Cablegate: What's Next for the Roxas Bill?

DE RUEHML #1370/01 1200802
O 300802Z APR 07





E.O. 12958: N/A
SUBJECT: What's Next For the Roxas Bill?

REF: 06 Manila 837


1. (SBU) With Congress now in recess, the Roxas pharmaceutical bill
will not pass before the May elections, and may not pass at all.
Despite initial worries that the bill would contravene TRIPS in
several respects, Post's engagement with Roxas and other legislators
helped to secure several amendments to bring most aspects of the
bill into conformity with international agreements. Given the
political appeal of less expensive prescription drugs, Roxas may
make a last ditch effort to get his legislation passed in the short
lame duck session in June and, if that fails, will likely
reintroduce his bill in the next Congress. Post will continue to
engage Congress on the pharmaceutical bill, and is generally
encouraged by the inclination of many legislators to consider the
quality of IPR protection before voting for the bill. End summary.

The Populist Desire for Cheaper Prescriptions

2. (U) Senator Manuel "Mar" Roxas introduced the "Cheaper Medicines
Act," more commonly called the "Roxas Bill," in November 2005. The
bill was a political response to the high cost of pharmaceuticals in
the Philippines relative to the rest of Asia. The bill sought to
lower the cost of drugs and increase competition among
pharmaceutical manufacturers primarily by:

--making it easier for the producers of generic drugs to access the
proprietary data of patent holders;
--prohibiting the granting of patents for new uses of existing
--permitting parallel imports of patented pharmaceuticals;
--applying the principle of international patent exhaustion to
shorten the terms of certain Philippine-issued patents.

In its initial form, the Roxas Bill appeared to violate several
provisions of TRIPS, most seriously in its data exclusivity
provisions and its prohibition on new use patents.

Prejudice and Presidential Aspirations

3. (SBU) Roxas, upon his election to the Senate in 2004, was
inclined to legislate on pharmaceuticals as a result of his prior
encounters with the drug industry as Secretary of Trade and
Industry. In that position, Roxas had advocated the parallel
importation of pharmaceutical products from India for sale in
government-run neighborhood pharmacies. This in turn led a
multinational drug manufacturer to sue the GRP successfully for
patent infringement. This left Roxas with an axe to grind against
drug companies, and a prejudice against what he considered to be
overly generous GRP patent protection for prescription drugs.

4. (SBU) Roxas clearly also sees the pharmaceutical price issue as
a political winner in the lead-up to 2010 presidential elections, in
which he plans to run. In 2004 Senate elections Roxas received the
highest number of votes ever in a Philippines-wide campaign. Roxas
clearly believes the popularity of lower drug prices can benefit him
politically. Other politicians agree, and not one of them has been
willing to take a public position against the bill.

Post's Response

5. (SBU) Given the contradictions between the first drafts of the
Roxas Bill and TRIPS, and the potential damage that this could do to
American pharmaceutical companies, Post actively engaged Roxas and
other legislators, coordinating closely with the Department and the
Office of the United States Trade Representative. Officers from the
Economic Section have met with Roxas on several occasions over the
past two years, as have USTR officials. Post also met repeatedly
with Representative Junie Cua, chair of the Trade and Industry
Committee in the House and sponsor of the counterpart bill on the
House side and with various other legislators. All were receptive
to USG views of the bill, and maintained their willingness to amend
the bill to eliminate most conflicts with TRIPS. However, Roxas and
Cua held their ground on new use patents, rejecting the argument
that TRIPS mandates their issuance and arguing that few other
countries permit them.

MANILA 00001370 002 OF 003

The Pharmaceutical Lobby

5. (SBU) The pharmaceutical lobby, led by the Pharmaceutical and
Healthcare Association of the Philippines (PHAP), has made its own
efforts on the Roxas Bill, though PHAP focused more on defeating the
bill than on obtaining amendments. PHAP concentrated on a public
relations campaign that warned that parallel importation would
introduce counterfeit drugs into the country. Few of its
last-minute proposals for far-reaching amendments were considered
seriously in Congress.

