WATCH COUNTRY

Brazil

Intellectual Property Protection

In May 1997, a law with the following provisions went into effect: a 20-year product patent term; pipeline protection for products in the approval process; basic biotech in line with GATT-TRIPs; a ban on parallel imports; and a one-year implementation period (TRIPs allows Brazil until 2005).

While this is generally a strong law, Brazil included a provision which prohibits importation as a means of satisfying the requirement that the patent be "worked" in that country, in direct violation of TRIPs 27(1). Our industry is particularly concerned about this provision and remains hopeful that the matter can be resolved quickly.

We also believe that the next step - adequate and effective implementation - is critical to complete this progressive measure. As such, our industry endorses any actions that will support education, training, and other activities of members of the National Institute of Industrial Property (INPI).

Brazil is the largest market for pharmaceuticals in South America, and enhanced patent protection will significantly benefit the U.S. research-based pharmaceutical companies, which lose hundreds of millions of dollars annually to patent piracy around the world. Brazil's improved patent protection regime has started to become a positive example for the developing countries in Latin America and worldwide with inadequate patent protection. Clearly, the greatest beneficiaries of the new law are the Brazilian people, who will receive improved healthcare and the transfer of healthcare technology, as well as an important stimulus to national innovation.

The international pharmaceutical industry has responded, by investing large amounts of new capital into Brazil. INPI has now started to issue pharmaceutical patents applications, including precedent-setting pipeline patents , and expressed the intention to refocus institutional resources to better address the existing backlog. Additional steps for improving the level of intellectual property protection can be taken by establishing "linkage" requiring an interface between the Patent Office and the Board of Health, safeguarding pharmaceutical confidential data, consistent with Brazil's TRIPs obligations by 2000.

Pricing

PhRMA companies are extremely concerned about newly introduced requirements (Ministry of Finance Regulation 127, published in the Official Gazette on November 27, 1998) obligating industry to justify price adjustments, in such a way as to potentially re-introduce price controls specifically targeting pharmaceutical prescription products. Not only does this directly impact the commercial interests of member company affiliates, but it signals a lapse in the proper evaluation of the industry's contribution to the containment of health care costs and a step back in Brazil's commitment to market reforms.

Potential Exports/Foreign Sales

It is not possible at this time to determine the impact on sales of PhRMA member company affiliates in Brazil if the aforementioned provisions were strengthened and renewed pricing concerns resolved.

For all the aforementioned reasons, PhRMA believes that Brazil should be listed as a Watch Country under Special 301 in 1999.