Inside This Issue

www.thedialogue.org Tuesday, June 30, 2009

FEATURED Q&A BOARD OF ADVISORS Will Venezuela Move to Modify Pharmaceutical Patents? Diego Arria Donna Hrinak Director, Senior Director of Latin Earlier this month, Venezuela's Venezuela seems to be following two Columbus Group America Government trade minister said the govern- trends. The first one has a positive stand Affairs, PepsiCo Genaro Arriagada ment was carrying out a review toward innovation, technology diffusion Board Member, Banco Jon Huenemann of patents, including those on and access to medicines. The second trend del Estado de Chile Principal, Qpharmaceutical products, arguing patents points toward the 'nationalization' of both International elevate the prices of goods and fill the cof- foreign and local private undertakings, Joyce Chang Department, fers of multinational corporations. Leaders clearly being the case with recent expropri- Global Head of Miller & Chevalier Emerging Markets of Venezuela's pharmaceuticals industry ations. This latter process could also be Research, JPMorgan James R. Jones say revoking patents and allowing drug expanded to cover 'intangible assets.' The Chase & Co. Co-chair, makers in Venezuela to produce patented Doha Declaration on TRIPS and Public Manatt Jones W. Bowman Cutter medications could discourage foreign Health of 2001 allows countries to take Global Strategies LLC Partner, investment in Venezuela and also cause measures to protect public health and E.M. Warburg John Maisto shortages of medicine. Do you agree? Will encourage countries to use TRIPS flexibili- Pincus Director, more medicine reach the neediest people US Education Finance Continued on page 3 Rui da Costa Group if patents are revoked? How much do pro- Managing Director, tections for intellectual property rights Latin America & the Nicolás Mariscal matter in Latin America's health systems? Caribbean, Chairman, Hewlett-Packard Co. Grupo Marhnos Guest Comment: David Vivas- Alejandro Delgado Thomas F. Eugui: "The recent announce- Economist for Latin McLarty III ments by Venezuela's trade min- America, Africa, the President, Middle East & Mexico, McLarty Associates istry and Intellectual Property General Motors AOffice (SAPI) on patent law and access to Carlos Paz-Soldan medicines have captured the attention of Dirk Donath Partner, Managing Director, DTB Associates, LLP international media. These announce- Eton Park Capital ments indicate in broad terms the direction Management Beatrice Rangel that the Venezuelan government plans to Obama 'Confident' in Colombia Director, take in relation to patent law, access to FTA, But Labor Concerns Remain Jane Eddy AMLA Consulting LLC Managing Director, medicines and industrial policy. While Corporate & Govt. José Antonio Ríos many of the measures announced are US President Barack Obama (R) and Ratings Group, Chief Executive Officer, coherent with internal policies and seem in Colombian President Alvaro Uribe dis- Vadium Technology Inc. Standard & Poor's principle consistent with international cussed cooperation on drug trafficking Marlene Fernández Andrés Rozental obligations, a pragmatic approach is need- and security, clean energy, human devel- Former Bolivian President, ed in their implementation in order to opment and the possibility of a third term Congresswoman Rozental & Asociados ensure some of the practical goals being for Uribe. See story on page 2. and Ambassador Everett Santos sought are actually achieved. The orienta- Photo: Colombian Government. Jason Hafemeister President, tion of the intellectual property system in Vice President, DALEC LLC Allen F. Johnson & Shelly Shetty Associates Inside This Issue Senior Director, Latin Peter Hakim American Sovereign FEATURED Q&A: Will Venezuela Move to Europe's Celesio Buys Majority President, Ratings, Fitch Inc. Modify Pharmaceutical Patents? ...... 1 Stake in Brazilian Company...... 2 Inter-American Dialogue Backed by ALBA and OAS, After Failing to Win Congressional Seat, Zelaya Vows to Return to Honduras ...... 2 Kirchner Resigns as Party Head...... 3 Obama 'Confident' in Colombia FTA Deal, Brazil Unveils Tax and Interest Rate But Labor Concerns Remain...... 2 Cuts to Speed up Economic Recovery ...... 3

