Intellectual Property Protection

For Lebanon, the outlook for American pharmaceutical products is unclear. As Lebanon rebuilds after a long period of civil strife, pharmaceutical piracy has not yet become a major feature of the health sector, as it is in neighboring Jordan and Syria, although new pirate products are now entering the market on a regular basis. There is new hope that the Government may finally implement WTO/TRIPS patent protection sometime by mid-year 2000, although progress has been slow under the new Minister of Economy, who has responsibility for the new legislation.

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.

Domestic Lebanese, Jordanian, U.A.E., and according to reports, 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 predicted in previous PhRMA NTE submissions, several pirate products are known to be under active regulatory consideration. Moreover, during the last several months, and despite the objections of American and European manufacturers, the Ministry of Health has granted marketing authorizations to a number of pirate copies. The introduction of these domestically produced pirate products can only be interpreted as an ominous sign for American and European research based companies, and a retreat from previous minister of health assurances to US officials who have raised the issue.

Assurances to European and US industry and diplomats are the latest developments in an effort to obtain de facto, if not de jure, patent protection. US 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 in the Registration Committee backlog.

Despite receiving many 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.

Although currently defunct following a financing scandal, the government hints that it might reactivate the Bureau National des Medicaments (BNM). The BNM has stated that one of its goals is the expanded penetration of generic products in the market. Research-based companies acknowledge a role for legitimate generics in the health care system. A government-sponsored scheme, however, is a potentially dangerous development in a market that does not offer protection to patented pharmaceutical products.

Unfortunately, the Ministry of Economy has failed to finalize a new draft patent law that offers product patent protection for pharmaceuticals similar to that required for WTO members under the TRIPS Agreement. Should the current minister of economy (who has vowed progress this year) submit the draft law to the Cabinet, there is still a chance that draft law could go to Parliament by the end of this year. This would open the way toward passage of a new law by mid year 2000.

The passage of this law, however, will require substantial diplomatic and industry support. It should be made very clear to Lebanese authorities that a new, TRIPS conforming patent law is a necessary pre-condition to WTO accession.

Other Trade Issues

During the past several years, 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.

Senior ministry of health officials recently acknowledged that parallel importation has failed to produce any savings on medicines to patients. Parallel importers, distributors, wholesalers and retail pharmacists do not pass on any "savings" associated with exchange rate arbitrage. Senior health officials also recognize that parallel importing puts the drug supply at risk. It is very hard to police the supply of medicines once the chain of supply from manufacturer to authorized importer is broken. Counterfeiting and/or poor quality goods can easily enter the drug supply.

Public sector procurement remains another serious trade barrier. 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.

Finally, research based companies have urged the Government to develop a "fast track" approval process for New Chemical Entities (NCE) and their associated line extensions. This would speed the introduction of new, innovative and often life and/or cost saving medicines to patients. Unfortunately, a lack of resources, outmoded regulatory requirements, and the lack of criteria for distinguishing between innovation and imitation, contribute to unnecessary delays to registering new products. Delays of up to two years are common, while in neighboring Cyprus, new products are often approved in as little as 90 days (based on prior "reference country" approvals, e.g., FDA or European Medicines Evaluation Agency approvals). To date, the Government has failed to take any action regarding industry proposals, meaning Lebanese patients often must search abroad or travel to obtain the latest medicines.

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. The total pharmaceutical market is estimated in 1999 at US$280 million (at retail pharmacy level), with average annual growth between 1994 and 1998 at 30% per year.

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. The introduction of pirate and or parallel imported products also poses risks to patients.

PhRMA urges that serious reforms be undertaken in the Government procurement sector and regulatory procedures to remove unnecessary or protectionist obstacles to new and innovative pharmaceuticals. This will greatly benefit patients, the health care sector, and encourage greater investment, technology transfer and spending from foreign companies.