VZCZCXRO4128
PP RUEHRG
DE RUEHBR #1338/01 3241351
ZNR UUUUU ZZH
P 201351Z NOV 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5389
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHSO/AMCONSUL SAO PAULO 0085
RUEHRI/AMCONSUL RIO DE JANEIRO 0041
RUEHRG/AMCONSUL RECIFE 0113
RUEHNE/AMEMBASSY NEW DELHI 0612
RUCPDOC/USDOC WASHDC

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. 

JUDICIAL AND LEGISLATIVE REVIEWS OF ANVISA ROLE ------------------------------------------------------------------------------------------


¶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  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. 

---------------- PIPELINE PATENTS ---------------- 

¶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. 

-------------------- VOICES IN THE DEBATE ---------------------- 

¶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 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. 

-------------POLYMORPHS AND SECOND-USE PATENTS -----------------

¶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. 

------------------------------- TENOFOVIR -------------------------------------------

¶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. 

-------------------------------- COMMENT ------------------------------------------

¶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 BRASILIA 00001338 004 OF 004 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