NEWS BRIEFS Political News ing with Colombian President Alvaro Uribe, the Associated Press reported. Europe's Celesio Buys Majority Some observers say Zelaya, a left-leaning Stake in Brazilian Company Backed by ALBA and OAS, Zelaya charismatic figure most known abroad Stuttgart-based Celesio said Vows to Return to Honduras for being aligned with President Hugo Monday it had acquired a majority Chavez of Venezuela, pushed the limits of stake in Panpharma, a leading Exiled President Manuel Zelaya of his constitutional authority, and that the Honduras said he will travel back to his country's judicial and military institu- Brazilian pharmaceutical wholesaler. country on Thursday in defiance of an tions acted legally in the Sunday coup to The 54 percent stake was acquired early morning military coup that ejected check an overextension of power. by way of a capital increase, him from power on Sunday, Reuters [Editor's note: see related Q&A in an although no specific financial details reported. Speaking in the Nicaraguan upcoming issue of the Advisor.] were disclosed. Panpharma holds a capital at a meeting of the heads of state market share of about 17 percent, allied with the Bolivarian Alternative for Obama 'Confident' in Colombia FTA supplying about 30,000 of the the People of Our America, Zelaya said Deal, But Labor Concerns Remain 52,000 pharmacies in Brazil, and the head of the Organization of American had revenues in 2008 of $3 billion States, Jose Miguel Insulza, had offered to US President Barack Obama on Monday reais ($US 1.54 billion). The agree- accompany him to Honduras Thursday said he was "confident" the US and ment is subject to the approval of after they attend talks over the crisis in Colombia could strike a deal on a long- the Celesio supervisory board. Washington tomorrow at the OAS, stalled free trade agreement, but he ulti- according to the mately rejected a timetable for the bill's Scotiabank Opens New Wealth report. Moreover, passage, citing both the need for further Managment Office in Miami UN General progress on human rights in the South Assembly president American nation and the US Congress' Canada's Scotiabank on Monday Miguel D'Escoto already full legislative plate. Following a launched a new Miami office that Brockmann said meeting with Colombian President Uribe will serve as a hub for the bank's Monday he has invit- at the White House, Obama told reporters expanding wealth management serv- ed Manuel Zelaya to he had instructed US Trade ices in the Caribbean and Latin come to New York Representative Ron Kirk to work with America. The office will provide pri- this week to report Colombian officials in order find ways to vate banking services to non-US res- directly to members proceed with the agreement. "There are idents and non-US citizens only, of the General Zelaya obvious difficulties involved in the Scotiabank said in a statement. The Assembly on the situ- Photo: ABN. process and there remains work to do, but company has similar locations ation in his country, I'm confident that ultimately we can throughout the Caribbean and in the Associated Press reported. Meanwhile, strike a deal that is good for the people of about 1,500 protesters, some of them Colombia and good for the people of the Peru, with plans to open new private masked and carrying sticks, taunted sol- United States," Obama said. He com- banking centers in Chile, Costa Rica, ders and burned tires just outside the mended Uribe on Colombia's progress in Mexico and Panama. Alan Jenkins gates of the presidential palace in a face- reducing human rights violations and will serve as director of the Miami off with security forces yesterday. The sol- violence against labor leaders, but said office. diers sprayed tear gas to disperse the even Uribe acknowledged "there remains crowds. The interim president of more work to be done." Labor protections New Zealand Company to Issue Honduras, head of congress Roberto and human rights have been major stick- Bonds to Develop Uruguay Farms Micheletti, said Monday he would not ing points in the congressional debate NZ Farming Systems Uruguay, a relinquish power to Zelaya and began over the US-Colombia free trade agree- large dairy and agricultural compa- building a cabinet. US President Barack ment, stalled in Congress since 2006, ny based in New Zealand, today Obama on Monday restated that the which Obama opposed as both a senator announced it has obtained regulato- United States still considers Manuel and as a presidential candidate. Obama ry approval from the Central Bank Zelaya to be the president of Honduras and Uribe also discussed extrajudicial of Uruguay for a proposed $30 mil- and assailed the coup that forced him into killings in Colombia, bilateral coopera- exile as illegal. "It would be a terrible tion to combat drug trafficking and lion bond issue in the South precedent if we start moving backwards efforts to promote clean energy and American country. The proceeds into the era in which we are seeing mili- human development. In addition, Obama will be used to finance debt and to tary coups as a means of political transi- did not shy away from addressing the permit continuing development of tion rather than democratic elections," controversy over Uribe's still uncon- the company's farms in Uruguay. Obama said in the Oval Office after meet- firmed plans to seek a third term in office.

