VZCZCXRO4585
PP RUEHRG
DE RUEHBR #1017/01 2291815
ZNR UUUUU ZZH
P 171815Z AUG 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 4858
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHSO/AMCONSUL SAO PAULO 4419
RUEHRI/AMCONSUL RIO DE JANEIRO 8088
RUEHRG/AMCONSUL RECIFE 9828
RUEHNE/AMEMBASSY NEW DELHI 0610
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 001017 
 
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: PATENT DENIED, GOB PAVES WAY FOR GENERIC 
PRODUCTION OF IMPORTANT HIV DRUG 
 
¶1. (SBU) SUMMARY:  In July, the Brazilian National Institute of 
Industrial Property (INPI) rejected a patent application by 
California-based Gilead Sciences for its HIV drug Viread (scientific 
name: tenofovir).  During a trip to Brazil to discuss the case with 
GOB officials, senior Gilead representatives briefed Econ and 
Commercial officers on August 6 in Brasilia.  The patent rejection 
(which INPI told Gilead was "purely technical" but accompanied by 
"lots of pressure" from the Ministry of Health) could be the final 
step in allowing generic production of tenofovir, since the Ministry 
of Health (MOH) has already declared tenofovir to be a drug of 
public interest (April 2008) and established an inter-ministerial 
group to oversee the development of domestic production capacity 
(May 2009).  More broadly, the decision carries troubling 
indications for the protection of innovative pharmaceutical products 
in Brazil.  END SUMMARY. 
 
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GILEAD TO GOB: DISAGREE, BUT COMITTED TO PATIENT CARE 
--------------------------------------------- -------- 
 
¶2. (SBU) Gilead intends to file a judicial appeal of the patent 
rejection in the next 45 to 55 days and will seek an injunction 
against any applications for generic license. Gilead representatives 
described their message to the GOB as one of clear disappointment 
but also continuing commitment to a productive relationship.  They 
characterized meetings with MOH and the National Health Vigilance 
Agency (ANVISA) as "encouraging" (specifically, the fact that the 
director of Brazil's AIDS program requested a meeting to discuss 
supplies of Viread for next year) and showing "good intent." 
 
¶3. (SBU) In Rio de Janeiro, the Gilead team met with the Vice 
President of INPI and a group of patent examiners.  During the 
meeting, which they described as awkward and tense, they said INPI 
admitted to being under "lots of pressure" from MOH on the Viread 
decision.  However, according to Gilead, the INPI officials also 
tried to emphasize that the decision had been "purely technical" and 
was "consistent with how [INPI] view[s] pharmaceutical patents." 
(Comment: Post would not have expected MOH to apply pressure 
directly to INPI, since MOH's own ANVISA would have reviewed the 
application after INPI, had INPI approved it, and could have 
independently rejected it (pharmaceutical patent applications must 
be approved by INPI and then ANVISA before a patent can be issued). 
This may suggest that MOH fears differing determinations on 
patentability by INPI and ANVISA could weaken the GOB position in a 
judicial appeal.  End comment.) 
 
--------------------------------------------- -- 
"INCREMENTAL INNOVATION" AND SECOND-USE PATENTS 
--------------------------------------------- -- 
 
¶4. (SBU) INPI's rejection of the Viread patent claims that the drug 
fails to meet the requirement for inventiveness.  Gilead counters 
that many pharmaceutical breakthroughs are based on "incremental 
innovation" and that the invention of Viread did involve the 
"inventive step" necessary to qualify for patent protection.  Gilead 
told Emboffs that if INPI is implying opposition to approving 
patents on incrementally innovative pharmaceuticals, Gilead products 
and those of other pharmaceutical companies are likely to encounter 
difficulty in the near future. 
 
