Pharmaceutical Research and Manufacturers of America - Policy Views - Issues Around The World - Special 301 Report



From the viewpoint of the research-intensive pharmaceutical industry, Argentina has the worst industrial property regime in our Hemisphere. It intentionally permits the local industry to copy our products immediately without having to expend the resources to develop and market these products. Thus, it rewards copying and discourages innovation. To make matters worse, there are proposals to dilute the meager level of protection currently provided, including proposals to extend the starting date for patent protection for pharmaceutical product, to require domestic use of patented inventions, and to expand the extensive compulsory licensing provisions. Finally, officials appointed at the end of the last Administration responsible for the National Institute of Industrial Property refuse to execute the TRIPS Agreement and Argentine law in an effort to protect those who copy our products.

The current Administration has not yet demonstrated that it will or can obtain the changes necessary to fulfill the minimum standards contained in the TRIPS Agreement and to provide for an effective agency for granting industrial property rights.

This situation is not new. To avoid trade sanctions by the U.S. Government, former President Menem promised in 1989 to enact a patent law in Argentina that would among other things:

Decree 290/96 promulgated in 1996 provided most of the current regime. It, however, did not contain the safeguards promised by President Menem. For example, patent applications for pharmaceutical patents could not be granted until October 2000, four years after promised. Worse, a number of its provisions are inconsistent with the TRIPS Agreement.

While the Decree did provide for one type of transition protection called "exclusive marketing rights" (EMR), health officials refused to enforce the innovator's rights in the one instance when an EMR was granted. Since then, officials at the National Institute of Industrial Property refuse to issue rights to any of the applicants despite clear evidence that the applications meet the criteria set forth in the Decree and the TRIPS Agreement. We believe that this is egregious behavior and appreciate efforts by the U.S. Government to intervene, including initiating consultations under the WTO dispute settlement procedures.

A separate law was enacted to regulate the disclosure and protection of test data used in connection with applications for marketing approval of pharmaceutical and agricultural chemical products. Instead of protecting this data from "unfair commercial use" as required by TRIPS Article 39.3, it permits competitors to rely on the test data prepared at great expense and submitted by the developer of the product. As a consequence, any competitor can begin to market the innovator's product no later than 120 days after a request to market without having to undertake the expense of proving that the product is safe and effective.

In other words, innovative companies develop new products and prove that they are safe and effective, while the local companies are permitted to copy the products almost immediately without the permission of the innovator.

The approval by the Argentine Congress of this unacceptable regime is the result of the Argentine domestic laboratories' pressure to maintain barriers to U.S. trade and investments, and maintain Argentina's deficient industrial property regime well beyond the time frame stipulated by the WTO. As mentioned, the final months of 1999 were dominated by efforts in the Argentine Congress to step back from existing TRIPS commitments, extending the transition period for compliance beyond the year 2000 (to 2005).

Additional congressional efforts included a draft bill instructing the government to promote production of those medicines excepted from patent laws, and creating a restrictive National Therapeutic Formulary including only those medicines authorized for prescription in the public and social funds programs accounting approximately 80 percent of the market.

Indications over the past year, made it clear that the Menem Government did not believe it had to pursue or implement any additional changes to its intellectual property regime to comply with the post-January 1, 2000, obligations of the TRIPS Agreement. The new Administration has not advocated any changes to the current regime. Given the political environment, however, it has been impossible to obtain even modest improvements to the industrial property regime. Indeed, it is far more likely that the Congress would enact legislation that reduces, rather than increases, the level of industrial property protection available in Argentina.

Therefore, it is unlikely that any positive actions can be expected in the foreseeable future. We believe that only a decision by a WTO dispute settlement panel finding that Argentine practice is inconsistent with the TRIPS Agreement will induce change in Argentina. Consequently, we urge the U.S. Government to initiate a WTO dispute settlement case against Argentina for the inconsistencies in their industrial property regime and move quickly as possible to request a panel challenging their failure to implement the EMR provisions of TRIPS Article 70.9 effectively.

Damage Estimate

PhRMA is currently studying methodology for estimating damages caused by these trade barriers in Argentina (see Appendix B). However, substantial and continuing loss of market share in the range of hundreds of millions of dollars per year is directly attributable to the ineffective intellectual property regime in Argentina.