--------
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
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----------------- 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
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----------------- 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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