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DE RUEHML #1370/01 1200802
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O 300802Z APR 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6302
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEAWJB/USDOJ WASHDC IMMEDIATE
RUEHZS/ASEAN COLLECTIVE IMMEDIATE
RUEHBK/AMEMBASSY BANGKOK IMMEDIATE 2005

UNCLAS SECTION 01 OF 03 MANILA 001370 
 
SIPDIS 
 
STATE FOR EAP/MTS 
STATE PASS TO USTR FOR BWEISEL AND DKATZ 
USDOC FOR 4430/ITA/MAC/SBERLINGUETTE 
USDOC PASS USPTO FOR PFOWLER 
BANGKOK FOR CHRIS SONDERBY AND JENNIFER NESS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON RP
SUBJECT:  What's Next For the Roxas Bill? 
 
REF:  06 Manila 837 
 
Summary 
------- 
 
¶1. (SBU) With Congress now in recess, the Roxas pharmaceutical bill 
will not pass before the May elections, and may not pass at all. 
Despite initial worries that the bill would contravene TRIPS in 
several respects, Post's engagement with Roxas and other legislators 
helped to secure several amendments to bring most aspects of the 
bill into conformity with international agreements.  Given the 
political appeal of less expensive prescription drugs, Roxas may 
make a last ditch effort to get his legislation passed in the short 
lame duck session in June and, if that fails, will likely 
reintroduce his bill in the next Congress.  Post will continue to 
engage Congress on the pharmaceutical bill, and is generally 
encouraged by the inclination of many legislators to consider the 
quality of IPR protection before voting for the bill.  End summary. 
 
The Populist Desire for Cheaper Prescriptions 
-------------------- 
 
¶2. (U) Senator Manuel "Mar" Roxas introduced the "Cheaper Medicines 
Act," more commonly called the "Roxas Bill," in November 2005.  The 
bill was a political response to the high cost of pharmaceuticals in 
the Philippines relative to the rest of Asia.  The bill sought to 
lower the cost of drugs and increase competition among 
pharmaceutical manufacturers primarily by: 
 
--making it easier for the producers of generic drugs to access the 
proprietary data of patent holders; 
--prohibiting the granting of patents for new uses of existing 
drugs; 
--permitting parallel imports of patented pharmaceuticals; 
--applying the principle of international patent exhaustion to 
shorten the terms of certain Philippine-issued patents. 
 
In its initial form, the Roxas Bill appeared to violate several 
provisions of TRIPS, most seriously in its data exclusivity 
provisions and its prohibition on new use patents. 
 
Prejudice and Presidential Aspirations 
--------------------- 
 
¶3. (SBU) Roxas, upon his election to the Senate in 2004, was 
inclined to legislate on pharmaceuticals as a result of his prior 
encounters with the drug industry as Secretary of Trade and 
Industry.  In that position, Roxas had advocated the parallel 
importation of pharmaceutical products from India for sale in 
government-run neighborhood pharmacies.  This in turn led a 
multinational drug manufacturer to sue the GRP successfully for 
patent infringement.  This left Roxas with an axe to grind against 
drug companies, and a prejudice against what he considered to be 
overly generous GRP patent protection for prescription drugs. 
 
¶4.  (SBU) Roxas clearly also sees the pharmaceutical price issue as 
a political winner in the lead-up to 2010 presidential elections, in 
which he plans to run.  In 2004 Senate elections Roxas received the 
highest number of votes ever in a Philippines-wide campaign.  Roxas 
clearly believes the popularity of lower drug prices can benefit him 
politically.  Other politicians agree, and not one of them has been 
willing to take a public position against the bill. 
 
Post's Response 
--------------- 
 
¶5. (SBU) Given the contradictions between the first drafts of the 
Roxas Bill and TRIPS, and the potential damage that this could do to 
American pharmaceutical companies, Post actively engaged Roxas and 
other legislators, coordinating closely with the Department and the 
Office of the United States Trade Representative.  Officers from the 
Economic Section have met with Roxas on several occasions over the 
past two years, as have USTR officials.  Post also met repeatedly 
with Representative Junie Cua, chair of the Trade and Industry 
Committee in the House and sponsor of the counterpart bill on the 
House side and with various other legislators.  All were receptive 
to USG views of the bill, and maintained their willingness to amend 
the bill to eliminate most conflicts with TRIPS.  However, Roxas and 
Cua held their ground on new use patents, rejecting the argument 
that TRIPS mandates their issuance and arguing that few other 
countries permit them. 
 
