US embassy cable - 03TEGUCIGALPA2861

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 002861 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/TPP (SDONNELLY), EB/TPP/MTA/IPC, AND OES 
STATE FOR WHA/CEN AND WHA/EPSC 
STATE PASS USTR 
COMMERCE ALSO FOR USPTO 
STATE PASS AID FOR LAC/CEN 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, SOCI, TBIO, PGOV, HO, WTRO 
SUBJECT: AIDS DRUGS AND THE WTO: THE EXPERIENCE OF HONDURAS 
 
 
1. (SBU) Summary and Action Request: The GOH has been seeking 
to be the first country to use the August 30 WTO decision on 
Access to Medicines in order to stretch its limited HIV/AIDS 
treatment funds.  Discussions with USG officials have 
revealed that the GOH would not need to use this decision for 
a planned upcoming medicines purchase, as it can make use of 
existing provisions in the WTO TRIPS Agreement.  The unhappy 
GOH reaction to this discovery, however, has revealed a 
fundamental misunderstanding on the GOH's part as to the 
purpose of the August 30 decision.  This misunderstanding may 
well exist in other developing countries facing AIDS crises. 
Embassy believes it would be useful to have a coordinated 
outreach effort to explain the August 30 decision, existing 
TRIPS flexibility and USG policy in this area for use with 
foreign governments.  Otherwise, (at least in Honduras and 
similar countries), the USG runs the risk of being blamed for 
positions the U.S. never advocated, and of losing good will 
which the U.S. may have hoped to win by our support of the 
August 30 decision and its eventual inclusion in the TRIPS 
agreement.  End Summary and Action Request. 
 
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GOH: How Do We Use the August 30 Decision? 
-------------------------------------------- 
 
2. (SBU) EconOffs were called to the Ministry of Industry and 
Trade on October 17th for a meeting with Minister Norman 
Garcia and Vice Minister for External Trade Irving Guerrero. 
The Honduran officials explained that Honduras is preparing 
to purchase generic copies of three AIDS drugs from Indian 
manufacturers, and they want to make the purchase under the 
terms of the August 30, 2003, decision of the WTO.  (This 
decision, regarding paragraph 6 of the Doha Declaration on 
the TRIPS agreement and public health, as Post understands, 
was intended to allow poor countries suffering from national 
health emergencies to import cheaper generics made under 
compulsory licensing if they are unable to manufacture the 
medicines themselves.) 
 
3. (SBU) The drugs to be purchased are AZT, 3TC and Combivir, 
all patented by GlaxoSmithKline, a British firm.  The 
producers are two Indian companies named Cipla and Rambaxy. 
The purchase would be made with the GOH's own money, and 
arranged through the IDA (International Dispensary 
Association), a broker based in the Netherlands.  This would 
be the second Honduran government purchase of AIDS medicines 
this year; in August, the Ministry of Health purchased the 
same drugs through the IDA using money from the Global Fund. 
According to Vice Minister Guerrero, the price being offered 
by the Indian manufacturers is 30 to 40 percent lower than 
the best price offered by GlaxoSmithKline.  The GOH's current 
stocks of these drugs are expected to run out between 
February and April 2004. 
 
4. (SBU) The GOH's initial concern was that the official 
mechanism for notifying the WTO of a purchase under the 
August 30 decision was not yet in place.  Vice Minister 
Guerrero had obtained a form from the IDA that purports to be 
a "waiver" form, to be used for WTO notification in such 
cases.  However, Guerrero acknowledged that this form was not 
officially approved by the WTO.  Fearing negative 
repercussions if the GOH somehow failed to follow the correct 
procedures for making the purchase and notifying the WTO, 
Guerrero asked for EconOffs' assistance in clarifying the 
proper procedures. 
 
5. (SBU) Honduras is the HIV/AIDS epicenter in Central 
America, accounting for approximately 60 percent of the HIV 
infections in the region.  It is estimated that Honduras has 
between 66,000 and 100,000 infected persons, and that between 
5,000 and 7,000 Hondurans become infected with HIV annually. 
The disease disproportionately affects the Afro-Caribbean 
minority on the North Coast of Honduras.  As of February 
2003, only 300 people were under ARV (antiretroviral) 
treatment, but this increased to 1,100 people as of 
September, thanks to the Global Fund-supported purchase of 
ARVs.  The medicines are distributed through five treatment 
sites (government hospitals, not NGOs): two in Tegucigalpa, 
one each in San Pedro Sula, Choluteca, and La Ceiba.  There 
is much to be done, however, to meet Millennium Challenge and 
Special Summit of the Americas goals on AIDS treatment. 
 
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Consultations Indicate that the Agreement Isn,t Relevant 
--------------------------------------------- ----------- 
 
6. (SBU) In a series of e-mails and telephone calls between 
the Embassy, State/EB, USTR and the GOH, it became clear that 
the GOH did not need to use the August 30 decision in this 
specific case.  After receiving confirmation that the drugs 
would be shipped directly from India to Honduras, it was 
explained that the proposed purchase would not be covered by 
the August 30 decision, since the exporting country (India) 
does not have patent protection for the drugs in question. 
 
7. (SBU) For the proposed purchase, the GOH would be able to 
issue a compulsory license as outlined in Article 31 of the 
TRIPS Agreement, and pay the remuneration to the patent owner 
itself (if there are valid GSK patents in Honduras).  The 
amount of the "adequate remuneration" paid to the patent 
holder, GlaxoSmithKline, would be determined by the GOH. 
 
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The GOH Reaction: Frustration, Even Some Suspicion 
--------------------------------------------- ----- 
 
8. (SBU) The initial reaction of GOH officials to the 
discussion with USG officials -- "So the August 30 decision 
doesn't work, it does nothing for countries like us," and 
"Why is the WTO issuing decisions that are meaningless?" -- 
revealed a fundamental misunderstanding of the purpose of the 
August 30 decision or the working of the TRIPS Agreement. 
The officials seemed disappointed they would have to pay 
remuneration under TRIPS Article 31, apparently unaware that 
such remuneration is also required under the provisions of 
the August 30 decision.  At the time, GOH officials even 
suggested that the narrow coverage of the August 30 decision 
was intentional and the agreement, advertised as a 
breakthrough for poor countries suffering from the HIV/AIDS 
epidemic, was never meant to work.  The tenor of their 
remarks also indicates a certain amount of blame being 
apportioned to the U.S. 
 
9. (SBU) Subsequently, GOH trade officials have come to 
understand that remuneration to the patent holder must be 
paid under either Article 31 or the August 30 decision, and 
they do now recognize that buying generic AIDS medications 
according to Article 31 and paying remuneration to the patent 
holder still would result in substantial savings compared to 
the full price.  While the GOH has not yet determined its 
next steps, it apparently has not made any effort to 
negotiate a lower price directly with the patent holder. 
 
10. (SBU) Comment: EconOffs have discussed this issue at 
length with the GOH, emphasizing the USG's sincere intent to 
assure cost-effective availability of AIDS medicines, and, we 
believe, we have cleared up some misunderstandings.  However, 
we believe that detailed guidance from Washington agencies on 
USG policy regarding TRIPS Article 31 and the August 30 
decision would be very helpful to our efforts here to 
encourage GOH respect for intellectual property rights and at 
the same time address the GOH's goal of increasing HIV/AIDS 
treatment.  We expect that such guidance would also be useful 
in many other posts around the world.  End comment. 
Pierce