BRAZIL IPR UPDATE: PHARMACEUTICAL SECTOR

UNCLAS SECTION 01 OF 04 BRASILIA 001338

SENSITIVE
SIPDIS

DEPT PASS USTR FOR KATHERINE KALUTKIEWICZ AND TANUJA GARDE
DEPT PASS USPTO

E.O. 12958: N/A
TAGS: KIPR ETRD ECON BR
SUBJECT: BRAZIL IPR UPDATE: PHARMACEUTICAL SECTOR

REF: A) BRASILIA 1175 B) Brasilia 1017

SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE USG


1. (SBU) SUMMARY: The Brazilian judicial and legislative branches
are in the process of examining two key pharmaceutical
patent-related issues - the role of the national health vigilance
agency (ANVISA) in reviewing pharmaceutical patent applications and
the constitutionality of Brazil's pipeline patent system. There has
been no resolution of a disagreement between the Brazilian patent
office (INPI) and the Inter-Ministerial Intellectual Property Group
(GIPI) regarding patents for polymorphs and second uses. In
addition, INPI's stated reasoning for a recent patent denial (lack
of inventive step) raises potential questions about the treatment of
incrementally innovative pharmaceutical patent applications - though
underlying political pressure to lower costs for Brazil's AIDS
program may have been at work in that case. With Brazil preparing
for a major election in October 2010, it is possible that no
definitive action will be taken on these topics in the near future.
END SUMMARY.

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JUDICIAL AND LEGISLATIVE REVIEWS OF ANVISA ROLE
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2. (SBU) Article 229C of Law 9279/1996 (Brazil's IP Law) requires
ANVISA's "prior informed consent" before a pharmaceutical patent can
be approved. In an October meeting with Econoff, federal judge
Liliane Roriz explained that there have been several federal court
decisions in recent years regarding ANVISA's role in reviewing
pharmaceutical patent applications. Two decisions in the first
instance ruled against the intervention of ANVISA in patentability
criteria and two ruled for it. At the appellate level, one decision
(in which Judge Roriz participated) ruled against ANVISA's
intervention and the other found such intervention to be legal.
Judge Roriz's written opinion in the case, which she repeated to
Econoff, stated that ANVISA should have, at most, a reference role
in that ANVISA has more comprehensive files regarding prior art for
pharmaceutical inventions.


3. (U) On November 6, the Brazilian attorney general (as a result of
a formal request brought by the Brazilian patent office, INPI)
issued an opinion (No. 210/PGF/AE/2009) ruling against ANVISA's
current practice of reviewing patentability requirements. The
opinion states that ANVISA has the authority to examine patent
applications only with regards to a public health perspective.
According to the opinion, the patentability requirements of a
pharmaceutical invention can only be examined by INPI, since
ANVISA's competency is limited to preventing the production and
marketing of products and services potentially harmful to human
health. The opinion has been presented for review to the office of
the President.


4. (U) Separately, the Brazilian legislature is also examining
ANVISA's role in reviewing pharmaceutical patent applications.
Draft Law 3709 of 2008 (currently pending review by the House of
Representatives' Committee on Economic Development, Industry, and
Commerce) would strike from Brazil's IP law the requirement for
ANVISA's prior consent on issuance of pharmaceutical patents. The
written justification for Draft Law 3709 explains that Section 229C
of the IP Law, where it is stated that pharmaceutical patent
approval shall depend on the prior consent of ANVISA, was intended
only to apply to pipeline patents - the direct subject of Sections
229-231.


5. (U) Brazil implemented the pipeline system as part of adopting
the 1994 Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS). Under the pipeline system Brazil began recognizing
in 1996 pharmaceutical patents that had been filed in other
countries before Brazil allowed such patents. Affected patents were
recognized based on the date of first foreign filing, so long as the
patent was approved in a foreign country, the patent subject matter
was not previously marketed in Brazil, and the application was filed
within one year of the publication of the Intellectual Property Act
of 1996. Such pipeline patents would expire on the date
corresponding to their original foreign-issued patent or not more
than 20 years from the date of their filing in Brazil.


