Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama)
Intellectual Property Protection
Central America continues to be characterized by a history of weak or non-existent patent protection. Although several Central American countries have made headway in protecting intellectual property, the area of patents has singularly experienced very slow progress. Further to a history of weak or non-existent patent protection for pharmaceuticals, the pervasive poor enforcement in Central American countries not only constitutes an obstacle to implement protection, but it represents, in effect, its major future challenge. The abundance of counterfeit pharmaceuticals which threatens the region's public health constitutes another consequence of the general lack of enforcement in the area.
Currently, the regional project Central American Agreement on Inventions and Industrial Designs (Convenio Centroamericano sobre Invenciones y Diseños Industriales) remains under discussion by representatives of all countries; however, despite the effort made by the intellectual property offices from the different countries, the adoption of the provisions of this Agreement is uncertain. Still, this Agreement does not fully comply with the requirements set forth by TRIPs, especially in the areas of compulsory licensing and international exhaustion, nor does it provide pipeline protection. It is anticipated that the revision of this project will conclude in the next discussion meeting which is expected to take place in February 1999. Once an agreement is reached, each national assembly has to approve it. Thus, although initiatives made by some governments to implement adequate and effective pharmaceutical patent protection should be commended, tangible results are still far from being reached.
The current patent regime dates back to 1983 and does not comply with the minimum requirements set forth by TRIPs: there is a twelve-year term, however, patents deemed to be of significant public interest, such as pharmaceuticals, receive only one year patent protection. Especially for the pharmaceutical industry, which needs from 10 to 12 years to develop a single new product, this provision constitutes a flagrant offense to international standards. Local manufacturing of patented products is obligatory, unless recognition of a reciprocity principle, valid only within the Central American region. In case local manufacturing occurs, parallel importation is restricted. Furthermore, the law provides for compulsory licensing in the event the patent holder does not manufacture locally the patented product and allows for patent expiration based on non-manufacturing principles.
The most recent patent legislation, approved by Decree Law No. 604, and effective since November 1993, represented a significant step in terms of patent protection in this country. However, several provisions of this legislation are not consistent with TRIPs. These are: only fifteen years from the date of solicitation for pharmaceutical products and processes; a broad interpretation for patentable material; overly broad compulsory licensing provisions, the potential for obligatory compulsory licenses; and no protection for products in the pipeline. On the positive side, the law protects against parallel importation and does not require local manufacturing of patented products.
Considered the most onerous regime in the region, Guatemala's current law, Decree Law No. 153-85, effective since 1986 does not provide protection for pharmaceutical or chemical products. Serious changes must be made to bring a new legislation that complies with the requirements set forth by TRIPs. The law provides also for compulsory licensing; local manufacturing of the patented product is mandatory; parallel importation is allowed; and enforcement is limited. Although new legislation is before the Guatemalan Congress, no significant steps have been taken to make progress on the issue. Meanwhile, although compelled under TRIPs to establish a "mail box" to guarantee exclusive marketing rights for up to five years, the Intellectual Property Office of Guatemala has not seriously developed such provision.
In December 1993, Honduras enacted its current patent regime, Decree Law No. 142-93. Although the current law is modern, several provisions are not consistent with TRIPs: a patent term of 17 years from application for pharmaceuticals; international exhaustion that opens the doors to parallel importation; compulsory licensing subject to broad interpretation; and no protection to products in the pipeline. Enforcement of the law is also very limited.
The current law which has been in effect since 1899 is considered extremely inadequate and has no real effect or practical application. Patents receive protection for five to ten years, the duration of which is left to the discretion of the Registrar. In some cases, the patent is renewable for an additional ten years, however no pharmaceutical patents are currently accepted. Although not regulated, it can be assumed that international exhaustion of rights prevails and parallel importation is not restricted.
Panama enacted the most recent legislation in the Central American region. Current Decree Law No. 35 went into effect in May 1996, and is consistent with TRIPs requirements. The law completely eradicated any provisions for compulsory licensing. Patent exhaustion is local, protecting against parallel importation. Additionally, past expiration based on non-manufacturing was eliminated. Efforts should now be directed towards improving the registration procedures and administration of justice, allowing for an effective and practical application of the new legislation.
Nicaragua and Panama continue to maintain a policy of price controls on pharmaceutical products. Recent Ministry of Health and Presidential Decrees in Costa expressly aim to reduce pharmaceutical prices, allowing parallel imports by wholesalers and promoting the use of generics by explicitly requiring that pharmacists provide consumers options similar or equivalent to what has been prescribed.
Potential Exports/Foreign Sales
If barriers were lifted in Central America, the increase in sales for PhRMA member company affiliates would range between US $100 to US $500 million dollars in potential exports.
For all the aforementioned reasons, PhRMA believes that Central America should be placed on the Watch List under Special 301 in 1999.