--------

Links to cables:

http://wikileaks.ch/cable/2009/10/09QUITO998.html

http://www.eluniverso.com/2011/04/22/1/1355/cable-230726.html

http://wikileaks.ch/cable/2009/10/09QUITO1068.html

http://www.eluniverso.com/2011/04/21/1/1355/cable-248229.html

 

--------

Cable dated October 13, 2009

http://wikileaks.ch/cable/2009/10/09QUITO998.html

Reference ID 09QUITO998

 

VZCZCXYZ0000
RR RUEHWEB
 
DE RUEHQT #0998/01 2862018
ZNR UUUUU ZZH
R 132016Z OCT 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0184
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA 0040
RUEHCV/AMEMBASSY CARACAS 0060
RUEHGL/AMCONSUL GUAYAQUIL
RUEHPE/AMEMBASSY LIMA 0066
UNCLAS QUITO 000998 
 
SENSITIVE 
SIPDIS 
DEPT PLEASE PASS TO USTR FOR BENNETT HARMAN 
DEPT FOR WHA/AND AND EB/TPP/IPE 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR EIND EC
SUBJECT: CORREA PROMOTES LOCAL PHARMACEUTICAL PRODUCTION 
 
1. SENSITIVE BUT UNCLASSIFIED 
 
2. (SBU) Summary. The head of Ecuador's Intellectual Property 
Institute (IEPI) denies the GoE intends to annul all pharmaceutical 
patents, as public statements by President Correa on September 26 
suggested. However, the government is undertaking a review of 
pharmaceutical patents to consider issuance of compulsory licenses. 
According to IEPI, the GoE plans to follow the legal process 
established in the WTO Trade Related Intellectual Property Rights 
Agreement (TRIPS) and Ecuador's national Intellectual Property Law. 
U.S. NGO Essential Action is providing legal advice to the GoE 
regarding compulsory licensing. Separately, the GoE is instituting 
a two-tier system for government tenders for medicines, relegating 
foreign suppliers to the second tier. End Summary. 
 
3. (SBU) On October 1 and 8, Embassy staff met with local 
representatives of U.S. pharmaceutical companies Pfizer, Merck 
Sharp and Dohme, Schering-Plough, and Wyeth to discuss statements 
made by President Correa during his weekly address on September 26. 
During his address, Correa announced plans to establish a public 
tender system for medicines that prioritizes local production, and 
to eliminate pharmaceutical patents. 
 
4. (U) Under the new public tender process, only national 
pharmaceutical suppliers will be able to participate in an initial 
bidding round. Should the government be unable to fulfill all of 
its requirements through the initial bid, a second round will be 
held in which foreign suppliers will be able to participate. This 
new system will be a significant blow to U.S. pharmaceutical 
companies, for whom sales to the public sector account for a 
significant portion of domestic sector sales, in some cases 
counting for close to 20 percent of local sales. In announcing the 
change, President Correa said he was responding to requests for 
support from local industry, which he said currently supplies only 
22 % in volume and 13% in value of medicines sold in the domestic 
market. Note, Ecuador is not a signatory to the WTO Agreement on 
Government Procurement. 
 
5. (SBU) Also troubling was President Correa's statement that he 
planned to eliminate all "obligatory patents" within a week. 
Correa said Ecuadorian law and international treaties allow Ecuador 
to repeal patents for human health concerns, adding that all 
medicines that can be produced and copied in Ecuador should be 
domestically produced. These statements were consistent with a 
vision Correa espoused in July: "Intellectual property is a 
mechanism for development for the people. This is our vision of 
intellectual property. It is not a mechanism to enrich the 
pharmaceutical or agrochemical companies." 
 
6.   (SBU) In an October 7 meeting, the president of Ecuador's 
Intellectual Property Rights Institute, Andres Ycaza, sought to 
reassure SCO and ECONOFF that the GoE was not planning to annul all 
pharmaceutical patents. Ycaza said he had been surprised by 
Correa's statements as well, having received notice of them while 
attending a World Intellectual Property Organization meeting in 
Geneva. However, Ycaza said the GoE was conducting a review of all 
pharmaceutical patents and does plan to issue compulsory licenses 
to address problems of access to medicine, specifically referring 
to cancer and HIV/AIDS treatments. In response to points raised by 
SCO and Econoff that compulsory licensing typically is used for 
emergency situations, permitted for only a specific time period and 
pursued only after negotiations with patent holders, Ycaza 
emphasized the GoE's intent to conduct the process in a manner 
consistent with Ecuador's legal obligations under the WTO TRIPS 
Agreement and Ecuador's Intellectual Property Law. He also 
mentioned that Ecuador would be justified in issuing compulsory 
licenses due to reasons of "public interest." Ycaza noted the need 
to provide access to medicines that are prohibitively expensive, 
mentioning a cancer drug that costs $6,000 per injection as an 
example. 
 