While expressing the importance of self- Featured Q&A determination for Colombians, Obama Continued from page 1 noted that "two terms works for us" in the US. He also mentioned to Uribe that ties. Many of the announced measures property and health authorities is a criti- George Washington, the country's first could be developed under this frame- cal factor for an effective management of president, stepped down from his post work. Nevertheless, no absolute legal intellectual property rights that takes despite the fact he could have remained assessment is possible until these into account public health needs, includ- president for life. announcements are transformed into ing the use of flexibilities in the TRIPS actual measures or legislation. Experts in agreement reaffirmed in WTO's Doha After Failing to Win Congressional the field believe that many of Venezuela's declaration of November 2001. IPR pro- Seat, Kirchner Resigns as Party Head goals in the current process could be tection and patent enforcement are achieved through a sophisticated set of deemed to be rewards for innovation. In a dramatic reversal of fortunes, Nestor policies driven by pragmatic reasoning However, monopolistic practices granted Kirchner, the former president of and at the same time respecting interna- to patent holders often result in high Argentina and husband of current tional obligations. Finding options to prices for medicines, making them inac- President Cristina Fernandez, resigned achieve some of these goals might need cessible for citizens and unaffordable for Monday as leader of the Peronist Party, more than political courage. It would governments in middle- and low-income the day following his coalition's decisive take technical sophistication, political countries. Moreover, being a patent defeat in midterm congressional elec- consensus and most importantly an holder confers not only rights, but also tions. Just two years ago, Kirchner was so inclusive consultative process with all responsibilities, such as transfer of tech- popular that political analysts speculated relevant sectors in Venezuelan society." nology, as acknowledged in Article 66.2 he handed his wife the presidency with of the TRIPS agreement. Countries the long term aim of legally running Guest Comment: José Luis Di should therefore continue to closely again in 2011, thereby ensuring continu- Fabio: "Venezuelan authorities monitor the linkage between regulation ous family control of Argentina for more through SAPI have been for the of pharmaceutical products and its than a decade. On Sunday, he was unable last five years compiling the impact on pricing and, ultimately, access, to secure a congressional seat. Kirchner's Adocumentation related to all the patents always keeping in mind what's best for resignation signals the playing field ahead granted in the country in order to make public health." for Argentine presidential politics is wide them accessible to the general public. open—for the first time since he came to This exhaustive revision has included Guest Comment: Adrian Cruz: power in 2003. Analysts speculate the those related to pharmaceutical products "In violation of its TRIPS obli- presidential contenders could include and has been coupled with the recent gations, Venezuela has not pro- Colombian-born millionaire Francisco announcement to study each one of tected data from clinical trials De Narvaez, who beat Kirchner Sunday them in order to detect eventual incon- Asince 2002. The country's patent office, for the congressional seat, newly elected sistencies with constitutional clauses SAPI, has not granted a single drug Santa Fe governor Carlos Reutmann, (like the enjoyment of the right to patent in the same period. Intellectual popular Buenos Aires mayor Mauricio health) while stating the will to respect property is the lifeblood of the pharma- Macri and vice president Julio Cobos, and honor all international agreements, ceutical industry. If a market violates who split with Fernandez over her policy including TRIPS and other trade-related international IP agreements, it risks not positions last year. [Editor's note: see conventions to which Venezuela is party. only the aggrieved company leaving but related Q&A in an upcoming issue of the Cooperation between trade, intellectual other multinationals as well. Pharma Advisor.] Continued on page 4 Economic News Mantega said the government would also 6.25 percent since July 2007. On June 9, extend existing tax breaks on the pur- Brazil's national statistics agency said the chase of cars, home appliances, construc- country had officially entered a recession Brazil Unveils Tax and Interest Rate tion materials and some food staples until as GDP for the first quarter of 2009 con- Cuts to Speed up Economic Recovery at least October. The tax breaks had been tracted 0.8 percent, following a 3.6 per- credited by the auto industry and other cent decline in the fourth quarter of last Brazil will cut taxes on 70 capital goods businesses with keeping Brazil's economy year. "Brazil was a late entrant into the and lower the long-term interest rate active during the worst of the global cred- current world recession, and promises to charged by state development bank it crisis. Mantega said the country plans be an early leaver," Columbia University BNDES in an effort to speed up the econ- to cut the long-term interest rate to 6 per- economist Albert Fishlow told the Advisor omy's recovery, Finance Minister Guido cent from 6.25 percent at its meeting earlier this month. [Editor's note: see Mantega told reporters in Brasilia today, Dow Jones reported. The so-called related Q&A with Fishlow and others in Monday, Bloomberg News reported. TJLP rate has remained unchanged at the June 19 issue of the Advisor.]

