Category
One drugs is frequently updated as local manufacturers
slowly raise their quality standards. He said that a few
drugs would probably be removed from the list during the
next few weeks--plans for which he recently announced
publicly. Pinto said that for the other drugs, ISSS would
continue to require bioequivalency studies or evidence of
prior registration.


6. Representatives of the Central American Federation of
Pharmaceutical Laboratories (Fedefarma) have met with
econoff to present their views on the issue. Executive
Director Rodolfo Lambour said that the issue is primarily
one of protection of public health. He cautioned, however,
that if ISSS were to accept test data prepared by Fedefarma
companies to support bids submitted by local manufacturers,
then he would have concerns, as he does already with the
Council's registration process, regarding CAFTA and TRIPs
data exclusivity provisions. Lambour was unable to provide
an estimate of the value of the drugs ISSS procures from
"Category One."


7. Comment and action request. At present, we view this as a
drug safety issue, not an intellectual property rights
issue. We propose supporting Fedefarma's position that
opening up ISSS procurement to firms that do not meet basic
quality standards creates unnecessary health risks for
Salvadorans. Our approach would be to suggest that the
Salvadorans maintain standards for procurement consistent
with international practices established by the World Health
Organization. We would also caution the Salvadorans that
opening up procurement to manufacturers that do not meet
quality standards may not benefit local manufacturers and
instead may trigger a flood of low quality imports from
other countries. Given the sensitivities related to
government procurement of medicines, post welcomes
Washington feedback before moving forward. End comment and
action request.

Barclay