VZCZCXYZ0000
RR RUEHWEB

DE RUEHQT #0998/01 2862018
ZNR UUUUU ZZH
R 132016Z OCT 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0184
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA 0040
RUEHCV/AMEMBASSY CARACAS 0060
RUEHGL/AMCONSUL GUAYAQUIL
RUEHPE/AMEMBASSY LIMA 0066

UNCLAS QUITO 000998 
 
SENSITIVE 
SIPDIS 
DEPT PLEASE PASS TO USTR FOR BENNETT HARMAN 
DEPT FOR WHA/AND AND EB/TPP/IPE 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR EIND EC
SUBJECT: CORREA PROMOTES LOCAL PHARMACEUTICAL PRODUCTION 
 
¶1.  SENSITIVE BUT UNCLASSIFIED 
 
¶2.  (SBU)  Summary.  The head of Ecuador's Intellectual Property 
Institute (IEPI) denies the GoE intends to annul all pharmaceutical 
patents, as public statements by President Correa on September 26 
suggested.  However, the government is undertaking a review of 
pharmaceutical patents to consider issuance of compulsory licenses. 
According to IEPI, the GoE plans to follow the legal process 
established in the WTO Trade Related Intellectual Property Rights 
Agreement (TRIPS) and Ecuador's national Intellectual Property Law. 
U.S. NGO Essential Action is providing legal advice to the GoE 
regarding compulsory licensing.  Separately, the GoE is instituting 
a two-tier system for government tenders for medicines, relegating 
foreign suppliers to the second tier.  End Summary. 
 
 
 
¶3.  (SBU)  On October 1 and 8, Embassy staff met with local 
representatives of U.S. pharmaceutical companies Pfizer, Merck 
Sharp and Dohme, Schering-Plough, and Wyeth to discuss statements 
made by President Correa during his weekly address on September 26. 
During his address, Correa announced plans to establish a public 
tender system for medicines that prioritizes local production, and 
to eliminate pharmaceutical patents. 
 
 
 
¶4.  (U)  Under the new public tender process, only national 
pharmaceutical suppliers will be able to participate in an initial 
bidding round.  Should the government be unable to fulfill all of 
its requirements through the initial bid, a second round will be 
held in which foreign suppliers will be able to participate.  This 
new system will be a significant blow to U.S. pharmaceutical 
companies, for whom sales to the public sector account for a 
significant portion of domestic sector sales, in some cases 
counting for close to 20 percent of local sales.  In announcing the 
change, President Correa said he was responding to requests for 
support from local industry, which he said currently supplies only 
22 % in volume and 13% in value of medicines sold in the domestic 
market.  Note, Ecuador is not a signatory to the WTO Agreement on 
Government Procurement. 
 
 
 
¶5.  (SBU)  Also troubling was President Correa's statement that he 
planned to eliminate all "obligatory patents" within a week. 
Correa said Ecuadorian law and international treaties allow Ecuador 
to repeal patents for human health concerns, adding that all 
medicines that can be produced and copied in Ecuador should be 
domestically produced.  These statements were consistent with a 
vision Correa espoused in July:  "Intellectual property is a 
mechanism for development for the people.  This is our vision of 
intellectual property.  It is not a mechanism to enrich the 
pharmaceutical or agrochemical companies." 
 
 
 
¶6.   (SBU)  In an October 7 meeting, the president of Ecuador's 
Intellectual Property Rights Institute, Andres Ycaza, sought to 
reassure SCO and ECONOFF that the GoE was not planning to annul all 
pharmaceutical patents.  Ycaza said he had been surprised by 
Correa's statements as well, having received notice of them while 
attending a World Intellectual Property Organization meeting in 
Geneva.  However, Ycaza said the GoE was conducting a review of all 
pharmaceutical patents and does plan to issue compulsory licenses 
to address problems of access to medicine, specifically referring 
to cancer and HIV/AIDS treatments.  In response to points raised by 
SCO and Econoff that compulsory licensing typically is used for 
emergency situations, permitted for only a specific time period and 
pursued only after negotiations with patent holders, Ycaza 
emphasized the GoE's intent to conduct the process in a manner 
consistent with Ecuador's legal obligations under the WTO TRIPS 
Agreement and Ecuador's Intellectual Property Law.  He also 
mentioned that Ecuador would be justified in issuing compulsory 
licenses due to reasons of "public interest."  Ycaza noted the need 
to provide access to medicines that are prohibitively expensive, 
mentioning a cancer drug that costs $6,000 per injection as an 
example. 
 
¶7.  (SBU)  While departing IEPI's offices, Embassy staff met Peter 
Maybarduk, a representative of U.S. NGO Essential Action, who is 
providing legal counsel to IEPI on compulsory licensing as part of 
the NGO's Access to Medicines program.  For its part, U.S. industry 
is trying, through well placed contacts, to get a better idea of 
President Correa's core objectives.  Once it is clearer whether the 
President's interests principally relate to access to medicine or 
promotion of domestic industry, the companies intend to try to 
develop a positive agenda they can present to the President as a 
way of opening the door to a more collaborative relationship. 
Embassy plans to consult with the Missions of other international 
pharmaceutical companies (French, British, Swiss, German, Swedish) 
and to continue seeking better definition of GoE intentions through 
meetings at the Coordination Ministry for Production and the 
Ministry of Health.  At this point, Embassy interaction with the 
GoE on the issue remains one of seeking information. 
 
 
 
¶8.  (SBU)  Comment.  Ycaza's focus on IPR is relatively narrow. 
Although he may believe the GoE's plans are motivated purely by an 
interest in providing better access to medicine, compulsory 
licensing coupled with the government's new discriminatory public 
tender process, President Correa's close personal relationship to 
certain local pharmaceutical producers and his rhetoric suggest 
that Correa's more fundamental agenda is promotion of the domestic 
pharmaceutical industry.  This would be consistent with the 
emphasis Correa has been placing on national production across 
industry lines (petroleum sector as an example) in the name of 
Ecuadorian sovereignty. 
HODGES