7. (SBU) While departing IEPI's offices, Embassy staff met Peter 
Maybarduk, a representative of U.S. NGO Essential Action, who is 
providing legal counsel to IEPI on compulsory licensing as part of 
the NGO's Access to Medicines program. For its part, U.S. industry 
is trying, through well placed contacts, to get a better idea of 
President Correa's core objectives. Once it is clearer whether the 
President's interests principally relate to access to medicine or 
promotion of domestic industry, the companies intend to try to 
develop a positive agenda they can present to the President as a 
way of opening the door to a more collaborative relationship. 
Embassy plans to consult with the Missions of other international 
pharmaceutical companies (French, British, Swiss, German, Swedish) 
and to continue seeking better definition of GoE intentions through 
meetings at the Coordination Ministry for Production and the 
Ministry of Health. At this point, Embassy interaction with the 
GoE on the issue remains one of seeking information. 
 
8. (SBU) Comment. Ycaza's focus on IPR is relatively narrow. 
Although he may believe the GoE's plans are motivated purely by an 
interest in providing better access to medicine, compulsory 
licensing coupled with the government's new discriminatory public 
tender process, President Correa's close personal relationship to 
certain local pharmaceutical producers and his rhetoric suggest 
that Correa's more fundamental agenda is promotion of the domestic 
pharmaceutical industry. This would be consistent with the 
emphasis Correa has been placing on national production across 
industry lines (petroleum sector as an example) in the name of 
Ecuadorian sovereignty. 
HODGES

 

-------

Cable dated October 21, 2009

http://www.eluniverso.com/2011/04/22/1/1355/cable-230726.html

refid: 09QUITO893

 

id: 
230726
date: 
10/21/2009 22:19
origin: 
Embassy Quito
classification: 
CONFIDENTIAL
destination: 
09QUITO998
header:
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RUEHPE/AMEMBASSY LIMA 0090
RUEHSG/AMEMBASSY SANTIAGO
RUEHTG/AMEMBASSY TEGUCIGALPA 0001
----------------- header ends ----------------
C O N F I D E N T I A L QUITO 000893 
 
SIPDIS 
DEPT PLEASE PASS TO USTR FOR BENNETT HARMAN 
DEPT FOR WHA/AND AND EB/TPP/IPE 
 
E.O. 12958: DECL: 2019/10/21
TAGS: ETRD, KIPR, EIND, EC 
SUBJECT: Presidential Decree on Compulsory Licensing Expected Soon
 
REF: QUITO 998 
 
CLASSIFIED BY: Heather Hodges, Ambassador, State, Exec; REASON:
1.4(B), (D) 
 
1.   (SBU) Summary. President Correa appears set to issue within 
days a presidential decree to pave the way for compulsory licensing 
of patented pharmaceutical products. Local representatives of
international pharmaceutical companies point out that a 
presidential decree is not legally required for the government to 
proceed with compulsory licenses, and worry that a decree will make 
it more difficult for the GoE to moderate its stance. The 
Ambassador raised U.S. concerns about this issue on October 19 with 
three key GoE officials in the Ministries of Foreign Affairs and 
Production, and EmbOffs are in close contact with industry 
representatives. End Summary. 
 
2. (U) In his October 17 television address, President Correa 
expanded on his earlier threats to annul pharmaceutical patents
(ref A) and noted his intention to publish a presidential decree 
early this week. Correa said he plans to initially issue 
compulsory licenses for all medicines, and then the policy will be 
applied to agrochemicals and other types of products that could be 
considered as public goods. Correa claimed international treaties 
allow Ecuador to establish compulsory licenses and described the 
GoE as a pioneer in implementing this policy in which knowledge is 
treated as a public good. 
 
