Supreme Court Endorses Parallel Importation of Drugs

UNCLAS MANILA 001055

SENSITIVE

SIPDIS

STATE FOR EAP/MTS, EAP/EP, EEB/IFD, AND EEB/TPP/MTA/IPC
STATE PASS USTR FOR BWEISEL, RBAE AND KEHLERS
STATE PASS USAID, OPIC, USDA
BANGKOK FOR JENNIFER NESS
TREASURY FOR OASIA
USDOC FOR 4430/ITA/MAC
USDOC PASS USPTO

E.O. 12958: N/A
TAGS: ETRD KIPR ECON RP
SUBJECT: Supreme Court Endorses Parallel Importation of Drugs


1. (SBU) Summary: The Philippine Supreme Court has ruled that the
Cheaper Medicines Act has legalized parallel imports of
pharmaceuticals by third parties, superseding legislation that
banned such imports. The decision potentially affects the
patentability of medicines by declaring that the Philippine
Constitution creates a right to inexpensive health care. The
decision means that importers may no longer need to register with
the Bureau of Food and Drug. End summary.


2. (U) On May 11, the Philippine Supreme Court ordered prosecutors
in the province of Pampanga to drop charges against a pharmacy, Roma
Drug, for illegal importation of patented GlaxoSmithKline products.
The Court ruled that the Special Law on Counterfeit Drugs of 1996,
under which the pharmacy had been charged, had been overtaken by the
Cheaper Medicines Act of 2008, which explicitly allows third-party
parallel importation of medicines. The Court, however, went beyond
this finding, and asserted that the former law was in fact
unconstitutional, because it violated a provision in the Philippine
Constitution that "health services [be] available to all the people
at affordable cost."


3. (SBU) EconOff spoke to Midas Marquez, chief of staff to Chief
Justice Puno, about the decision. Marquez said that the main
finding of the Court in this decision is that the Cheaper Medicines
Act superseded the Special Law on Counterfeit Drugs of 1996. He
told us that this was a simple decision made necessary by the
omission of language in the Cheaper Medicines Act repealing older
contradictory legislation. On the subject of the older law's
constitutionality, Marquez insisted that the Court only addressed it
as an academic exercise, and it is now a moot question. The
constitutional requirement that health care be affordable is a
general principle that sits alongside other legal principles such as
intellectual property rights.


4. (SBU) The decision is not yet final, as the Solicitor General and
GlaxoSmithKline will file motions for reconsideration. The head of
the legal department at the Manila office of GlaxoSmithKline, who is
drafting the motion, told us that the company is most worried over
the draft decision's implication that third party importers of
patented medicines will not need to register with the Bureau of Food
and Drug, as the Cheaper Medicines Act ostensibly requires. The
company is encouraged that the Office of the Solicitor General, on
behalf of the Arroyo administration, will join in the motion
contesting the Supreme Court's ruling.


5. (SBU) Comment. This ruling apparently does little more than
reaffirm the provisions of the Cheaper Medicines Act allowing
parallel imports. However, if it overturns the registration
requirement, counterfeit drugs could become a serious problem with
significant potential implications for health. The Supreme Court's
invocation of a broader right to inexpensive health care could be
problematic if courts, contrary to Marquez's assurances, decided to
read this as a precedent. At this point, we believe that is
unlikely.

Memmott