6. (U) On November 10, Econoff attended a public hearing at the
Brazilian Chamber of Deputies. Former Deputy Ney Lopes, who served
as rapporteur for the law that introduced Section 229C, testified
that the intention at the time was for the section to be limited in
scope to pipeline patents. He said that the current application of

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Section 229C implies doubt of INPI's competency and needlessly
duplicates work. Professor Aluizo Borem, representing the Brazilian
National Technical Committee on Biosafety (CTNBio),emphasized the
long process for creating new drugs and treatments and argued that
Brazil should aim for a regulatory environment conducive to
innovation. He argued that a plain reading of the IP Law shows that
Section 229C applied only to pipeline patent applications and that
to require ANVISA's consent on non-pipeline patents serves only to
add bureaucratic steps without legal justification or benefit to
society. Deputy Moreira Mendes agreed that the requirement for
ANVISA's prior consent is not well-grounded in the law, nor does it
recognize the separate competencies of ANVISA and INPI. In making
broader comments on patents and public interest, he pointed out that
generics would not exist without the breakthroughs and investments
of original drug manufacturers.


7. (U) Celia Chaves, President of the Brazilian National Federation
of Pharmacists (FENAFAR) and representing the IP Working Group of
the Brazilian Network for the Integration of All People, argued that
international standards and agreements confirm the primacy of public
health over commercial interests. She said that Section 229C was
not specific to pipeline patents and should be maintained in its
entirety, since ANVISA's review is more rigorous than that of INPI
and is conducted with public health in mind. She decried the
"delaying strategies" of brand-name drug makers and claimed that
only 15% of drugs approved by the U.S. Food and Drug Administration
between 1989 and 2000 were "truly innovative." The remainder, she
argued, are for things like new salt forms or polymorphs of existing
molecules, which are "not that hard" to create and "do not have new
therapeutic benefits." (Note: This statistic is drawn from a May
2002 report published by the U.S. National Institute for Health Care
Management Research and Education. The Pharmaceutical Research and
Manufacturers of America [PhRMA] issued a critique of this report
noting that the referenced statistics arbitrarily exclude large
numbers of medicines, specifically vaccines and biologics, and
misuses the FDA's Priority Review Classification System in assessing
what drugs are innovative. End note.) As for the competencies of
INPI and ANVISA, Ms. Chaves interpreted that Section 101 of the IP
Law, which defines the competency of INPI, does not give INPI
exclusive dominion over patents.


8. (U) Odinir Finotti, President of the Brazilian Generic
Manufacturers Association (ProGenericos),said that the generic
industry wants to follow the law as it is written but that
brand-name manufacturers are using deceptive strategies to extend
the life of their patents, including pipeline patents. He argued
that patents granted today would have no benefit for public health
in Brazil until their expiration in 20 years and that Brazil is best
served by maintaining ANVISA's review in order to be more cautious
about the concession of patent rights.

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PIPELINE PATENTS
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9. (SBU) In April 2009, the Brazilian Attorney General submitted to
the Federal Supreme Court (STF) a challenge to the constitutionality
of the pipeline patent system. According to the Attorney General's
submission, inventions patented under the pipeline system did not
meet the requirement for novelty since they were publicly released
once the patent application was submitted outside of Brazil. The
STF has not yet ruled on this case. Federal Judge Roriz told
Econoff that she finds the case "ridiculous" and feels that it would
not make sense to declare pipeline patents unconstitutional thirteen
years after the measure was implemented. It is an indication of the
weakness of the case, she says, that it took so long to bring a file
to the STF.


10. (U) The STF has not yet issued any opinions on the case.

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VOICES IN THE DEBATE
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11. (SBU) Post has reported previously (ref A) that the Ministry of
Exterior Relations (MRE) and the Ministry of Health (MOH) frequently
argue that IP protection is only one path (and an optional one at
that) to innovation and economic development and that it must be
balanced against the public interest. While the Ministry of
Development, Industry, and Commerce (MDIC) has seemed more willing
to consider IP protection as a key component of economic
development, MDIC's Secretary of Industrial Technology Francelino
Grando recently supported the MRE and MOH view during opening

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remarks at a November 5 seminar on IP and Innovation hosted by the
Brazilian Association of Fine Chemical Industries (ABIFINA - an
organization whose members include major Brazilian generic drug
manufacturers like Ache, Eurofarma, and EMS). Secretary Grando
stated that the GOB should resist international pressure for more
concessions (i.e. TRIPS-plus) on IP and underlined the legitimacy of
subordinating patent policy to the interests of economic and social
development.