3. (C) In an October 15 meeting, Maria del Carmen, Executive 
Director of IFI - a local chamber representing international R&D 
pharmaceutical companies, told Econoff and Commercial Assistant 
that a presidential decree on compulsory licensing of patented
pharmaceutical products had been drafted, but that the content was 
not yet final. According to del Carmen's sources, the decree is 
expected to have two main provisions declaring: 1) access to 
medicines as a "public interest," and 2) all patented 
pharmaceutical products are subject to potential compulsory
licensing. A third provision requested by local industry to allow 
importation of products under compulsory license was reportedly 
rejected by President Correa because it did not promote local 
production. However, Andres Ycaza, the head of Ecuador's 
Intellectual Property Institute, said in an October 19 El Universo 
article that if local manufacturing of a product under compulsory 
license was not possible, copies could be imported. 
  
4. (C) Local representatives of U.S. and other international R&D 
pharmaceutical companies have identified and been in contact with 
potentially sympathetic ministries. They see as allies the Minister 
of Health Caroline Chang, Coordinating Minister for Production 
Nathalie Cely, and Coordinating Minister for Social Development 
Jeanette Sanchez. IFI has been told that these ministers have 
tried to explain to Correa the potential negative implications for 
economic development and the health system of issuing wholesale 
compulsory licenses, but he has rejected their arguments. Minister 
of Health officials are reportedly concerned they will be involved 
in enforcing any compulsory license and worry about the quality of 
copies. [Copies of patented pharmaceutical products are already 
pervasive in Ecuador and there have been problems with some not 
containing the active ingredient(s) of the patented product.] 
According to IFI, Chang is looking into financial irregularities 
and business dealings of some of the local producers in an attempt 
to gain some leverage and better understand their true objectives. 
 
5. (C) On October 19, the Ambassador took advantage of a 
previously schedule meeting at the MFA to express concern over the 
issue with three key GoE interlocutors on economic policy.   The
Ambassador spoke at length with Technical Secretary Mauricio Pena
of the Coordinating Ministry for Production (second to Minister 
Cely). Pena claimed not to have details on the President's plan,
but said Correa was being motivated by an interest in gaining 
access to medicine and that the Ministry of Health was in charge of 
the issue.   In her meeting with MFA Vice-Minister for Trade Julio 
 
Oleas, the Ambassador said that while not delivering official 
points, she wanted to register Washington's concern with the GoE's 
plans for compulsory licensing as expressed by President Correa.
Oleas responded candidly that it was a presidential, political 
decision and that now the government would have to figure out what 
to do. The Ambassador noted the IPR eligibility requirements of 
unilateral trade programs such as the Andean Trade Promotion and 
Drug Eradication Act and the Generalized System of Preferences. 
Oleas said he was also aware that the issue is covered in 
provisions of various international treaties and directed Pena to
gather more details about the President's plan and forward to the
Mission. Later, in response to urging by MFA Under Secretary for
Bilateral Affairs Jorge Orbe that Ecuador and the United States 
develop a closer relationship through our Bilateral Dialogue
process, the Ambassador pointed to the potential IPR issue as a 
serious problem. 
 
 
---------------------------------- 
 
COMMENT AND REQUEST
---------------------------------- 
 
6. (SBU) Despite Pena's claim that Correa's principal interest is 
access to medicine, we believe that his primary objective is 
promotion of local production, both on ideological grounds and 
possibly in response to specific requests by close associates in 
the local pharmaceutical industry. Among those close associates 
are Renato Carlo, President of the Chamber of Small Industries in 
Guayaquil and former President of ALFE, the association of local 
pharmaceutical producers, and the Ayala family (Rafael and 
Mauricio) who own Farmayala. Both allegedly contributed financial 
resources to President Correa's presidential campaign and Carlo is 
also a close friend from school. Econ and FCS officers continue to 
consult with representatives of U.S. pharmaceutical companies and 
have suggested they present President Correa with data that would 
help dispel his misperceptions regarding the extent to which 
wholesale compulsory licensing will yield a substantial increase in 
local production. The Embassy has also reached out to other 
diplomatic missions and conveyed an interest in collaborating. 
Although concerned, neither the French nor the Swiss Missions have 
yet approached the GoE on the issue. According to our contact at 
the French Embassy, the local EU delegation is calling a meeting 
next week with representatives of Member States to devise a common 
approach. While not a member of the EU, the Swiss Embassy expects 
to join the EU meeting next week. The major French pharmaceutical 
companies in Ecuador are Sanofi-Aventis and Salvie; the Swiss 
companies are Roche and Novartis. The German Mission did not 
convey a high level of interest in pursuing the issue with the GoE. 
We will follow up with the British Mission over the next couple 
days. 
HODGES 
=======================CABLE ENDS============================

