United Arab Emirates

Intellectual Property Protection

Despite a Government statement to the press and reassurances to European and US diplomats, there is dwindling hope that the UAE will complete passage of patent legislation to meet its January 1, 2000 TRIPS obligations.. In fact, our latest reports suggest that the UAE may seek a five-year delay in pharmaceutical patent protection. The UAE would then be the only GCC member state claiming the additional five year implementation period.. The delay seems completely unjustifiable given the UAE's strong economy, level of development, high per capita income and flourishing pharmaceutical sector. It would also be strangely at odds with the UAE's highly publicized drive to be viewed as an attractive and "world class" commercial hub for the region.

In 1992, the United Arab Emirates (UAE) promulgated a new patent law. Article 6.2 of the law specifically exempts medicines and pharmaceutical compounds from product patent protection. The only protection allowed for medicines and drugs are ineffective process patents. Additionally, compulsory licensing provisions do not meet TRIPS requirements and a statement that importation does not meet local working requirements also violates TRIPS. The lack of progress on patents contrasts with recent progress on trademarks and copyrights, where new legislation substantially reducing infringement is in place and there are documented attempts at enforcement.

In June 1997, an official from the Ministry of Finance and Industry announced that the UAE would amend its patent law to provide pharmaceutical product protection by the year 2000. It has since been reported that the draft law has been sent to WIPO for review. While this is encouraging news there has not yet been any opportunity for comment and review by the U.S. or private industry. It is also unclear if the draft law will represent a true "world class" patent law with inclusion of pipeline protection and other TRIPS-plus features, or meet only bare minimum standards

Meanwhile, a local company, Julphar, continues to copy European and American patented pharmaceuticals products. The company appears to have some influence on the Government, and has been increasingly active in its attacks on the WTO/TRIPS and patent protection for pharmaceuticals. There are reports that subsequent to the Ministry of Finance and Industry announcement in 1997, Julphar and regional generic companies are rushing to submit pirate product marketing applications to the Ministry of Health in order to "grandfather" the marketing registration of these products in anticipation of the new patent law.

An informal survey of companies in November 1998 has identified at least 8 pirate product applications that have recently been submitted to the MOH, and are pending approval. In fact, one of these products, a pirate copy of a leading US pharmaceutical, was recently approved and has entered the market, an ominous development. The affected US company raised the issue to UAE health and commerce officials, but was unsuccessful in its effort to de-register the product. In fact, the minister of health refused to meet with company officials.

Research companies also note that in February, the UAE supported GCC Resolution No. 11, calling for a five-year delay in pharmaceutical patent protection, until at least 2005.

While work on the patent law progresses slowly, American pharmaceutical companies remain vulnerable to recurring threats to register pirate copies of internationally patented products. The unresolved issue of pharmaceutical, biological and chemical patent protection deserves to be kept in focus as the "last frontier" of adequate and effective intellectual property protection in the UAE.

Other Barriers

Research based companies are concerned about a perceived lack of transparency and possible conflict of interest at the Ministry of Health. It would appear that some health officials might hold financial interests in certain local health and/or pharmaceutical companies. Indeed, on more than one occasion, research industry has observed local health officials-many of whom have responsibility for policies and procedures affecting multinational companies, openly working to promote local companies to other Gulf and Middle East officials.

As is the case with other GCC countries, the UAE allows "local" GCC producers up to 20% higher prices in public sector bidding and procurement, vs. multinational companies. This rule is in place despite ongoing Government cost containment programs, and allows local generics companies to "shadow price" foreign competitors.

Potential Exports/Foreign Sales

While current US losses due to piracy are low, the potential exists for substantial losses in this market (Estimated at CIF $220 million). The UAE represents the second largest of the GCC states after Saudi Arabia. PhRMA is concerned that in the absence of adequate and effective patent protection, the Ministry of Health may acquiesce to pressure from local and regional generic companies to register new pirate copies in advance of anticipated changes to the patent law. Moreover, a new patent law not including a "pipeline" provision would imply a tremendous risk to dozens of new products currently in the R&D cycle, but not yet available on the market in the UAE.

PhRMA companies have long hoped that progress on patents in the UAE would be seen as a model to other GCC countries, but it appears now that the UAE may be alone in demanding a five year transition period after year 2000. PhRMA urges US officials to prioritize the IPR issue on the bilateral agenda.