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 
 
BRASILIA 00001338  002 OF 004 
 
 
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 
 
BRASILIA 00001338  003 OF 004 
 
 
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