Senate Passage, Controversy in the House

6. (U) As the May 2007 elections neared and the 13th Congress moved
to wrap up its business, the Senate and House versions of the Roxas
Bill moved toward final votes. The Senate bill (SB 2263), fresh
from amendments made during interpellation that generally reinforced
the primacy of TRIPS, passed unanimously on January 31, illustrating
that given the strong public appeal of the issue, the bill would
likely pass final votes regardless of its content. In the House,
Cua's bill came up for debate on second reading during a two-day
special session on February 19-20.

7. (SBU) During this debate, an incident arose in the House
involving lobbyists from PHAP. With the election campaign underway,
many legislators were not present in the House. A note from PHAP
representatives urging a Congressman to request a quorum call
circulated among several legislators, who accused PHAP of violating
House rules. A shouting match ensued on the House floor as these
members tried to force the lobbyists to leave. Once order was
restored, several amendments from the floor toughened the bill by
requiring all pharmacies to sell parallel imports alongside versions
produced for the Philippine market and creating a price control
board for pharmaceuticals. Roxas' staff told us that the senator
had no prior warning of these amendments, and that he does not
support price control mechanisms. The amended bill passed the House
on second reading, and still requires approval on third reading
before it can go to a conference committee.

Could It Still Pass In This Session?

8. (SBU) Congress is now in recess until after the May 14 elections,
at which point it is likely to meet for only three days. However,
there is a chance that the bill could pass during the lame-duck
session the week of June 4. Joaquin Lagonera, head of the
Presidential Legislative Liaison Office, told EconOff that President
Arroyo considers the medicines bill a priority and has instructed
him to work to secure its passage in this Congress. Lagonera said
that several House members have indicated that they are considering
abandoning their own version of the bill and passing the milder
Senate version on third reading. Doing so would obviate the need
for a conference committee and place the bill on the President's
desk for signature. Post will follow up with Lagonera as part of
our efforts to gauge intentions.

Or Will It Wait For The Next Congress

9. (SBU) If it does not pass in this Congress, Roxas is likely to
reintroduce his bill in the 14th Congress that will sit in July
2007, though Blas Viterbo, Roxas' legislative director, told EconOff
that Roxas, who is in the middle of a six-year term, has not yet
made a final decision. If he plans to focus his presidential
campaign on drug prices, it would be a logical step to reintroduce
the bill in order to keep the issue in the public's mind.

10. (SBU) The President of PHAP told us that he is certain that the
bill will be reintroduced, and that he still fears the addition of
radical provisions similar to those in the House from this session.
For its own part, PHAP plans a campaign to make the Roxas Bill moot
by advocating a national health service on the British model that
covers prescription drugs. In so doing, PHAP believes it can move
the discussion away from price controls and expand the market for
its products to lower-income groups via a government plan. Such a
plan would, however, be problematic, and it is doubtful that the
proposal will thrive in Congress. The plan does not propose a way
to finance a universal health service, and nothing prevents Roxas
from grafting his patent bill onto a national health care plan. In
fact, it may be a logical step.

MANILA 00001370 003 OF 003


11. (SBU) For a time, it appeared that the Roxas Bill meant a step
backwards in IPR protection in the Philippines. However, as the
course of debate on the bill progressed, Roxas and other legislators
showed sensitivity to TRIPS, and a willingness to amend the bill to
keep it close to being TRIPS-consistent. Similarly, despite the
populist appeal of a bill that purports to reduce the cost of
medicines, Congress has resisted the urge to enact it without debate
and reflection. While legislators are concerned about the price of
prescription drugs, and are aware of the electoral potency of the
issue, there is equal concern about the credibility of IPR
protection. We expect the issue to remain alive in the next
Congress, and Post will continue to engage its contacts on IPR


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