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Cablegate: Brazilian Ministry of Health Slows the Pace On

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 BRASILIA 002335

SIPDIS

NSC FOR CRONIN
STATE FOR OES/STC PMEEKS, WHA, EB, and E
TREASURY FOR OASIA - DAS LEE AND FPARODI
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON
HHS FOR STEIGER
AID WASHDC FOR LAC/SA
NIH FOR EISS

SENSITIVE

E.O. 12958: N/A
TAGS: KIPR ETRD EAID PGOV IPR
SUBJECT: BRAZILIAN MINISTRY OF HEALTH SLOWS THE PACE ON
COMPULSORY LICENSING

REF: A) Brasilia 2157, B) Brasilia 1716

1. (SBU) Summary. On August 30, DCM, accompanied by selected
members of Country Team, met with Ministry of Health
Executive Secretary Jose Agenor da Silva to discuss the
implications of any potential GOB move towards compulsory
licensing of pharmaceuticals. Embassy message was that: a)
USG values our cooperation with the GOB on health issues but
that the ongoing debate on compulsory licensing is
worrisome, b) any GOB decision to embark upon compulsory
licensing would likely deter pharmaceutical makers from
introducing new drugs into the market and would make it more
difficult for the GOB to attract badly-needed foreign direct
investment, and c) given the depth of feelings within the
U.S. Executive Branch and Congress on this issue, the
interchange that would occur in the wake of a compulsory
license would most likely negatively affect our bilateral
relations. Da Silva repeated the official GOB line that the
Ministry preferred a negotiated solution to the Abbott
controversy, but could not preclude the possibility of a
compulsory license. He pledged, however, that whatever
decision the Brazilian government reaches would be a
reasoned and informed one, fully vetted within the GOB - and
not based upon politics or emotion. End Summary.

2. (SBU) In the cordial 45-minute session, Da Silva was
joined by Moises Goldbaum (the Ministry's Secretary for
Science, Technology, and Strategic Resources), and Amb.
Santiago Alcazar (International Affairs Advisor). While
neither Da Silva nor his colleagues in the meeting appear to
have been present at all of the previous negotiating
sessions with Abbott, they did appear to be fully informed
about the state of play with that company.

3. (SBU) DCM opened the meeting by noting that the USG has a
wide range of cooperative health and research programs with
the GOB on issues such as HIV/AIDs, tuberculosis, and
vaccine development. While we would like to expand
cooperation with Brazil, he said, the current debate on
compulsory licensing worried USG policymakers. Our view, he
noted, was that under the current circumstances any move by
the GOB towards compulsory licensing of the anti-retroviral
drugs produced by Abbott, Gilead, and Merck would be
counterproductive. Specifically, compulsory licensing would
likely deter pharmaceutical makers from introducing new
drugs into the market and would make it more difficult for
the GOB to attract badly-needed foreign direct investment.
In addition, he noted, given the depth of feelings within
the U.S. Executive Branch and Congress on this issue, the
interchange that would occur in the wake of a compulsory
license would most likely negatively affect our bilateral
relations. DCM strongly urged the GOB to pursue a
negotiated solution, as it had initially done earlier in the
failed July 8 accord with Abbott.

4. (SBU) In response, Da Silva made the following points:

-- The GOB was very much interested in continuing its
scientific/health cooperation with the USG, including the
joint programs with USAID, CDC, and the National Institutes
of Health. Indeed, Brazil wanted to increase the NIH
research projects in country beyond the current roster of 60
programs.

-- The Ministry was well aware of Abbott's sixty year
investment in Brazil and the degree to which the company
generated employment in the pharmaceutical sector. However,
the capacity of the MOH to purchase expensive anti-
retroviral drugs was limited and if Abbott was not able to
offer its product at a low enough price it could well be
that the Ministry would seek a compulsory license.

-- The June 22 New York Times editorial urging Brazil to
embark upon compulsory licensing, if necessary to save its
internationally-recognized AIDS treatment program, showed
how divided opinion was on this issue within the U.S. For
instance, the Clinton Foundation had recently told the GOB
that it could provide Abbott's Kaletra drug at US$0.41 per
pill now and at US$0.25 per pill in six to nine months.
(When asked how an NGO could supply a pharmaceutical
currently under patent, Goldbaum clarified da Silva's
statement, noting that the Clinton Foundation had merely
stated that it could help the GOB in finding reasonably-
priced active ingredients and provide technical assistance
regarding the manufacture of generics).

-- The GOB had changed the focus of its negotiations with
Abbott. Before, politics and emotion had held sway. Now,
all Ministries within the government would be consulted and
all facts proffered would be documented. The GOB was
collecting all the information available so that the best
technical decision could be made. A meeting between the
Minister of Health and ForMin Amorim and FinMin Palocci to
discuss the implications of compulsory licensing was set for
September 1.

5. (SBU) While both Da Silva and Alcazar stated that they
understood the Embassy's advocacy role, they nevertheless
requested that post make clear to Abbott that it needed to
take a more flexible stance in the negotiations. Da Silva
opined that if both sides, the MOH and Abbott, were willing
to compromise, there would be space for an agreement. For
his part, DCM made clear that neither the USG nor the
Embassy would lobby Abbott - or any of the other firms
threatened with compulsory licensing. Goldbaum then
observed that the GOB's demands included not only price
concessions but technology transfer as well. The patent for
Kaletra expires in 2013 (the date, per Abbott, is 2017), but
the GOB wants to be in a position to manufacture that drug
domestically well before then, he said. Goldbaum opined
that the reason the CDC and NIH research/assistance programs
were so favorably viewed within the GOB was because they
offered technology transfer.

6. (SBU) In response to a query from Embassy reps as to
whether we could share the substance of the discussion (as
appropriate) with the affected U.S. firms, Da Silva replied
in the affirmative. Indeed, the GOB wanted any arrangement
agreed to be fully transparent, he said. One of the
problems with the July 7 accord, he declared, was that
Abbott had wanted it to be secret - which was something that
the GOB could not accept.

7. (SBU) Comment: After several months of rhetoric from the
MOH, the measured comments of our interlocutors were quite
welcome. The personal involvement of FinMin Palocci in the
debate is a good sign, though very likely he would not have
joined the dialogue had Secretary Snow not intervened.
Similarly, the involvement of ForMin Amorim and INPI
President Jaguaribe (see septel) is on balance positive.
While the world-view of both is that developing countries
should not have to provide the IPR protections that
developed countries do, they also will be able to inject
into the debate concerns over the effect of compulsory
licensing upon foreign direct investment and trade
relations.

8. (SBU) Nevertheless, the worrisome element - which
Goldbaum's comments brought into stark relief - is the
demand for technology transfer. Assuming that the pricing
issue was resolved, the GOB would still want early access to
Abbott's formula (and possibly manufacturing processes) for
Kaletra. In an industry where intellectual property is key
to survival, surrender of technology could be a pill that
neither Abbott, nor Merck and Gilead, can accept.

DANILOVICH

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