 

-------

Cable dated October 29, 2009

http://wikileaks.ch/cable/2009/10/09QUITO1068.html

Reference ID 09QUITO1068

[Excerpt – the other points in this cable do not address compulsory licensing]



Decree Published on Compulsory Licensing Patented Medicines 
 
--------------------------------------------- -------------- 
 
10. (U) On October 26, the GoE published an anticipated 
presidential decree (Ref B) on compulsory licensing of patented 
pharmaceutical products that identifies the Intellectual Property 
Institute (IEPI) as the authority in charge of the process, 
including determinations of the length of the license and 
remuneration of the patent holder. Regarding remuneration, the 
decree is silent on whether or not the GoE will negotiate with 
patent holders. IEPI is supposed to work with the Ministry of 
Health in evaluating requests for compulsory licensing, which will 
be considered on a case-by-case basis. The decree does not apply 
to cosmetic and aesthetic medicines, but only to those medicines 
used to treat illnesses that affect the Ecuadorian population and 
are considered priorities for the public health. The decree covers 
both national production and importation under compulsory 
licensing. 
HODGES

------

 

Cable dated February 10, 2010

http://www.eluniverso.com/2011/04/21/1/1355/cable-248229.html

 
Reference ID 10QUITO75
 
id:
248229
date:
2/10/2010 21:50
origin:
Embassy Quito
classification:
CONFIDENTIAL//NOFORN
destination:
09QUITO1068|09QUITO998
header:
VZCZCXYZ0035
RR RUEHWEB
DE RUEHQT #0075/01 0412150
ZNY CCCCC ZZH
R 102150Z FEB 10
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0955
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHCV/AMEMBASSY CARACAS
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
RUEHSG/AMEMBASSY SANTIAGO
 
----------------- header ends ----------------
C O N F I D E N T I A L QUITO 000075 
SIPDIS 
NOFORN 
E.O. 12958: DECL: 2020/02/10 
TAGS: ETRD, KIPR, EINV, EC 
SUBJECT: GOE REVIEWS INITIAL COMPULSORY LICENSE PETITIONS 
REF: 09 QUITO 998; 09 QUITO 1068 
CLASSIFIED BY: Heather Hodges, Ambassador, State, Exec; REASON: 
1.4(B), (D) 
 
1. (C) Summary. Ecuador's Intellectual Property Institute 
(IEPI) has received two compulsory license petitions under 
procedures issued on January 15. The procedures provide the 
detailed follow-up to Presidential Decree 118, issued in October 
2009 (refs A and B), which established access to medicines as a 
"public interest" and provided a policy framework for compulsory 
licensing of pharmaceutical products. The petitions were submitted 
by two companies for the public non-commercial use of Abbott's HIV 
treatment drug Kaletra. Only one of Kaletra's two components is 
under patent in Ecuador. Once all documentary requirements are 
met, IEPI will consult with the Ministry of Health before making a 
final determination. The GoE has taken pains to draft the 
compulsory license resolution in a manner it believes will make it 
difficult to challenge in the WTO. The local Abbott representative 
expressed doubts that local or foreign manufacturers could 
effectively copy Kaletra because of the technological complexity of 
producing the "combination drug." Nonetheless, issuance of a 
compulsory license would likely reduce the willingness of 
international research and development pharmaceutical companies to 
introduce new products in the Ecuadorian market. End Summary. 
IEPI Issues Compulsory License Resolution 
 
2. (U) On January 15, Ecuador's Intellectual Property Institute 
(IEPI) issued Resolution No. 10-04 P-IEPI providing specific 
procedures for applying for compulsory licenses of patented 
pharmaceutical products. (Note, IEPI is currently drafting a 
resolution to cover compulsory licenses of agrochemicals). The 
resolution has been forwarded to the Department for translation. 
According to the resolution, interested parties may apply for 
compulsory licenses within two categories: public non-commercial 
use, and commercial use. 
 
