by Deborah Portilho and Rana Gosain
Managing Intellectual Property, IP Focus Americas, 3rd ed. London, 2007. p. 27-30
Brazil is one of the largest markets for pharmaceutical products in the world, with one pharmacy for every 3,300 inhabitants, which is almost twice the number recommended by the World Health Organization (WHO). The annual sales of pharmaceuticals in Brazil have been increasing consistently over past years. The market has the potential to double and reach more than $ 15 billion. This could be a dream scenario for the pharmaceutical industry, but several hindrances stand in the way. The industry is fighting battles against a few domestic laboratories and against Anvisa, the Brazilian Health Authority. This article discusses the problems, which affect the patent and trade mark rights of pharmaceutical companies doing business in Brazil.
Foreign pharmaceuticals in Brazil
Foreign research-based pharmaceutical companies doing business in developing countries during the last decade have experienced a rather hostile climate in the pharmaceutical environment. There has been an urgency to negotiate the prices of life-saving drugs with health authorities from those countries rather than face the imminent granting of compulsory licenses of their patents. The policies adopted by the Brazilian government have been harsh. In May this year, the government issued the first compulsory license on the grounds of public interest after negotiations with patent owner Merck when price reduction of the HIV drug Efavirenz fell through. This was without doubt the most severe penalty the Brazilian government has applied. Pharmaceutical companies, including Merck, Roche, Abbott, Pfizer and GlaxoSmithKline, are concerned about the future of pharmaceutical patents and about the policies adopted to reduce the price of pharmaceuticals.
For example, Law 10,196/2001 introduced restrictive and controversial amendments to Patent Law 9,279/96. One of these amendments empowers the Health Ministry’s National Surveillance Agency, Anvisa, to give the final word on the approval of pharmaceutical patents. The requirement signals that the government is not comfortable with the idea of granting pharmaceutical patents for certain products, in particular HIV drugs. It has put an additional hurdle to delay the granting of such patents.
The other significant change in Law 10,196/2001 is a provision equivalent to the Bolar Exemption, adopted by the United States in 1984. This provision enables unauthorized third parties to have access to confidential data and test results submitted by a pharmaceutical company with the purpose of producing a patented drug, after the respective patent has come to an end. This act is exempted from infringement because the provisions favour quick entry of generic versions of brand name products into the Brazilian market, once the patent has expired.
Following the enactment of Patent Law 9,279/96, the Brazilian government approved two related laws. These are Law 9,787 of February 10 1999, which regulates provisions on generic drugs, and Law 10,603 of December 17 2002, which protects confidential data and information submitted for obtaining approval of agrochemical, veterinary and pharmaceutical products.
Earlier this year, the Pharmaceutical Research and Manufactures of America (PhRMA) lodged a formal complaint with the World Trade Organization (WTO). They alleged that the Brazilian government is violating Article 39.3 of the TRIPs Agreement by disclosing confidential data to unauthorized third parties who seek sanitary registrations. This allegation may not be absolutely correct. Brazil’s Regulatory Law 10,603 of December 17 2002 guarantees non-disclosure and non-use of submitted test results and data during the period of protection. Protection can be for five or 10 years depending on the classification of the product. Once the protection periods prescribed in article 4 of the law had expired, the regulatory official may disclose the data whenever requested by third parties.
A further concern of the pharmaceutical companies is that Brazil’s Regulatory Law 10,603 of December 17 2002 exempts regulatory officers from responsibility in granting sanitary registrations to third parties that cover patented drugs. In some countries, such as the US, the regulatory officer will check the Orange Book listing to determine whether the granting of a registration on a drug to a third party will infringe prior patent rights.
It should be clear that the lack of a dynamic and modern IP system will block substantial investment and divert it to other developing countries whose laws and policies favour patent rights. Ironically, Brazil’s market potential as a net taker of investments is widely acknowledged. Its ranking as one of the promising economies of the Brazil, Russia, India and China group (BRIC) has become notorious.
The backlog of patent applications pending substantive examination at the Brazilian Patent and Trademark Office (PTO) is alarming. The simple reason is the inadequate number of patent examiners – approximately 200 – responsible for examining all of the technological areas. The result is a seven to eight year delay for a pharmaceutical patent application to issue.
