CAVEAT EMPTOR: "Let Us Conduct Your Research and Clinical Trials Said the Brazilian Spider to the Foreign Pharma Flies..."

[The following article reflects a concerted effort led by health and regulatory officials within the Brazilian government to entice U.S. and European-based pharmaceutical, biotech and clinical research organizations [CROs] with offers of attractive financing and a 'sound regulatory system' to relocate a portion of their R&D and manufacturing activities within Brazilian national borders. "The country boasts a large, ready patient population, a universal health care system with hospitals able to support clinical research, and rules to ensure adherence to ethical review standards...ANVISA has developed capacity to evaluate clinical protocols and monitor studies, while also conducting more plant inspections to ensure compliance with quality manufacturing standards, working with international authorities to approve new vaccines, and streamlining its registration process to cut the time to analyze new drugs to only 12 months." These offers are being made on the heels of a recently executed "information exchange agreement between the [Brazilian] drug regulatory agency, the National Health Surveillance Agency  or ANVISA, and the [U.S.] FDA."  

However, as this article readily admits, "One challenge is concern about the country’s poor record for recognizing and protecting intellectual property rights...[Indeed, Brazil is said to employ their domestic regulatory system in a manner that secures local pharmaceutical and biotech companies a 'home court advantage'.  "US companies and key officials at the Office of the US Trade Representative [USTR] complain that the slow speed of patent reviews and regulatory overlaps make it difficult to enforce IP rights in Brazil.  The biggest challenge is coping with the lack of coordination between regulatory approval staff and the patent office. Local generic players continue to take advantage by obtaining marketing rights from officials who do not certify whether the reviewed product is under patent or not.  By the time an infraction of the patent terms is documented, the product is already on the market and competing with the originator."  [Furthermore, the Brazilian government has undertaken considerable efforts within international intergovernmental venues within Geneva, Switzerland, such as the World Intellectual Property Organization (WIPO), to broaden in international law the bases and instances in which compulsory licensing flexibilities with respect to patent rights may be employed by 'BRIC' and developing country governments to appropriate/expropriate foreign patented medicines and medical devices for an ostensible 'public' use without payment to the rights holders of full, adequate and complete fair market value compensation. See, e.g.,:  

ITSSD 'Geneva Diary' of the Proceedings of the 15th Session of the WIPO Standing Committee on the Law of Patents Reflects Developed Country IP Rights Under Third World Assault, ITSSD Journal on Intellectual Property Rights (Oct. 26, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/itssd-geneva-diary-of-proceedings-of.html; 

Brazilian Demands for Broader Compulsory Licensing Internationally Generate the Kinds of Legal & Economic Uncertainties Driving the Restructuring of the CRO Market, ITSSD Journal on Intellectual Property Rights (Oct. 30, 2010) at: 

http://itssdinternationaliprights.blogspot.com/2010/10/brazilian-demands-for-broader.htm;

New Survey of Global Pharma Companies Reveals Increasing Decision to Reduce R&D as Result of High Economic Costs and Regulatory and Policy Risks - Some Generated by Developing Country Governments, ITSSD Journal on Intellectual Property Rights (Oct. 28, 2010) at:

http://itssdinternationaliprights.blogspot.com/2010/10/new-survey-of-global-pharma-companies.html.

 Thus, it is highly recommended that all U.S. and European pharmaceutical and biotech companies undertake significant due diligence before taking this kind of a leap into Brazil.  In fact, they would be advised to read the

famous poem, authored by 19th Century English poet Mary Howitt, which holds as important a lesson for adults as it does for children. It is entitled, The Spider and the Fly  which has been reproduced below for their benefit:

The Spider and the Fly

Will you walk into my parlour?" said the Spider to the Fly,

'Tis the prettiest little parlour that ever you did spy;

The way into my parlour is up a winding stair,

And I've a many curious things to shew when you are there."

Oh no, no," said the little Fly, "to ask me is in vain,

For who goes up your winding stair can ne'er come down again."

-----

"I'm sure you must be weary, dear, with soaring up so high;

Will you rest upon my little bed?" said the Spider to the Fly.

"There are pretty curtains drawn around; the sheets are fine and thin,

And if you like to rest awhile, I'll snugly tuck you in!"

Oh no, no," said the little Fly, "for I've often heard it said,

They never, never wake again, who sleep upon your bed!"

-----

Said the cunning Spider to the Fly, "Dear friend what can I do,

To prove the warm affection I 've always felt for you?

I have within my pantry, good store of all that's nice;

I'm sure you're very welcome -- will you please to take a slice?"

"Oh no, no," said the little Fly, "kind Sir, that cannot be,

I've heard what's in your pantry, and I do not wish to see!"

-----

"Sweet creature!" said the Spider, "you're witty and you're wise,

How handsome are your gauzy wings, how brilliant are your eyes!

I've a little looking-glass upon my parlour shelf,

If you'll step in one moment, dear, you shall behold yourself."

"I thank you, gentle sir," she said, "for what you 're pleased to say,

And bidding you good morning now, I'll call another day."

----

The Spider turned him round about, and went into his den,

For well he knew the silly Fly would soon come back again:

So he wove a subtle web, in a little corner sly,

And set his table ready, to dine upon the Fly.

