The Mexican Ministry of Health (SSA) has recently instituted new policies with respect to pharmaceutical product approvals that violate its U.S. treaty obligations, particularly NAFTA and World Trade Organization (WTO) Trade Related Intellectual Property Agreement (TRIPS). Furthermore, a lack of linkage between patent and health authorities, combined with TRIPS Article 41 violations, represents potentially devastating commercial losses for PhRMA member companies. The Mexican Government should cancel existing copy-product registrations and cease issuing new registrations. The material subject to patent and data exclusivity protection may also be copyrighted, representing a further violation of intellectual property. The SSA must acknowledge its responsibility, as a part of the Mexican Government, to fulfill international treaty obligations and domestic patent law. The Mexican Government has promised to exclude copy products from Government tenders; we hope this agreement will be implemented fully. Price controls remain in place. Thus, PhRMA believes that Mexico should be designated as a “Priority Watch List” country for 2003.

Intellectual Property Protection

While several PhRMA member companies have seen copies of patented products registered in recent years, there has been an alarming increase in infringing registrations in the last six months of 2002. The SSA continues to grant health registrations to generic products without verifying with the Mexican Institute of Industrial Property (IMPI) whether a patent already exists. Innovator companies are forced to take the patent infringers to court – an expensive and time-consuming process, particularly in the absence of preliminary injunctive relief and other adequate enforcement measures. Such lawsuits also represent a waste of scarce Mexican judicial resources. Several years can elapse before a case is resolved, leading to considerable losses for PhRMA member companies because the infringing products remain on the market during litigation. In total, these deficiencies in Mexico’s system represent a violation of TRIPS Article 41 and of Article 70.2 because linkage had been enforced previously on certain products.

In 2002, the Government of Mexico committed at least 31 linkage violations on 16 products of PhRMA member companies. In addition, several copy registration applications remain pending. Many of the linkage violations noted above also constitute data exclusivity violations on products of PhRMA member companies.

Pharmaceutical companies submit to the Mexican SSA undisclosed test and other data in order to obtain sanitary registrations to sell their products in Mexico. The undisclosed test and other data are very valuable, representing a huge investment in research and clinical trials. In return, the SSA is supposed to protect the data from unauthorized or unfair commercial use by providing data exclusivity. Nevertheless, the SSA continues to grant sanitary registrations to generics and branded copies of innovative products in violation of NAFTA Articles 1711.5 and 1711.6 and TRIPS Articles 39.2 and 39.3. These approvals constitute “unfair commercial use” of PhRMA member companies’ data.

The Mexican Government in late 2002 stated that it would not purchase infringing copy products in Government tenders. We welcome this announcement and hope this policy will be implemented fully.

Price Controls

The pharmaceutical industry is still one of the very few in the Mexican economy subject to Government price controls.

Damage Estimate

Mexico is the largest market in Latin America, with at least $6 billion estimated sales for 2002. It is the only major market in Latin America likely to show growth in 2003. If Mexico allows infringing copies to garner market share, it will have a devastating impact on the research-based pharmaceutical industry.