Trade mark-related problems
The first problem in this area arose in February 2002, when Anvisa issued an official communication to pharmaceutical laboratories and importers in Brazil advising that, based on article 5 of Decree 79,094/77, as of April 8 2002 Anvisa would no longer permit the importation and sale of immunobiologicals (which include vaccines and immunoglobulins) identified by trade marks. This prohibition derived from a requirement originally introduced in 1976 by Law 6,360, which was implemented in January 1977 by Decree 79,094. The Brazilian health authorities had apparently never enforced this law, as vaccines and other immunotherapeutic products were regularly commercialized under their respective trade marks until 2002. Anvisa was created in 1999 and addressed these legal provisions in its Resolution, RDC 92, of October 23 2000, which deals with generic products. It reaffirmed, in the fourth paragraph of article 4, that “immunotherapeutic products cannot, under any circumstance, have coined names or trade marks”. This is a unique situation. No other country seems to have a similar prohibition. In view of some practical and technical considerations, the Pharmaceutical Industries Union (SINDUSFARMA) and the Brazilian Society of Immunization filed a court action in an attempt to have Anvisa’s resolution revoked. Since the action is still pending awaiting a second instance decision, all vaccines are being commercialized in Brazil without trade marks. Nevertheless, the Brazilian PTO has been granting trade mark registrations for vaccines on a regular basis.
High tax rates and price control
In addition to the high tax rate applied to pharmaceuticals in Brazil, which, at present, amounts to 35% of the end price of the medicines, the pharmaceutical industry faces another major problem with the pricing of its products. Since the enactment of Law 10,742/2003, the price of any medicine must be approved prior to its launch in the market. After this readjustments are only granted on an annual basis by the Brazilian Chamber for the Regulation of the Market of Medicines (CMED).
According to the Brazilian economist Felipe Ohana, this control disadvantages those who are in need of modern medicine to treat their diseases. It deters the introduction of innovative medicines to the local market. In fact, a comparative study has demonstrated that in 2004 the 20 largest pharmaceutical laboratories in the world launched 60 new products in Mexico and only 34 products in Brazil. Moreover, 21 of these 34 products were introduced in the Brazilian market up to two years after they had been launched in Mexico.
In Ohana’s view, even if there were initially limitations, the end of government price control and the acceptance of a self-regulated market would significantly decrease the price of medicines to consumers. Unfortunately, since the Brazilian authorities apparently do not share this opinion, the price of medicines in Brazil tends to continue to be rigorously regulated. The industry will therefore have to continue its struggle to survive.
Influencing advertising
Another concern of pharmaceutical companies doing business in Brazil relates to the advertising of their products. For more than 24 years there was no official control over advertising of pharmaceutical products. In November 2000 Anvisa implemented rigorous rules through Resolution RDC 102. A survey carried out by IBOPE Monitor compared the first trimesters of the years 2000 through 2007, and found that pharmaceutical industry investment in publicity had grown almost 70% over the past three years, as opposed to 33,6% growth in publicity in general.
This prosperous scenario may change in the future. Since there are many loopholes in the existing resolution, Anvisa prepared a new text with much stricter rules. This new text was published for public consultation in November 2005 and is expected to be implemented soon. According to Anvisa, advertisements of pharmaceutical products should not just exalt their qualities, but also draw consumers’ attention to their risks and this is not being done properly by the industry. Anvisa’s most important goal is to achieve a balance in the information that companies provide to consumers through their advertisements. If companies do not achieve this balance, they will still be expected to be concerned about the stricter rules that will soon take effect.
Multiple trade marks
Another concern for the pharmaceutical companies is Anvisa’s prohibition to the effect that a given company cannot sell the same substance under two different marks. This prohibition appeared in an internal Anvisa note issued in August 2004, and was later confirmed by an Anvisa Committee. It states that the same pharmaceutical company cannot own more than one registration covering the same product in the same presentation identified by different trade marks. According to the internal instruction, the legal basis for this prohibition is Article 124, Item XX, of Law 9,279/96, which happens to be the Brazilian Patent and Trade Mark Law.
It is clear to trade mark attorneys that Anvisa has misinterpreted the provision. What the Patent and Trade Mark Law prohibits is the “duplication of trade marks in the name of a single owner for the same product, unless they are displayed in a sufficiently distinctive form”. As in foreign laws, the purpose of this provision is to prevent trade mark owners from duplicating trade marks in an attempt to circumvent cancellation proceedings on the grounds of non-use. Anvisa has not only misinterpreted the provisions of the Trade Mark Law, but is also applying the Law when it is not within its jurisdiction to do so. In fact, the provision in question deals with prohibitions concerning the registration of trade marks. Anvisa does not register trade marks, but only approves their use once registration of the corresponding product has been obtained.
