This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 BRASILIA 002335 
 
SIPDIS 
 
NSC FOR CRONIN 
STATE FOR OES/STC PMEEKS, WHA, EB, and E 
TREASURY FOR OASIA - DAS LEE AND FPARODI 
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON 
HHS FOR STEIGER 
AID WASHDC FOR LAC/SA 
NIH FOR EISS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD EAID PGOV IPR
SUBJECT: BRAZILIAN MINISTRY OF HEALTH SLOWS THE PACE ON 
COMPULSORY LICENSING 
 
REF:  A) Brasilia 2157, B) Brasilia 1716 
 
¶1. (SBU) Summary. On August 30, DCM, accompanied by selected 
members of Country Team, met with Ministry of Health 
Executive Secretary Jose Agenor da Silva to discuss the 
implications of any potential GOB move towards compulsory 
licensing of pharmaceuticals.  Embassy message was that: a) 
USG values our cooperation with the GOB on health issues but 
that the ongoing debate on compulsory licensing is 
worrisome, b) any GOB decision to embark upon compulsory 
licensing would likely deter pharmaceutical makers from 
introducing new drugs into the market and would make it more 
difficult for the GOB to attract badly-needed foreign direct 
investment, and c) given the depth of feelings within the 
U.S. Executive Branch and Congress on this issue, the 
interchange that would occur in the wake of a compulsory 
license would most likely negatively affect our bilateral 
relations.  Da Silva repeated the official GOB line that the 
Ministry preferred a negotiated solution to the Abbott 
controversy, but could not preclude the possibility of a 
compulsory license.  He pledged, however, that whatever 
decision the Brazilian government reaches would be a 
reasoned and informed one, fully vetted within the GOB - and 
not based upon politics or emotion.   End Summary. 
 
¶2. (SBU) In the cordial 45-minute session, Da Silva was 
joined by Moises Goldbaum (the Ministry's Secretary for 
Science, Technology, and Strategic Resources), and Amb. 
Santiago Alcazar (International Affairs Advisor).  While 
neither Da Silva nor his colleagues in the meeting appear to 
have been present at all of the previous negotiating 
sessions with Abbott, they did appear to be fully informed 
about the state of play with that company. 
 
¶3. (SBU) DCM opened the meeting by noting that the USG has a 
wide range of cooperative health and research programs with 
the GOB on issues such as HIV/AIDs, tuberculosis, and 
vaccine development.  While we would like to expand 
cooperation with Brazil, he said, the current debate on 
compulsory licensing worried USG policymakers.  Our view, he 
noted, was that under the current circumstances any move by 
the GOB towards compulsory licensing of the anti-retroviral 
drugs produced by Abbott, Gilead, and Merck would be 
counterproductive.  Specifically, compulsory licensing would 
likely deter pharmaceutical makers from introducing new 
drugs into the market and would make it more difficult for 
the GOB to attract badly-needed foreign direct investment. 
In addition, he noted, given the depth of feelings within 
the U.S. Executive Branch and Congress on this issue, the 
interchange that would occur in the wake of a compulsory 
license would most likely negatively affect our bilateral 
relations.  DCM strongly urged the GOB to pursue a 
negotiated solution, as it had initially done earlier in the 
failed July 8 accord with Abbott. 
 
¶4. (SBU) In response, Da Silva made the following points: 
 
-- The GOB was very much interested in continuing its 
scientific/health cooperation with the USG, including the 
joint programs with USAID, CDC, and the National Institutes 
of Health.  Indeed, Brazil wanted to increase the NIH 
research projects in country beyond the current roster of 60 
programs. 
 
-- The Ministry was well aware of Abbott's sixty year 
investment in Brazil and the degree to which the company 
generated employment in the pharmaceutical sector.  However, 
the capacity of the MOH to purchase expensive anti- 
retroviral drugs was limited and if Abbott was not able to 
offer its product at a low enough price it could well be 
that the Ministry would seek a compulsory license. 
 
-- The June 22 New York Times editorial urging Brazil to 
embark upon compulsory licensing, if necessary to save its 
internationally-recognized AIDS treatment program, showed 
how divided opinion was on this issue within the U.S.  For 
instance, the Clinton Foundation had recently told the GOB 
that it could provide Abbott's Kaletra drug at US$0.41 per 
pill now and at US$0.25 per pill in six to nine months. 
(When asked how an NGO could supply a pharmaceutical 
currently under patent, Goldbaum clarified da Silva's 
statement, noting that the Clinton Foundation had merely 
stated that it could help the GOB in finding reasonably- 
priced active ingredients and provide technical assistance 
regarding the manufacture of generics). 
 
-- The GOB had changed the focus of its negotiations with 
Abbott.  Before, politics and emotion had held sway.  Now, 
all Ministries within the government would be consulted and 
all facts proffered would be documented.  The GOB was 
collecting all the information available so that the best 
technical decision could be made.  A meeting between the 
Minister of Health and ForMin Amorim and FinMin Palocci to 
discuss the implications of compulsory licensing was set for 
September 1. 
 
¶5. (SBU) While both Da Silva and Alcazar stated that they 
understood the Embassy's advocacy role, they nevertheless 
requested that post make clear to Abbott that it needed to 
take a more flexible stance in the negotiations.  Da Silva 
opined that if both sides, the MOH and Abbott, were willing 
to compromise, there would be space for an agreement.  For 
his part, DCM made clear that neither the USG nor the 
Embassy would lobby Abbott - or any of the other firms 
threatened with compulsory licensing.  Goldbaum then 
observed that the GOB's demands included not only price 
concessions but technology transfer as well.  The patent for 
Kaletra expires in 2013 (the date, per Abbott, is 2017), but 
the GOB wants to be in a position to manufacture that drug 
domestically well before then, he said.  Goldbaum opined 
that the reason the CDC and NIH research/assistance programs 
were so favorably viewed within the GOB was because they 
offered technology transfer. 
 
¶6. (SBU) In response to a query from Embassy reps as to 
whether we could share the substance of the discussion (as 
appropriate) with the affected U.S. firms, Da Silva replied 
in the affirmative.  Indeed, the GOB wanted any arrangement 
agreed to be fully transparent, he said.  One of the 
problems with the July 7 accord, he declared, was that 
Abbott had wanted it to be secret - which was something that 
the GOB could not accept. 
 
¶7. (SBU) Comment:  After several months of rhetoric from the 
MOH, the measured comments of our interlocutors were quite 
welcome.  The personal involvement of FinMin Palocci in the 
debate is a good sign, though very likely he would not have 
joined the dialogue had Secretary Snow not intervened. 
Similarly, the involvement of ForMin Amorim and INPI 
President Jaguaribe (see septel) is on balance positive. 
While the world-view of both is that developing countries 
should not have to provide the IPR protections that 
developed countries do, they also will be able to inject 
into the debate concerns over the effect of compulsory 
licensing upon foreign direct investment and trade 
relations. 
 
¶8. (SBU) Nevertheless, the worrisome element - which 
Goldbaum's comments brought into stark relief - is the 
demand for technology transfer.  Assuming that the pricing 
issue was resolved, the GOB would still want early access to 
Abbott's formula (and possibly manufacturing processes) for 
Kaletra.  In an industry where intellectual property is key 
to survival, surrender of technology could be a pill that 
neither Abbott, nor Merck and Gilead, can accept. 
 
DANILOVICH