PRIORITY FOREIGN COUNTRIES
Intellectual Property Protection
Argentina is one the world's most difficult markets in which innovative U.S. pharmaceutical companies attempt to compete by relying on technological innovation. The Argentinean intellectual property regime denies U.S. companies adequate and effective levels of intellectual property protection through deficiencies in their patent, trademark and data protection regimes. The non-innovative pharmaceutical industry in Argentina, in particular, has contributed to this result through its campaigns against effective and meaningful patent reform. These efforts have prevented the Argentine Government from implementing critically important changes to its patent system, despite its obligations under the TRIPS Agreement and its bilateral commitments to the United States.
Argentina's patent and other intellectual property regimes fall short of the levels mandated by the TRIPS Agreement, whether measured through its current obligations, including under Article 70.9 of the Agreement, or with respect to the requirements that will apply to Argentina on January 1, 2000. The Government of Argentina shows no inclination to attempt to change its system to conform it to Argentina's current or future TRIPS obligations. The result is that U.S. companies are being denied adequate and effective protection of their intellectual property in Argentina and cannot compete or capitalize on their innovations in that market. Given that this situation is not likely to change during the remaining 9 months before the bulk of the TRIPS Agreement becomes applicable to Argentina, the harm being caused to U.S. interests by the deficient intellectual property regime in Argentina will continue for the foreseeable future.
The absence of adequate levels of intellectual property protection in Argentina has prevented research-based U.S. pharmaceutical companies from effectively competing in Argentina for many years. Significant efforts by the United States Government over the past decade have led to commitments being made by the Argentine Government to change its inadequate intellectual property regime. Many of the most critical commitments undertaken by the Argentine Government, however, have not been implemented.
Making matters worse, Argentine passed legislation (Decree 260) in March of 1996 that, while making a number of important changes to the Argentine patent law, incorporates provisions that will serve to perpetuate the pattern of inadequate protection for current and future generations of innovative pharmaceutical products and technologies. It is a virtual certainty that the deficiencies of the new regime will not be cured during the remaining nine months of 1999. This opinion is based on public statements from the Argentine Government that indicate it believes that Decree 260 implements a TRIPS-compliant patent regime, and on the recognition of the effectiveness of the political opponents of patent reform in Argentina, who have prevented establishment of higher levels of protection for pharmaceutical technology for many years.
As noted above, the patent regime established by Decree 260 falls far short of Argentina's obligations under the standards defined in the TRIPS Agreement. The vast majority of the obligations under the TRIPS Agreement will become applicable to Argentina on January 1, 2000, approximately nine and a half months from the date of this report. The more significant deficiencies of the regime established by Decree 260 include:
In the same time frame as Decree 260, the Argentine Government established a new regime governing use of test data generated for regulatory approval. The new legislation addresses handling, protection and use of data generated by pioneer pharmaceutical applicants as part of the required procedures for obtaining marketing approval for new pharmaceutical products. Under the new regime, proprietary information submitted for registration purposes by a pioneer pharmaceutical manufacturer can and will be used by other companies after only four months from the date of registration of the pharmaceutical product. Four months of exclusion from re-use of test data -- or conclusions to grant marketing approval on the basis of a prior approval grounded on that data - is not an adequate or effective form of protection against unfair commercial use of the data. Furthermore, because the new law only addresses pharmaceutical product registrations for marketing approval, it appears to have stripped the other required class of products (i.e., agricultural chemicals) of any protections that these products had under the old law. As a result, the data exclusivity law runs counter to Argentina's obligations under TRIPS Articles 39.2 and 39.3, and is counter to established practices in the United States, Europe, and many other countries.
The status of the Argentine intellectual property situation has deteriorated further over the past year. After nearly five years, Argentina has shown that it has implemented a deficient "mailbox" and exclusive marketing rights system that does not adhere to its current obligations under the TRIPS Agreement. As of January 1, 1995, Argentina became bound by Article 70.9 of the TRIPS Agreement because it elected to defer making product patents available for pharmaceutical products. Argentina promulgated regulations that appeared to provide a mechanism for filing so-called "mailbox" applications, and for granting "exclusive marketing rights." U.S. companies have found, however, that the mailbox and exclusive marketing rights system established by these regulations are illusory.
Indications from the Government of Argentina, including those provided during the recent Argentine state visit, make it clear that the Government of Argentina does not believe it has 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. Efforts undertaken to pursue patent reform, or even to obtain indications from the Government that it is willing to attempt to correct the outstanding deficiencies have not resulted in any positive developments. Coupling this posture of opposing any further reform with a political environment that has been shown to be effective in preventing even minor changes to their domestic intellectual property regime demonstrates that, as of January 1, 2000, Argentina will not have a TRIPS-compliant intellectual property regime. Thus, a very considerable legal uncertainty remains, offering the prospect of extensive litigation to unravel all of the possible interpretations of many ambiguous and contradictory patent provisions.
Argentina's failure to comply with its obligations under the TRIPS Agreement reflects the hostile conditions that U.S. pharmaceutical manufacturers face in that market. Without question, Argentina is the worst expropriator of US pharmaceutical technology in the Western Hemisphere. Local copier manufacturing firms dominate 55% of a pharmaceutical market that currently is estimated at almost $3.6 billion. The continuing loss of market share to these manufacturing firms on the order of nearly $600 million per year is directly attributable to the ineffective intellectual property regime in Argentina.
1995 TOTAL MARKET Sales(*) Market Share
Origin Labs. 3,600 100%
Domestic 2,000 55% European & Other 1,100 31% U.S. 500 14%
(*) Sales in $ US million.
Potential Exports/Foreign Sales
If current trade barriers were removed, PhRMA member company affiliates in Argentina would enjoy a potential increase in sales of over US $500 million dollars.
For all the aforementioned reasons, PhRMA believes that Argentina should be listed as a Priority Foreign Country under Special 301 in 1999.