Conflict between marks
Prior to 2005, whenever there was a conflict between two product names (marks), Anvisa would give priority to that which identified the product that was first submitted for registration before Anvisa, even over a previously applied-for or even registered trade mark for a product which was submitted to Anvisa at a later date.
Surprisingly, however, since June 2005 Anvisa has been recognizing the rights of trade mark owners and applicants over the rights of the companies which have merely applied for a product registration, even when the product was registered with Anvisa at a date earlier than that of the filing of the application or registration at the Brazilian PTO. This analysis has been conducted by Anvisa in an effort to clean up its database in order to eliminate confusingly similar trade marks. For this purpose, it has requested the owners of the marks deemed to be in conflict to present a copy of the certificate of registration or of the application petition, so as to determine which company has prior rights over the mark.
Of course there have been many discussions concerning this matter, particularly regarding Anvisa’s legitimacy to request the alteration of marks that have been in the market for many years. In any case, since this is a rather complex matter, a solution for some of the conflicts pointed out by Anvisa is likely only to be decided in court.
Dressing up generic products
In addition to the problems with Anvisa, multinational pharmaceutical companies also face a complicated situation regarding the use of the trade dress of the packaging of their over the counter (OTC) products by generic companies, which has prompted the filing of several court actions. The strong interest of generic companies in the use of such packaging seems to have been the reason behind the presentation of a Congressional Bill, on June 2 2005, by the former Federal Deputy Roberto Gouveia (PT/SP). He proposed the adoption of the trade dress of reference OTC products by generics, as well as the use of their trade marks on the packaging of generics. Because Gouveia was not re-elected in 2006, his bill was automatically abandoned. However, a new bill was presented before Congress on February 2 2007, by the Federal Deputy Dr. Rosinha (PT/PR), with the exact same proposal as that of the original. The matter is still pending. Fortunately, it has just received an unfavourable vote by Deputy Alceni Guerra (PFL/PR), who was the Minister of Health during the presidency of Fernando Collor de Mello in the early 1990s.
Furthermore, on August 18 2006, Anvisa published Public Consultation 46. It refers to a proposed resolution which would ensure that trade marks of all reference products be placed on the packaging of the corresponding generic product, in a size not larger than one-quarter of the size in which the name of the active ingredient is written, and without any stylization. This Public Consultation was probably published for the same reasons that prompted the presentation of the bill mentioned above.
In reply to this Consultation, the Trademark Commission of the Brazilian Association of Intellectual Property (ABPI) sent a document to Anvisa formally criticising the proposed resolution. Other bodies, as well as trade mark owners and their local licensees have also presented their own arguments to Anvisa against the requirements of the Consultation. So far, no decision has been made on the matter.
Even though the battle with the generic companies is not close to an end, there have been two important first instance court decisions against their desire to copy the packaging of major OTC products. If these decisions are maintained by the higher courts, they may be used to defeat not only the Congressional bill under analysis, but also Anvisa’s proposed resolution.
An uncertain future
With regard to trade marks, it is important to acknowledge that, even though Anvisa has misinterpreted provisions of our Trade Mark Law, it is at least recognizing the existence of such a Law, which is something that it simply did not do in the not-so-distant past. Therefore, there may be light at the end of the tunnel in the trade mark area.
On the other hand, it is clear that Anvisa will continue to interfere in pharmaceutical patent matters. The decision to empower Anvisa with the approval of pharmaceutical patents does not make sense. It will serve to stimulate conflict between PTO examiners and Anvisa’s authorities. In addition, the legitimacy of several of Anvisa’s actions should be challenged on the basis of being unconstitutional.
Brazil needs to organize its PTO infrastructure urgently. The federal government must expedite and give priority to infrastructure change to promote efficiency. It must transform the agency so that it can be respected. Delays in granting patents are normal even for developed countries. Excessive delays such as these at the Brazilian PTO will increase dissatisfaction and create a lack of credibility in Brazil’s patent system.
Finally, the government authorities should carefully examine the possibility of granting patent term extensions for pharmaceutical patents to compensate for the delays (of 12 to 13 years) involved in obtaining regulatory approval for the commercialization of new drugs. Countries such as the US, Japan and Europe have been granting supplementary protection certificates for some time now. The pharmaceutical IP environment in Brazil is not favourable. However, the president of the PTO seems to be taking measures, such as increasing the number of patent examiners, which should improve the situation.