Featured Q&A enabling more than three million people Latin America Advisor Continued from page 3 to access lifesaving antiretroviral therapy. is published every business day by the companies depend on IP protection in Competition and domestic manufactur- Inter-American Dialogue, Copyright © 2009 order to be able to recoup the huge R&D ing have helped Brazil save $1 billion Erik Brand, General Manager, Publishing investment for the drugs of the future. As since 2001, and develop one of the [email protected] president of Sterling-Winthrop, world's most effective HIV/AIDS treat- SmithKlineBeecham, and ment programs. Multinational drug com- Gene Kuleta, Editor GlaxoSmithKline Latin American panies, based almost exclusively in north- [email protected] Region, I spent 30 years in constant dia- ern countries, routinely use patent logue with Ministries of Health explain- monopolies on key medicines to keep Matthew Schewel, Reporter, Assistant Editor ing the importance of IP protection. We prices at high, anti-competitive levels— [email protected] were threatened in Brazil in the late 1990s often too high to enable widespread with patent violation for vaccines and in treatment, including throughout Latin Inter-American Dialogue: the early 2000s for retrovirals (anti- America. There are several tailored ways Peter Hakim, AIDS), but we were able to diffuse the Venezuela could improve access to medi- President issue through a ground-breaking tech- cines while contributing to pharmaceuti- Michael Shifter, nology transfer with semipublic health cal research and development costs, and Vice President, Policy institution FioCruz. In that manner, we complying fully with domestic laws and got to keep our patents inviolate for the WTO patent rules. For example, by issu- Joan Caivano, Director, Special Projects private sector and FioCruz could pro- ing compulsory licenses, Venezuela could duce, under our license, for the public authorize generic competition with spe- Dan Erikson, Senior Associate, US Policy sector and thus lower its costs. If the cific patented medicines, in exchange for Brazilians had violated our anti-AIDS reasonable royalties to the patent holder. Paul Isbell Visiting Senior Fellow patents back in 2000, we would likely It is not true the Venezuelan pharmaceu- have left Brazil or at least not have tical industry uniformly opposes revi- Claudio Loser, Senior Fellow launched any of the future anti-AIDS sions to patent rules. The generics cham- products. The mutating nature of the ber, Canamega, publicly supports revi- Manuel Orozco, Director, Remittances and Development Program AIDS virus would have meant that the sions, and domestic manufacturers Brazilian government could have claimed would benefit from flexibilities allowing Tamara Ortega Goodspeed, Senior Associate, Education to 'save' the poor AIDS victims of the year them to produce more medicines. 2000 but condemned those patients of Targeted reforms to Venezuela's patent Marifeli Pérez-Stable, 2005 and beyond that may have been system could protect international invest- Vice President, Democratic Governance deprived of the newer generation of ment incentives, while also improving Jeffrey M. Puryear, retrovirals, so expensive to develop." market efficiency, increasing investments Vice President, Social Policy in innovative research and develop- Viron Vaky, Guest Comment: Peter ment—and supporting access to medi- Senior Fellow Maybarduk: "It's worth clarify- cines for all." Subscription Inquiries are welcomed at ing what the Venezuelan gov- [email protected] ernment has and has not said. AThe government announced plans to David Vivas-Eugui is deputy programs Latin America Advisor is published every review patent rules. Improving public director at the International Centre for business day, except for major US holidays, by the Inter-American Dialogue access to medicines and generic medicine Trade and Sustainable Development in 1211 Connecticut Avenue, Suite 510 manufacturing capacity are key priorities Geneva. Washington, DC 20036 of this review. The government has not Phone: 202-822-9002 Fax: 202-822-9553 yet announced a detailed policy, and José Luis Di Fabio is manager in the area The opinions expressed by the members of the statements by some government oppo- of Technology, Health Care and Research Board of Advisors and by guest commentators do nents seem to have exaggerated the sub- at the Pan American Health not necessarily represent those of the publisher. The stance of the announcements. A clarify- Organization. analysis is the sole view of each Advisor and does not necessarily represent the views of their respective ing source is Venezuela's intellectual employers or firms. The information in this report property office, SAPI, which has posted Adrian Cruz is a member of the Advisory has been obtained from reliable sources, but neither notices on the subject. Over the last ten Board of Cross Keys Capital. its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any ques- years, generic competition worldwide has tions relating to the contents of this publication, produced a revolution in HIV/AIDS Peter Maybarduk is an attorney for the contact the editorial offices of the Inter-American treatment, reducing prices from $10,000 Essential Action Access to Medicines Dialogue. Contents of this report may not be repro- duced, stored in a retrieval system, or transmitted to near $100 per person per year, and Project. without prior written permission from the publisher.