Intellectual Property Protection

The outlook for American pharmaceutical products in Lebanon is unclear. As Lebanon rebuilds after a long period of civil strife, pharmaceutical piracy has not yet become a major feature of the economy, as it is in neighboring Jordan and Syria. And there is new hope that the Government may implement WTO/TRIPS patent protection by year 2000.

Indeed, Lebanon is poised to go in either of two directions: toward a safe and quality pharmaceutical market where innovative, patented products and legitimate generic copies can co-exist and provide doctors and patients with an array of therapeutic options; or, one in which the healthcare market may be overrun by poor quality pirated copies. In the latter scenario, both the patient population and the economy will suffer as international research-based companies refrain from various forms of investment, technology transfer, training and other value-added activities, as such investments will provide benefits to pirating companies rather than the originator.

Recent reports continue to support market intelligence that Jordanian and Syrian pirate companies are aggressively pressuring Lebanese health authorities to register unauthorized copies of internationally patented pharmaceuticals. American companies are especially concerned about the recent registration of 2-3 generic companies, well known regionally for their pirating activities. As was reported in previous PhRMA submissions, several pirate products are known to be under active regulatory consideration. Moreover, in December 1997, a well-known Jordanian generics company launched a pirate version of a U.S.-patented product, a worldwide top-selling antibiotic. The introduction of this pirate Jordanian product can only be interpreted as an ominous sign for American companies, and a retreat from Ministry of Health assurances to U.S. officials. The pirate introduction comes despite MOH assurances to the U.S. Ambassador that measures would be undertaken to prevent pirate product registration.

The assurances to the U.S. Ambassador are the latest developments in an effort to obtain de facto, if not de jure, patent protection. U.S. and European research pharmaceutical companies and local licensed manufacturers have urged senior Ministry of Health (MOH) officials to deny registration to dozens of poor quality, unauthorized copies believed to be held in the Registration Committee backlog.

Despite receiving assurances that "the Government of Lebanon supports intellectual property rights," there is no tangible indication that MOH regulations have been issued to block registration of infringing products.

There is hope, however, that the new Government of Lebanon is moving to amend the antiquated patent regime. A draft patent law has been approved by the Minister of Industry, Economy and Trade that provides basic product patent protection to pharmaceuticals. At this writing, approval of the draft patent law is pending with the Ministry of Justice, which has agreed to review the draft law for compliance with TRIPs. It is hoped that by April, the Minister of Justice will make the required amendments and revisions and return an approved draft patent law to the Cabinet. Should the Cabinet approve the law, and there are reasons for optimism given recent public statements in support of an overhaul of the antiquated intellectual property laws, then the legislation could be on track for Parliamentary approval by year end. The passage of this law, however, will require substantial diplomatic and industry support.

Of recent concern are reports of a renewed effort to revitalize a scandal plagued government bureau (the Bureau National des Medicaments), which confirms that one of its goals is the expanded penetration of "generic" products in the market. This is a potentially worrisome policy in a market that does not offer protection to patented U.S. products. While PhRMA does not object to the registration of legitimate generics, we are concerned that pirated product registration and importation may be encouraged by a revitalized Bureau.


Other Trade Issues

In the past year, there has been a substantial rise in the parallel importation of pharmaceuticals. The importation of these products as a "cost containment" measure represents a violation of patent rights, and due to porous supply chains outside the manufacturer's control, poses serious health and safety concerns because counterfeit products may enter the country via parallel trade.

A serious trade barrier concerns public sector procurement. The Government procurement policy discriminates against foreign suppliers by allowing local manufacturers a 15% price advantage in Government business. This discriminatory practice contributes to higher costs for public sector procurement -- ironic considering Government efforts at cost containment -- and represents an added burden on taxpayers. It is also widely acknowledged that locally produced products have "priority standing" over imported products in Ministry of Health registration procedures, which translates into shorter waiting periods for obtaining marketing authorization.


Potential Exports/Foreign Sales

Lebanon represents one of the fastest growing pharmaceutical markets in the Middle East, and there is significant market support for innovative, branded pharmaceuticals. However, as the market is still rebuilding following the civil war, it is not possible to estimate the potential growth in U.S. exports or sales.

There is considerable risk that without sustained pressure to upgrade the existing patent law, Lebanon could go the way of Syria or Jordan -- with sales losses to American companies in the tens of millions and risk to manufacturing investments.



Lebanon is considered a PhRMA priority country in the Middle East region. In recent years, American companies have been investing in Lebanon and growing rapidly, displacing European competitors. The future is unclear however, as Jordanian, Syrian and other companies are pushing for greater market penetration, including pirate versions of top-selling products. The Government has not taken any tangible action to prevent this, and is in fact facilitating pharmaceutical piracy by registering pirate products and encouraging generic use. There are encouraging reports, however, that the Government is committed to reforming the patent law in line with international obligations, however, in the meantime, US companies remain vulnerable to piracy.

For all the aforementioned reasons, PhRMA believes that Lebanon should be listed as a Watch Country under Special 301 in 1999.