12. (U) The ABIFINA seminar was structured into three panels on the
judicial, economic, and social aspects of intellectual property.
The majority of the panelists focused on what they called the
anti-competitive nature of pharmaceutical patents and the impact to
society of decreased access to medications. One panelist, Professor
Bruno van Pottelsberghe of the Free University of Brussels, focused
his presentation on the factors in various patent systems that
affect the quality of approved patents (which he found to be worst
in the U.S. Patent and Trademark Office),but he also pointed out
that pharmaceutical companies take on tremendous financial
investments and risks to develop and test new drugs. Unless
governments are willing to take on that role themselves, he said,
they must acknowledge the public interest in access to
as-yet-undeveloped medicines.


13. (U) Ronaldo Fiani, a professor of economics at the Federal
University of Rio de Janeiro, said there are two "myths" dominating
the patent conversation - the myth that patents are "good
monopolies" and the myth that IP protection is an effective
incentive for innovation. Professor Fiani expressed dismay that
Brazil's own competition authority (CADE) has made public arguments
for the benefits of the temporary monopoly granted by IP protection.
He went on to say that only technical capacity-building can promote
innovation and that economists invented the myth of IP protection as
an incentive to innovate. Professor van Pottelsberghe responded
that while some elements of the current patent system may be flawed,
IP protection is not a carrot enticing a horse to run, but rather
the road itself. That is, IP protection is a fundamental
pre-condition for innovation and economic development.

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POLYMORPHS AND SECOND-USE PATENTS
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14. (U) The December 2008 Inter-Ministerial Group on Intellectual
Property (GIPI) decision against patentability of polymorphs and new
medical indications of existing drugs (second-use patents) has yet
to be implemented by a change in Brazil's patent law. INPI tells
IPR Attach that they continue to evaluate applications on a
case-by-case basis, approving patent applications that meet the
patentability requirements of novelty and inventive step. Draft Law
2511 of 2007 would amend the Brazilian patent law to disallow
second-use patents. The draft law has been awaiting consideration
by the Brazilian House of Representatives' Committee on Economic
Development, Industry, and Commerce since August 2009.

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TENOFOVIR
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15. (SBU) As reported previously (ref B),the case of U.S.
pharmaceutical company Gilead's rejected patented application for
the AIDS drug tenofovir has raised concerns about INPI's stance on
patents for incrementally innovative drugs. (Note: Gilead has not
yet filed a planned judicial appeal in Brazil. End note.) A patent
application for the same drug was refused by the Indian patent
office in September 2009, based partly on pre-grant opposition filed
by the Brazilian AIDS advocacy group Brazilian Interdisciplinary
AIDS Association (ABIA) in cooperation with an Indian NGO. ABIA's
opposition filing stated that a patent in India would have a direct
impact on the ability of Brazil to produce and access generic
versions of tenofovir.

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COMMENT
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16. (SBU) The issues surrounding patents for pharmaceutical
products are unlikely to be resolved during the lead-up to the
October 2010 elections. With the media and elite's attention
focused on the campaigns for president, all 26 state governors,
two-thirds of the Senate, and all federal deputies, Post expects
that action in most controversial areas will be stalled until after
a new government is in place in January 2011. President Lula's

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sustained popularity is largely based on his personal connection
with the country's lower classes and his party (with current
Presidential Chief of Staff Dilma Rousseff as its presidential
candidate) will not want to jeopardize that populist touch. Given
the popularly-held belief that pharmaceutical patents benefit
multi-national drug companies at the expense of the Brazilian
public, reforms to strengthen Brazil's patent system are not
vote-winners and therefore are unlikely to be pursued over the next
twelve months. END COMMENT.

KUBISKE