Then he came out to his door again, and merrily did sing,

"Come hither, hither, pretty Fly, with the pearl and silver wing;

Your robes are green and purple -- there's a crest upon your head;

Your eyes are like the diamond bright, but mine are dull as lead!"

-----

Alas, alas! how very soon this silly little Fly,

Hearing his wily, flattering words, came slowly flitting by;

With buzzing wings she hung aloft, then near and nearer drew,

Thinking only of her brilliant eyes, and green and purple hue --

Thinking only of her crested head -- poor foolish thing! At last,

Up jumped the cunning Spider, and fiercely held her fast.

He dragged her up his winding stair, into his dismal den,

Within his little parlour -- but she ne'er came out again!

-----

And now dear little children, who may this story read,

To idle, silly flattering words, I pray you ne'er give heed:

Unto an evil counsellor, close heart and ear and eye,

And take a lesson from this tale, of the Spider and the Fly.

-------------------------------------------------------------------------------------------------------------- 

http://blog.pharmexec.com/2010/10/27/brazil-profile-latin-americas-giant-repositions-for-pharma-growth/

Brazil Profile: Latin America's Giant Repositions for Pharma Growth

By William Looney

Published: October 27, 2010

Brazil claims a bright future as a drug research and clinical trials site — but IP issues continue to raise concerns among the multinational investor community.

Health and regulatory officials of Brazil are making the rounds with a message for pharmaceutical companies and clinical research sponsors about what a great place it is to do business. Most pharma companies have had operations in Brazil for years, but largely to import and sell products made elsewhere. Now Brazilian officials are offering attractive financing and touting a sound regulatory system and clinical research network to persuade R&D and manufacturing operations to expand their presence in the market. 

Washington was a logical choice for conference hosted by the Brazilian Health Ministry last month, coinciding with the signing of a information exchange agreement between the drug regulatory agency, the National Health Surveillance Agency  or ANVISA, and the FDA.  Brazilian officials used the occasion to describe the opportunities offered pharma and biotech firms from its large ($50 billion) retail drug market and the capacity of its export-import bank to finance investment projects. Brazil wants active pharmaceutical ingredient producers to set up shop so domestic manufacturers don’t have to import these products.

One attraction to pharma companies may be growing opportunities to conduct clinical trials in Brazil. The country boasts a large, ready patient population, a universal health care system with hospitals able to support clinical research, and rules to ensure adherence to ethical review standards. A National Clinical Research Network is taking its cue from the U.S. National Institutes of Health in establishing a network of research centers (Pesquisa Clinica), many linked to universities or teaching hospitals able to evaluate and study new technologies, pointed out Reinaldo Guimaraes, Brazil’s secretary of science and technology.  ANVISA has developed capacity to evaluate clinical protocols and monitor studies, while also conducting more plant inspections to ensure compliance with quality manufacturing standards, working with international authorities to approve new vaccines, and streamlining its registration process to cut the time to analyze new drugs to only 12 months.

IP: Still on the Radar Screen

One challenge is concern about the country’s poor record for recognizing and protecting intellectual property rights. Despite a lack of patent protection for medicines until 1996, Brazil is now in compliance with TRIPS, explained Jorge Raimundo, president of Interfarma, the country’s R&D-based pharmaceutical manufacturers’ association. More patents are being registered in Brazil, he said, acknowledging that this has created an immense backlog in patent applications.

However, US companies and key officials at the Office of the US Trade Representative [USTR] complain that the slow speed of patent reviews and regulatory overlaps make it difficult to enforce IP rights in Brazil.  The biggest challenge is coping with the lack of coordination between regulatory approval staff and the patent office. Local generic players continue to take advantage by obtaining marketing rights from officials who do not certify whether the reviewed product is under patent or not.  By the time an infraction of the patent terms is documented, the product is already on the market and competing with the originator.

Despite this implicit homegrown advantage, leading generic drug makers have not yet set up subsidiaries in Brazil, partly due to the complexity of Brazil’s generic policies. Prior to enacting a generics law in 1999, Brazil permitted marketing of “similaires” that did not have to document bioequivalence. In the past decade, generic drugs that meet standards for bioequivalence and interchangeability have become more common and are gaining a larger share of the market. The similaires are supposed to be eliminated by 2014, but are very cheap, and thus still very popular.

Ultimately, the real goal is to attract research operations able to spur development of new treatments that meet Brazil’s key areas of medical need. Brazil offers “spectacular areas for research,” said Raimundo, noting progress in stem cells, genetic engineering, and drugs for neglected diseases. A prime attraction is Brazil’s biodiversity, with 60,000 unique plant species.

Looking for Long-Term Gain

The transition to a new government next month is unlikely to force any dramatic changes in policy toward the sector, considering that the more conservative candidate in the run-off election has a record of supporting aggressive actions to require foreign drug-makers to make essential medicines available at low prices, investors can expect the next government to push for pro-generic policies on the international front while seeking to stabilize the environment for the innovative side of medicines in its domestic industrial strategy for the sector. A truly pro-patent approach to innovation may be too much to expect:  although Brazil has weathered the global economic downturn relatively well, the government remains under pressure to reduce its spending, which could prompt cuts in pharmaceutical coverage.  Still, taking a long term view of change, Novartis, Pfizer and other pharma companies are investing and purchasing local operations and launching clinical trials.