US lobbied against Cheaper Medicines Act


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From September 19, 2005 to January 15, 2010, dozens of cables were sent to the US Department of State from Manila regarding the disputes in the Philippines concerning Intellectual Property Rights (IPR) and the pricing mechanisms of pharmaceutical drugs.

Former senators Manuel Roxas introduced the “Cheaper Medicines Act,” in November 2005. The bill was said to be a response to the high cost of pharmaceuticals in the Philippines relative to the rest of Asia. It originally 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; and applying the principle of international patent exhaustion to shorten the terms of certain Philippine-issued patents.

According to the website Knowledge Ecology International, the controversial cables constantly lied about the IPR norms in the TRIPS agreement. It said that much of the US advocacy in the Philippines was done in close cooperation with Pfizer.

“The Department of State often claims that TRIPS requires patents on new uses of old drugs or data exclusivity, but this is not true. 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 Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS),” the KEI said.

The advocacy group also said the cables’ declarations that the Philippine government was simply trying to protect poor people by calling for strong IPR monitoring was “incredible” given that “at the same time the Embassy and White House trade officials are plotting against poor people.”

US companies worried about changes in PH pharmaceutical policies

In Kenney’s October 27, 2005 cable , she said US stakeholders are worried about possible changes in the Philippines’ pharmaceutical policies.

She said US IPR rights holders are concerned about then Senator Manuel Roxas’ move to amend the Intellectual Property Code 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,” she Kenney. She then went on to say that the Embassy is seeking a meeting with Roxas to explain the US’ concerns with the bill and its potential to weaken patent protection for pharmaceuticals.

Kenney said Roxas’ bill is especially troubling to U.S. pharmaceutical rights holders, which 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.

US lobbied against new use patents in drug industry

In a later cable dated Dec. 11, 2006 to the US Department of State,Kenney said Roxas and Quirino Rep. Junie Cua, (the congressman who sponsored the Cheaper Medicines proposal in the House of Representatives), “agreed to resolve US concerns.”US Trade Representative for Southeast Asian and Pacific Affairs David Katz had previously met with the two lawmakers, and this was followed by another visit by an unnamed economic counselor Nov. 22 “to lobby for the removal” of the two provisions of concern.

“He passed to both copies of the interagency-cleared non-paper identifying specific language changes,” the cable said.

“He argued that while the Philippines has every right to take actions to benefit the health and economic circumstances to its population, those actions must respect the obligations the country has signed and the rights of the holders of patents.”

Kenney said both lawmakers then proceeded to review the language changes word per word in the presence of the counselor.

“Both agreed that the current wording of the data exclusivity provision of the legislation is overly broad. Roxas promised to resolve the problem in the Senate version and to provide us with the new language. Cua undertook to consult with Roxas and others on changing the language of the House version,” she said.

The US, however, was unable to get all its agenda when the two legislators’ did not give in on the issue of “new use patents.”

Kenney said the two noted that the “new use patents” was a controversial concept internationally, but they did not agree that it was violative of the TRIPS. The two lawmakers refused to remove the provision from their bills, and Cua even pointed out how India’s new patent legislation does not protect new use patents.

By December 8, however, Cua and the House committee on Trade amended the bill partially, resolving the US concerns on data exclusivity.

Kenney was not satisfied saying that it would have been better if the bill used the new language they recommended.

“Nonetheless, we believe resolution of the data exclusivity issue brings this legislation a long way toward acceptability. We will continue to work with legislators to ensure that new language on this point is acceptable, and will continue to provide language to Washington agencies for their review as soon as it becomes available,” she said.

Despite the US’ efforts against its passage, Republic Act No. 9502, or the “Universally Accessible Cheaper and Quality Medicines Act of 2008,” was passed. It was able to reduce by half the prices of 22 essential medicines, but advocacy groups said the final law was “very much watered down” compared to the original proposal.

Afraid of Indian drug companies

According to reports, the US was worried about the possible entry of numerous Indian drug companies in the local market.
Business reports state that India’s pharmaceutical companies comprise an estimated $8 billion industry and growing at the rate of 7.7 percent annually. The indian drug industry currently ranks third in terms of volume of production with a 10-percent share of the global pharmaceutical market, and 14th in value.

Indian drug companies also have the highest number of manufacturing plants approved by the US Food and Drugs Administration (FDA) outside the United States. Currently over 200 facilities are FDA-approved. These same companies today export their products to more than 65 countries (within regulated markets) and to the rest of the world, including the Philippines. They have the largest number of Abbreviated New Drug Applications filed with the US FDA. Many of these are already at Phases 2 and 3 study levels.

Allowing the entry of these companies may very well have the effect of bringing down prices of medicines in the local market.

In a Mar 5, 2009 cable, Kenney said the Philippine press featured stories noting that drug prices have not fallen since the Cheaper Medicines Act came into effect, and that this created pressure for more immediate action from the government.

“However, the Philippine government must tread carefully and should not ignore Pfizer’s warning that it could withdraw many drugs from the Philippine market if price controls are put into effect. Pfizer’s withdrawal of medicines from Thailand following laws on compulsory licensing clearly demonstrates the risks. Post will continue to remind Health Department officials that expecting pharmaceutical companies to sell products for less than it costs to produce them could prove counterproductive,” she said. (

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