3. (SBU) The IEPI resolution stipulates that petitions for 
"public non-commercial use" compulsory licenses must state that 
production or importation of the licensed product will be used 
primarily to supply the domestic market and be used for public 
non-commercial use. For the purpose of the resolution, public 
non-commercial use refers to "the processes of acquiring 
pharmaceuticals by Ecuadorian public sector entities to cover 
(supply) their respective health programs." In essence, if the 
license will be used to produce or import pharmaceuticals for sale 
to the government, it will be considered for public non-commercial 
use, even if the licensee makes a profit in the transaction. The 
petition also must include a proposal for pricing the product. 
Note, under WTO Trade Related Intellectual Property Rights 
Agreement (TRIPs) rules, to be granted a compulsory license, the 
party seeking the license must have made an effort to obtain 
authorization from the patent right holder on reasonable commercial 
terms and conditions, but could not within a reasonable period of 
time successfully conclude those negotiations. This requirement 
may be waived in cases of public non-commercial use. 
 
4. (SBU) To petition for a commercial use compulsory license, the 
potential licensee must state that the product to be produced will 
be used primarily to supply the domestic market and prove that they 
have attempted to obtain the authorization of the right holder on 
reasonable commercial terms and conditions, but have not obtained a 
favorable response within 45 days. This provision does not appear 
to entitle the licensee to import the product under the compulsory 
license. The petition must also include a pricing proposal. 
 
Two Petitions for Compulsory Licenses, So Far... 
 
5. (C) In a meeting February 3, IEPI president Andres Ycaza told 
Emboffs that IEPI had received two compulsory license petitions. 
The petitions were from two different companies, but for the same 
product - Abbott's Kaletra (protease inhibitor for treatment of 
HIV). Ycaza said IEPI had requested the companies submit 
additional documentation before it would review the petitions. 
Once/if all documentary requirements have been met, IEPI will 
consult with the Ministry of Health for a determination on whether 
the medicine in question "is used to treat illnesses that affect 
the Ecuadorian population and that are public health priorities." 
Should the Ministry of Health make a positive determination, IEPI 
would then make a final decision on issuing the compulsory 
licenses. Ycaza passed this information to Emboffs confidentially 
- please protect accordingly. 
 
6. (C) Embassy has alerted Abbott, but has asked that they not 
give attribution to the Embassy when discussing with GoE officials. 
Abbott no longer has production facilities in Ecuador; equipment 
from the company's one production facility was sold in 2005 and the 
land in 2008. According to Abbott's local representative, Ricardo 
Lama, the company sells Kaletra in Ecuador under the name Aluvia, 
and at a vastly reduced "differential rate" of about $90 per month 
for treatment, versus a cost of around $600 per month in the United 
States. The name was changed to try to limit smuggling of the 
product into other markets where cost is higher. Lama said 
"Kaletra," a combination drug, is not patented in Ecuador, but one 
of its two components is. He said the production process for 
Kaletra is technologically complex and would not be easy to copy by 
local or foreign manufacturers. Abbott produces all Kaletra in a 
single plant in Germany. So far, no country has issued a 
compulsory license for Kaletra. 
 
7. (C) In speculating about Abbott's response should a 
compulsory license be issued, Lama said if Abbott receives 
sufficient royalty payments, it would likely keep Aluvia in the 
market, since doctors and patients prefer the brand product. 
However, he doubted Abbott would introduce any new products into 
the Ecuadorian market. He also noted that Abbott is very concerned 
about the implications for other markets should Ecuador issue a 
compulsory license. 
 
Action Request 
 
8. (C) The local association representing international R&D 
pharmaceutical companies (Corporacion Industria Farmaceutica de 
Investigation - IFI) was provided an opportunity by IEPI to review 
and comment on the compulsory license resolution prior to 
publication. IFI and some of its members have told Emboffs that 
they believe the resolution is largely compliant with TRIPs, 
although some would like to have the negotiation period extended to 
six months, as currently provided for under domestic intellectual 
property legislation. In another area, Ycaza indicated that IEPI 
had consulted with IPR experts at the WTO regarding the definition 
of "public non-commercial use" within the resolution. Post would 
appreciate Washington analysis of whether or not this provision is 
WTO compliant. 
 
Comment 
 
9. (C) It remains to be seen on what scale compulsory licenses 
for pharmaceutical products will be sought and issued here. We 
suspect that enthusiasm may wane once the challenges of producing 
some of the newest, and most sought after, drugs becomes apparent. 
Nonetheless, there is potential for real damage not just to the 
patent holders, but to the health of Ecuadorians as well, due to 
public administration of inferior copies of patented drugs, or lack 
of access to new medicines should R&D pharmaceutical companies pull 
back from introducing new drugs into this market for fear of 
compulsory licensing. 
HODGES 
=======================CABLE ENDS============================

 

 

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