¶5. (SBU) The issue of patents for incremental innovation in 
pharmaceuticals has been the subject of ongoing debate within the 
GOB.  In April 2008, INPI issued preliminary internal guidelines 
allowing such patents. This decision was criticized by MOH because 
such patents could prevent the production of generics containing 
active substances already in the public domain.  The Ministry of 
Foreign Affairs (MRE) was also critical of INPI's guidelines and 
noted in press reports that the World Trade Organization's Agreement 
on Trade Related Aspects of Intellectual Property (TRIPS) does not 
require patent protection for polymorphs or second-use 
pharmaceutical products. 
 
¶6. (U) In December 2009, the Interministerial Group for Intellectual 
Property (GIPI)- of which INPI is not a voting member - made an 
administrative ruling against granting polymorph and second-use 
patents.  Two bills currently before the Brazilian Chamber of 
Deputies (PL 2511/07 and PL 3995/08) would amend Brazil's 
intellectual property law to forbid patents for incremental 
innovations.  Both bills remain in Chamber committee and have not 
reached the floor. 
 
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BRASILIA 00001017  002 OF 002 
 
 
GILEAD TO USG: SPEAK SOFTLY AND CARRY NO STICK 
--------------------------------------------- - 
 
¶7. (SBU) In a meeting with Emboffs, Gilead acknowledged that all 
signs point to generic production of tenofovir.  While the company 
intends to file a judicial appeal, it also wants to continue what it 
calls a positive relationship with MOH and find a "constructive path 
forward." Gilead intends to seek new patents in Brazil and says it 
will not "hold patients hostage" as a result of the Viread patent 
rejection. 
 
¶8.  (SBU) Gilead representatives requested that the USG register 
disappointment with the GOB regarding the Viread patent rejection 
and highlight Brazil's position as an "outlier" in this case - every 
other country where an application was filed has approved the Viread 
patent.  (Note: Gilead said that in meetings with the Brazilian 
Ministry of Commerce (MDIC) and a patient rights group, 
interlocutors erroneously believed the U.S. Patent and Trademark 
Office (USPTO) rejected Viread's patent application in the United 
States.  Although USPTO temporarily suspended the patent (as is 
standard practice) when a challenge was filed in 2008, the patent 
was later upheld.  End note.)  Gilead reps suggested that the 
arrival of a new Ambassador might afford new opportunities to 
discuss the case with high-level GOB interlocutors.  They repeated, 
however, that they intend to keep their response positive and 
non-threatening and that USG engagement should simply convey that 
the case "has not gone unnoticed." 
 
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COMMENT 
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¶9. (SBU) The Viread decision (and the signs of political pressure 
applied by MOH) raises new questions about the protection of 
intellectual property in the pharmaceutical sector in Brazil, where 
the Health Ministry's apparent "industrial policy" approach to the 
health care sector has not been countered by other, more 
pro-IP/pro-innovation voices within GOB.  Based on decisions from 
patent authorities around the world, Viread's scientific case seems 
strong.  INPI's admission of MOH pressure calls into question the 
"purely technical" nature of this decision and, more broadly, the 
strength and independence of Brazil's patent regime. 
 
¶10. (SBU) Compulsory licensing has been a topic of much discussion 
since Brazil's 2007 decision to issue a compulsory license for 
Merck's HIV drug Stocrin (scientific name: efavirenz) and will 
continue to be so.  However, Brazil's current stance against patents 
for incremental innovation in pharmaceuticals could have equally 
damaging results.  Political pressure to reject patent applications 
for legitimately innovative drugs could be a new front in Brazil's 
push to cut health costs and bolster its generic drug industry, but 
will ultimately damage innovation and competitiveness.  The USG has 
opportunities to engage on these issues with MRE (through the 
Economic Partnership Dialogue, the Bilateral Consultative Mechanism, 
and the Joint Consultative Mechanism[JCM]), MDIC (through the 
Commercial Dialogue), the Ministry of Science and Technology (which 
will lead the delegation to the next JCM), and through direct 
dialogue with the Brazilian Congress.  Continuing to press 
innovation/competitiveness themes and raise their profile within the 
spectrum of stake-holder agencies will remain an important part of 
the strategy to affect progress on intellectual property protection 
in Brazil.  END COMMENT. 
 
KUBISKE