 
MANILA 00001370  002 OF 003 
 
 
The Pharmaceutical Lobby 
-------------------- 
 
¶5. (SBU) The pharmaceutical lobby, led by the Pharmaceutical and 
Healthcare Association of the Philippines (PHAP), has made its own 
efforts on the Roxas Bill, though PHAP focused more on defeating the 
bill than on obtaining amendments.  PHAP concentrated on a public 
relations campaign that warned that parallel importation would 
introduce counterfeit drugs into the country.  Few of its 
last-minute proposals for far-reaching amendments were considered 
seriously in Congress. 
 
Senate Passage, Controversy in the House 
-------------------- 
 
¶6. (U) As the May 2007 elections neared and the 13th Congress moved 
to wrap up its business, the Senate and House versions of the Roxas 
Bill moved toward final votes.  The Senate bill (SB 2263), fresh 
from amendments made during interpellation that generally reinforced 
the primacy of TRIPS, passed unanimously on January 31, illustrating 
that given the strong public appeal of the issue, the bill would 
likely pass final votes regardless of its content.  In the House, 
Cua's bill came up for debate on second reading during a two-day 
special session on February 19-20. 
 
¶7. (SBU) During this debate, an incident arose in the House 
involving lobbyists from PHAP.  With the election campaign underway, 
many legislators were not present in the House.  A note from PHAP 
representatives urging a Congressman to request a quorum call 
circulated among several legislators, who accused PHAP of violating 
House rules.  A shouting match ensued on the House floor as these 
members tried to force the lobbyists to leave.  Once order was 
restored, several amendments from the floor toughened the bill by 
requiring all pharmacies to sell parallel imports alongside versions 
produced for the Philippine market and creating a price control 
board for pharmaceuticals.  Roxas' staff told us that the senator 
had no prior warning of these amendments, and that he does not 
support price control mechanisms.  The amended bill passed the House 
on second reading, and still requires approval on third reading 
before it can go to a conference committee. 
 
Could It Still Pass In This Session? 
------------------- 
 
¶8. (SBU) Congress is now in recess until after the May 14 elections, 
at which point it is likely to meet for only three days.  However, 
there is a chance that the bill could pass during the lame-duck 
session the week of June 4.  Joaquin Lagonera, head of the 
Presidential Legislative Liaison Office, told EconOff that President 
Arroyo considers the medicines bill a priority and has instructed 
him to work to secure its passage in this Congress.  Lagonera said 
that several House members have indicated that they are considering 
abandoning their own version of the bill and passing the milder 
Senate version on third reading.  Doing so would obviate the need 
for a conference committee and place the bill on the President's 
desk for signature.  Post will follow up with Lagonera as part of 
our efforts to gauge intentions. 
 
Or Will It Wait For The Next Congress 
-------------------- 
 
¶9. (SBU) If it does not pass in this Congress, Roxas is likely to 
reintroduce his bill in the 14th Congress that will sit in July 
2007, though Blas Viterbo, Roxas' legislative director, told EconOff 
that Roxas, who is in the middle of a six-year term, has not yet 
made a final decision.  If he plans to focus his presidential 
campaign on drug prices, it would be a logical step to reintroduce 
the bill in order to keep the issue in the public's mind. 
 
¶10. (SBU) The President of PHAP told us that he is certain that the 
bill will be reintroduced, and that he still fears the addition of 
radical provisions similar to those in the House from this session. 
For its own part, PHAP plans a campaign to make the Roxas Bill moot 
by advocating a national health service on the British model that 
covers prescription drugs.  In so doing, PHAP believes it can move 
the discussion away from price controls and expand the market for 
its products to lower-income groups via a government plan.  Such a 
plan would, however, be problematic, and it is doubtful that the 
proposal will thrive in Congress.  The plan does not propose a way 
to finance a universal health service, and nothing prevents Roxas 
from grafting his patent bill onto a national health care plan.  In 
fact, it may be a logical step. 
 
MANILA 00001370  003 OF 003 
 
 
 
Comment 
------- 
 
¶11. (SBU) For a time, it appeared that the Roxas Bill meant a step 
backwards in IPR protection in the Philippines.  However, as the 
course of debate on the bill progressed, Roxas and other legislators 
showed sensitivity to TRIPS, and a willingness to amend the bill to 
keep it close to being TRIPS-consistent.  Similarly, despite the 
populist appeal of a bill that purports to reduce the cost of 
medicines, Congress has resisted the urge to enact it without debate 
and reflection.  While legislators are concerned about the price of 
prescription drugs, and are aware of the electoral potency of the 
issue, there is equal concern about the credibility of IPR 
protection.  We expect the issue to remain alive in the next 
Congress, and Post will continue to engage its contacts on IPR 
protection. 
 
Kenney