PRESSURE TO DRAW UP A PATENT LAW FOR PHARMACEUTICAL PRODUCTS

6:39 AM Mar 31, 1995

PRESSURE TO DRAW UP A PATENT LAW FOR PHARMACEUTICAL PRODUCTS

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The provisions that make it "utterly useless", according to the US envoy here.

While Clara Lewis, with the Latin American Association of Pharmaceutical Industries, told IPS that the new law approved early Thursday morning "is quite balanced," U.S. Ambassador James Cheek called it "utterly useless."

"It has so many defects that I can't even specify which is the worst," said Cheek, whose statements were condemned by the lower house as a violation of the principle of non-interference.

For decades, the United States has been pushing Argentina to draft a law providing for the protection of inventions of pharmaceutical products in order to curtail the local production of medicines using formulas developed abroad.

U.S. ambassadors have often made it clear that the issue is a key one in Argentine-U.S. relations.

Argentina's pharmaceutical industry - one of the most developed in Latin America, along with its Mexican and Brazilian counterparts - has a $2.4 billion annual turnover and provides jobs to over 35,000 people. Local laboratories finally gave in to the constant U.S. pressure and accepted the inevitability of a patent law.

Ironically, the Uruguay Round accords, signed in April 1994 in Morocco despite stiff opposition by the Argentine pharmaceutical industry, was used as a model for the new law, accepted by local firms.

On the other hand, the US now considers that accord inadequate for defending U.S. private interests.

"What is established by the GATT are basic guidelines, but we feel Argentina must go significantly further than what is set in the GATT to guarantee the rights of researchers," U.S. secretary of trade Ronald Brown said this week in Buenos Aires.

However, according to Lewis the only international obligation Argentina has in terms of patents is the GATT accord which stipulates the need for countries to recognise and protect intellectual property rights, while taking into account the interests of key sectors in drafting legislation.

One of the basic conditions of the accord is that the protection of intellectual property rights be subordinated to "promoting innovation and the transfer and sharing of technology in the interests of social and economic well-being."

Argentina's new law - which could yet be vetoed by President Menem - recognises the right of inventors to receive royalty payments, but it also stipulates that the patent-holder must use the invention in the country that grants it.

U.S. laboratories strongly oppose the clause, which seeks to keep foreign firms from leaving the country in question and maintaining factories in only one or two countries in the region.

The new norm in the Trips agreement allows for use of licenses without the authorisation of the patent-holder only in certain specific cases: to neutralise competitive practices and in the case of medical emergencies. The local producer can also obtain a licence without authorisation when no response has been received three years after the request to use the invention was made. In such a case, the National Institute of Intellectual Property, created by the new law, will grant the use of the licence.

Meanwhile, the U.S. Embassy protested a clause which allows an eight-year transition period for the implementation of the norm, while the United States wanted the law to be retroactive.

The Trips accord provided for a 10-year transition period for developing countries to implement their new patent laws, which the Argentine legislature reduced by only two years.

Local laboratories calculate that if a law such as the one wished for by the United States had been approved, some 500 million dollars a year would have been paid to foreign laboratories.

But with the new norm, foreign laboratories will take in a mere 50 to 70 million dollars in royalties, according to studies carried out by the Argentine Centre of Pharmaceutical Industries.

The law, unanimously approved by the lower house - which ruled all biological and genetic material unpatentable - is far removed from the norm proposed two years ago by the executive branch, which was more in line with U.S. wishes.

With the new norm, the U.S. government will be unable to apply the sanctions provided for in U.S. commercial law for those countries that fail to respect intellectual property rights, as occurred in Brazil.

"The biggest danger now is that the President may veto all the key clauses," deputy Rafael Flores, who left the ruling party to join the centre-left coalition, told IPS. Flores said President Carlos Menem has 15 days to veto all or part of the law, but added that "it would be very complicated to do so on the eve of (the May 14) presidential elections."

The parliamentary condemnation of Cheek's statements was interpreted by some legislators as an attempt to deter Menem from vetoing the new law.

The foreign ministry called on the U.S. ambassador to explain why he said that with the new law, "not one peso of investment money will come" for pharmaceutical research.

Menem called Cheek's statements "unorganised and blown out of proportion," but did not rule out the possibility of vetoing clauses that differ from the law his administration proposed two years ago.