Wikileaks cables on the US opposition to Philippines legislation on affordable medicines

Posted on by James Love

From KEI staff review of Wikileaks cables (/wikileaks)

From September 19, 2005 to January 15, 2010, the US Department of State sent dozens of cables from Manila reporting on disputes in the Philippines regarding IPR and the pricing of pharmaceutical drugs. Much of the U.S. advocacy in the Philippines was done in close cooperation with Pfizer.

One disturbing feature of the cables is the constant lying about the IPR norms in the TRIPS agreement. For example, the Department of State often claims that TRIPS requires patents on new uses of old drugs or data exclusivity (it clearly does not). The US Department of State also implies in several cables that parallel trade (importing the patent owners’ own product that was placed in the market in another country), is inconsistent with TRIPS.

Another incredible element of the cables are the admissions that the Philippines government is simply trying to protect poor people — at the same time the Embassy and White House trade officials are plotting against poor people. For example, this is from a September 11, 2009 cable by Kristie Kenney, then the United States Ambassador to the Philippines (currently Ambassador to Thailand).

“Prescription medication prices in the Philippines are the second highest in Asia (next to Japan), in a country where about a third of the population subsists below the official poverty line. In this instance, some multinational companies failed to recognize that cheaper medicine for the masses is an emotional and political issue.”

Here are a few examples of the cables:

October 27, 2005

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U.S. STAKEHOLDERS WORRIED ABOUT PHARMACEUTICAL POLICY
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¶7. (U) In discussions with U.S. IPR rights holders, Katz, Fowler and econoffs heard concerns about a recent bill sponsored by Senator Roxas to amend the Intellectual Property Code of the RP, with respect to patents and parallel imports for pharmaceuticals. Roxas’ proposal would change the IP Code so that the period of patent protection begins after the product has been introduced anywhere in the world rather than just in the RP. Pharmaceutical companies believe that this will essentially cut the time frame for patent protection in half to 10 years. The Roxas bill will also permit pharmacies and other entities licensed to distribute pharmaceuticals to avail of parallel import schemes. Currently, only government facilities and programs can legally import drugs from countries that do not provide patent protection.
¶8. (SBU) The Intellectual Property Office (IPO) and Philippine pharmaceutical representatives co-sponsored a forum to discuss the Roxas bill, which by coincidence took place just after the USTR/USPTO visit. Embassies were not invited, but preliminary reports indicate that the dicussion was heavily biased toward the Roxas bill. The IPO told us that the discussion covered an “educational agenda.” (Note: Embassy will closely monitor developments on this proposed legislation as it is likely to become a key issue during the Special 301 review. Embassy is seeking a meeting with Roxas to explain our concerns with his bill. End note.)

¶15. . . .. The Roxas bill and its potential to weaken patent protection for pharmaceuticals is concerning and will be monitored in coming weeks.

November 22, 2005

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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.
——- COMMENT ——-
¶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

September 11, 2009

Prescription Drug Price Reductions Commence
¶2. (SBU) Prescription drug price reductions commenced on August 15 for big retail outlets and will be fully implemented by September 15, 2009 for small retail drug outlets that do not have computerized inventory systems. This initiative stemmed from the passage of the Universally Affordable & Cheaper Medicines Act (Republic Act 9502) by the Philippine Congress, in June 2008. Spurred by the legislation, officials of the Departments of Health (DOH) and Department of Trade & Industry (DTI) sought to negotiate voluntary 50 percent price reductions on 21 prescription drugs from members of the Pharmaceutical and Healthcare Association of the Philippines (PHAP). These drugs, according to the DoH, are medicines that treat many of the leading causes of illness and mortality in the country.
¶3. (SBU) However, the government and pharmaceutical firms reached an impasse on five prescription drugs: amlodipine (anti-hypertension), atorvastatin (anti-cholesterol), azythromycin (antibiotic), cytarabine and doxorubicin (anti-cancer). Executives from Pfizer (not a PHAP member) told emboffs that the government did not consult sufficiently during this process, and did not select drugs that would have the greatest benefit for the Philippine masses. They also claimed there was no market study or economic analysis justifying the government’s price reduction of 50 percent. Pfizer is particularly affected by the executive order because the drugs included constitute the bulk of the company’s business in the Philippines.

