US embassy cable - 05MANILA5447

UNCLAS SECTION 01 OF 02 MANILA 005447 
 
SIPDIS 
 
Sensitive 
 
STATE FOR EAP/MTS 
STATE PASS TO USTR FOR BWEISEL AND DKATZ 
STATE PASS TO USAID FOR CDOWNEY 
USDOC FOR 4430/ITA/MAC/DBISBEE 
USDOC PASS TO USPTO FOR PFOWLER, KHAUDA 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, KIPR, BEXP, RP 
SUBJECT:  PHARMACEUTICAL PATENT PROTECTION ON THE CHOPPING 
BLOCK 
 
Sensitive but Unclassified - Not for Internet - Protect 
Accordingly. 
 
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SUMMARY 
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1.  (SBU)  Senator Manuel Roxas, Chairman of the Senate 
Committee on Economic Affairs and the Committee on Trade and 
Commerce, introduced a bill last month proposing amendments 
to the RP's Intellectual Property Code (IP) that could 
significantly weaken intellectual property rights protection 
for pharmaceutical products.  The bill would further 
liberalize the compulsory licensing provision, allow the 
"early use" of patented drugs by potential generic 
manufacturers, and expand parallel importation.  Committee 
hearings on SB2139 are scheduled to start this week. 
Embassy has written to Roxas expressing our concern and are 
trying to meet with him at the earliest opportunity.  End 
Summary. 
 
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SENATE BILL WEAKENS DRUG PATENT PROTECTIONS 
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2.  (U)  Senator Manuel ("Mar") Roxas, Chairman of the 
Senate Committee on Economic Affairs and the Committee on 
Trade and Commerce, introduced a bill last month (SB2139) to 
amend the Intellectual Property Code (IP) of the 
Philippines.  Based on conversations with GRP officials and 
industry representatives, Embassy understands that the bill 
proposes three major changes that could significantly weaken 
intellectual property rights protection for pharmaceutical 
products.   First, it would liberalize compulsory licensing 
by immediately allowing exceptions when drugs or medicines 
are to "protect public health."  Current compulsory 
licensing provisions involve a lengthy bureaucratic process. 
Since the law's inception in 1998, only four cases have been 
filed. 
 
3.  (U)  Second, the bill includes an "early use" provision 
that would allow the experimentation, production and 
registration of a patented drug and its data before the 
expiration of the patent.  This would permit manufacturers 
to make and sell the drug as a generic immediately after 
patent expiration.  Current law provides patent protection 
for a product from the date of patent approval in the 
Philippines, provided that the patent application is filed 
within one year of the product's introduction to the world 
market.  The Roxas proposal would nullify any advantage to 
filing a local patent in the Philippines and reduce the 
overall period of patent protection. 
 
4.  (U)  Third, the Roxas bill would allow parallel 
importation of drugs and medicine by the government, again 
under the umbrella of "public health," upon application to 
the Intellectual Property Office (IPO), regardless of 
whether the imported product is protected by a local patent. 
Currently, parallel imports are not allowed for products 
under patent protection in the Philippines.  The Roxas 
proposal, therefore, expands parallel imports by eliminating 
local patent protection on imported medicines.  In addition, 
the bill prohibits the ability of a rights holder to apply 
for an additional patent for a "new use" discovered for a 
drug with an existing patent. 
 
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DIVERGENT VIEWS ON PATENT PROTECTION NEEDS 
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5.  (SBU)  In mid-October, the GRP co-sponsored a forum on 
public health with the Philippine Chamber of the 
Pharmaceutical Industry (PCPI), a local industry advocacy 
group composed of Philippine generic manufacturers, to 
"examine flexibilities" in the Trade-Related Aspects of 
Intellectual Property Rights Agreement (TRIPS) with respect 
to patents, including compulsory licensing, early use 
provisions, and allowances for parallel importation. 
Although Embassy was not invited to the event, the 
Pharmaceutical and Healthcare Association of the Philippines 
(PHAP), an industry association with members holding U.S. 
patent rights, said the forum was attended by pharmaceutical 
industry representatives, officials from the Department of 
Trade and Industry, Department of Health and the Bureau of 
Food and Drugs, the Chair of the House Committee on Trade 
and Industry, and the Vice-Chair of the House Committee on 
Health. 
6.  (SBU) Ireneo Galicia, Deputy Director General at the 
Intellectual Property Office, told Econoff that the Roxas 
bill was "mentioned" at the forum and a "brief description 
of the salient points of the bill" was provided.  According 
to Galicia, Senator Roxas sees patents as the main cause 
behind high medicine costs.  However, one of the forum 
briefing papers, submitted by IPO itself, expressed "a 
growing concern that the TRIPS standards for intellectual 
property rights may have negative implications with regard 
to affordability and access to medicines, especially in the 
Philippines."  Galicia commented that Roxas does not 
necessarily take into account other factors such as 
production prices.  Galicia noted that the IPO tried to 
"disabuse" attendees of the notion that patents are the only 
problem.  He said the forum helped Roxas understand there 
are other ways to reduce medicine prices.  Galicia still 
expects committee hearings to move forward on the Roxas 
bill, however. 
 
7.  (SBU) Representatives from Pfizer and from PHAP had a 
completely different assessment of the forum, expressing 
dissatisfaction with the way it was organized and a general 
feeling that the cards were stacked against patent holding 
pharmaceutical companies.  PHAP indicated that industry 
representatives, aside from those of the local PCPI, were 
given very little time to speak and felt that their views 
were not heard.  Pfizer expressed similar concerns, noting 
that it seemed like the forum was organized so as to garner 
support for the Roxas bill rather than to provide a balanced 
discussion of alternative ways to reduce medicine costs. 
 
8.  (SBU)  Overall, Galicia said the forum highlighted the 
need for the IPO to revisit pertinent rules and regulations, 
as well as business processes, in order to improve overall 
efficiency and effectiveness.  Specifically, IPO needs to 
reexamine whether "issued patents are of good quality" 
(meaning that IPO is issuing patents appropriately) and 
whether rules are being applied uniformly.  In the 
meanwhile, SB2139 will move forward to committee hearings 
this week.  Rumor has it that Representative Ferjenel Biron, 
Vice-Chair of the House Committee on Health, intends to file 
a counter-bill in the House that closely models the Senate 
version. 
 
9.  (U)  Embassy has written to Senator Roxas expressing USG 
concern with the legislation and Econ Counselor has 
requested a meeting with him to underscore these concerns. 
 
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COMMENT 
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10.  (SBU)  The Roxas bill is especially troubling to U.S. 
pharmaceutical rights holders who are trying to retain their 
market share and profitability in the Philippines.  While 
the bill taps into more flexible provisions in TRIPS, it may 
not offer enough protection for drug makers.  Passage of the 
bill would not reflect well on the Philippines' efforts to 
improve IPR and be removed from USTR's Special 301 Priority 
Watch List, following its out-of-cycle review this January. 
U.S. pharmaceutical patent holders, represented by PHAP, may 
defuse concerns about the high drug costs and the potential 
for an avian flu pandemic by focusing on alternate ways to 
reduce the cost of medicine, and support information 
exchange and planning to address any potential pandemic. 
 
JONES