. . .
Comment ¶7. (SBU) Although the government conducted public consultations on the implementation of this law, industry officials have a point about the lack of thorough scientific or economic studies underlying the government’s actions to halve the price of these medicines. On the other hand, there is intense pressure for the current government to reduce medicine prices as the election season is nearing (reftel A), and calls for affordable medicines increase from civil society groups (reftel B). Prescription medication prices in the Philippines are the second highest in Asia (next to Japan), in a country where about a third of the population subsists below the official poverty line. In this instance, some multinational companies failed to recognize that cheaper medicine for the masses is an emotional and political issue. When price controls were placed on several of their most profitable products, it affected some companies’ whole business model. Investment, and therefore, job creation by research pharmaceutical companies in the Philippines, will continue to be inhibited by such government market interventions. Furthermore, Philippine civil society’s and government’s success in lowering prices might encourage further interventions.

April 7, 2007

——————-
¶2. (U) Senator Manuel “Mar” Roxas introduced the “Cheaper Medicines Act,” more commonly called the “Roxas Bill,” in November 2005. The bill was a political response to the high cost of pharmaceuticals in the Philippines relative to the rest of Asia. The bill sought to lower the cost of drugs and increase competition among pharmaceutical manufacturers primarily by:
–making it easier for the producers of generic drugs to access the proprietary data of patent holders;
–prohibiting the granting of patents for new uses of existing drugs;
–permitting parallel imports of patented pharmaceuticals;
–applying the principle of international patent exhaustion to shorten the terms of certain Philippine-issued patents.
In its initial form, the Roxas Bill appeared to violate several provisions of TRIPS, most seriously in its data exclusivity provisions and its prohibition on new use patents.

Note: In fact, the TRIPS does not require granting of new use patents, or data exclusivity.

September 11, 2009

Prescription Drug Price Reductions Commence
¶2. (SBU) Prescription drug price reductions commenced on August 15 for big retail outlets and will be fully implemented by September 15, 2009 for small retail drug outlets that do not have computerized inventory systems. This initiative stemmed from the passage of the Universally Affordable & Cheaper Medicines Act (Republic Act 9502) by the Philippine Congress, in June 2008. Spurred by the legislation, officials of the Departments of Health (DOH) and Department of Trade & Industry (DTI) sought to negotiate voluntary 50 percent price reductions on 21 prescription drugs from members of the Pharmaceutical and Healthcare Association of the Philippines (PHAP). These drugs, according to the DoH, are medicines that treat many of the leading causes of illness and mortality in the country.
¶3. (SBU) However, the government and pharmaceutical firms reached an impasse on five prescription drugs: amlodipine (anti-hypertension), atorvastatin (anti-cholesterol), azythromycin (antibiotic), cytarabine and doxorubicin (anti-cancer). Executives from Pfizer (not a PHAP member) told emboffs that the government did not consult sufficiently during this process, and did not select drugs that would have the greatest benefit for the Philippine masses. They also claimed there was no market study or economic analysis justifying the government’s price reduction of 50 percent. Pfizer is particularly affected by the executive order because the drugs included constitute the bulk of the company’s business in the Philippines.
¶7. (SBU) Although the government conducted public consultations on the implementation of this law, industry officials have a point about the lack of thorough scientific or economic studies underlying the government’s actions to halve the price of these medicines. On the other hand, there is intense pressure for the current government to reduce medicine prices as the election season is nearing (reftel A), and calls for affordable medicines increase from civil society groups (reftel B). Prescription medication prices in the Philippines are the second highest in Asia (next to Japan), in a country where about a third of the population subsists below the official poverty line. In this instance, some multinational companies failed to recognize that cheaper medicine for the masses is an emotional and political issue. When price controls were placed on several of their most profitable products, it affected some companies’ whole business model. Investment, and therefore, job creation by research pharmaceutical companies in the Philippines, will continue to be inhibited by such government market interventions. Furthermore, Philippine civil society’s and government’s success in lowering prices might encourage further interventions. [emphasis added]
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