FTAA: Brazil’s Poison Pill – Final Part

FTAA: Brazil's Poison Pill - Final Part

The successful policy against AIDS implemented in Brazil will
be put in jeopardy if the country adopts stringent intellectual
property rules in any FTAA negotiations. The Brazilian
government should analyze carefully the trade-offs of this deal
in order to avoid the mistake of trading export dollars for lives.


Andrea Garrafa Gouveia


The FTAA and the Brazilian AIDS Case

"We agree that the TRIPS agreement does not and should not prevent members from taking measures to protect
public health." "We affirm that the agreement can and should be interpreted and implemented in a manner supportive of WTO
members’ rights to protect public health and, in particular, to promote access to medicines for all."

The above excerpts were taken from the TRIPS Agreement, after its reformulation in November of 2001, when the
WTO members, including the United States, met for one more round of discussions, in Doha, Qatar, and signed the new
agreement. The Doha Round clarified that public health should be predominant over patent protection, bringing hope to the poor
economies struggling to control the spread of serious disease inside their national borders.

Withal, the FTAA’s first drafts on intellectual property were developed before the changes made on the TRIPS
Agreement at Doha, and contain US intentions of strengthened intellectual property rights in the American continent that go
against the country’s promises made in Qatar. Although the FTAA text hasn’t still made it official, US public comments
regarding negotiating objectives on the Agreement have made it clear it seeks to enforce a TRIPS-Plus among the potential
members. It may sound like pure speculation, but other evidence also exemplifies the intentions of the Bush Administration to
protect patent rights in light of public health.

The two recent FTA Agreements involving the US and the countries of Singapore and Chile reflect clearly the
intentions behind the US desire to transform the whole continent into a single free trade area, and thus can be seen as a pilot for
what is going to be the FTAA. In the Advisory Committee Report to the President on U.S.-Singapore Free Trade Agreement
submitted by the Committee on Intellectual Property Rights for Trade Policy Matters (IFAC-3), the patent protection obligations
that must be followed by Singapore go beyond those included in the TRIPS Agreement. As it is described in the first
paragraph of the patent section, "Singapore FTA include[s] a number of important clarifications of the existing TRIPS obligations
as well as a number of additional provisions that enhance the standards of the TRIPS

The report also reveals that the United States seeks to establish, in the countries it signs the Trade Agreements with,
the same Intellectual Property Protection level it has within its borders, which goes contrary to the international agreement
that countries with different level of development should be treated differently—poor countries don’t always need to follow
the same standards as the industrialized world.

Another report, sent by the same committee to the Bush Administration, this time covering the US-Chile FTA
Agreement, states that the draft on Chile’s FTA was not as well proposed, because in spite of the fact that it contains levels of patent
protection higher that the ones established by TRIPS, it is still not considered high enough according to US standards. On the other
hand, the Committee considers the Singapore FTA closer to what the US expects of a bilateral/multilateral Agreement on
Patent protection, stating, "IFAC-3 believes that it is critical that future FTAs include, at a minimum, all of the additional
patent protections found in the Singapore FTA as well as provisions such as the twelve-month grace period," and further
stating, "…[the Singapore] agreement, on the whole, establishes key precedential provisions to be included in the other FTAs
now being negotiated, included the FTAA."

But what are those additional provisions contained in these new US bilateral agreements that will likely be
incorporated into the FTAA text and that could affect Brazil?

They are:

Restricting the grounds for compulsory licensing;

Banning of parallel imports;

5 year protection from test regulatory data;

Patent extension to make up for any regulatory delays;

Generic drugs obligation of getting marketing approval issues by state agencies.

The US and the pharmaceutical companies intend to extend the patent for more than the 20 years stipulated by the
TRIPS. Besides, by granting the companies exclusive rights over handling the data of a registered pharmaceutical product, the
system would create a monopoly for these companies in the market. Furthermore, the need for getting marketing approval
would forbid generic drugs from reaching the market promptly after the patent expires. These provisions, which provide
stronger rights for patent holders, would be responsible for a delay or restriction in the production of cheaper generic versions of
new medicines.

Currently, 8 of the 15 drugs that compound the anti-aids cocktails are already manufactured in Brazil. These are
legal copies, which are not protected by patents, since Brazil has only started to recognize intellectual property rights of
pharmaceuticals since 1996, when the law of patents was approved. The drugs not produced in Brazil are purchased from
foreigner laboratories. The Brazilian government is pressuring to drop the prices of two of them, Efavirenz and Nelfinavir.

The purchasing of these two drugs consumed 36 percent of the US$ 200 million Brazil spent in 2002 with anti-aids
drugs. If the domestic manufacturing of the 8 drugs already mentioned were not made possible, Brazil would be spending close
to $500 million, which would make the free and universal distribution of drugs impracticable (CNDST _December 2002).
Thanks to the government health policy against AIDS, since the ARVs have been gratuitously distributed, the death rate related
to AIDS fell by more than 50 percent; additionally, 58 thousand new cases of AIDS per year and a total of 358
thousand hospitalizations have been avoided.

The prices of the treatment have also tumbled: today, the annual cost of the treatment of one patient in Brazil is
estimated in US$ 2,233. In the United States the annual treatment/per capita costs between US$ 10,000 and US$15,000 and it is
not granted to everybody1. This value corresponds to more than 3 times the per capita income in Brazil. In 1997, 35
thousand people were granted with the cocktail anti-AIDS. Nowadays, out of the 600 thousand infected with the HIV virus, 120
thousand are being treated with the ARVs distributed freely by the

According to a research study conducted by The University of Campinas in Brazil (UNICAMP), in 1995, Brazil
imported US$ 300 million in drugs. In 1999 the import of drugs was already mounting to US$ 1.4 billion, an increase by 470
percent. From 1994 to 1997, the deficit in the Brazilian balance of trade was US$ 1 billion, if we count only the pharmaceutical sector.

Brazil is a developing country with many social-economic problems, carrying a total debt of US$ 240 billion (World
Bank, April 2003). Therefore, it does not possess reserves of capital. Even so, the government has successfully managed to
provide free and universal access to the drugs that treat the AIDS disease. This was only possible because the country has, since
1995, domestically produced AIDS treatment generics and products like the brand medicines. However, sooner or later,
besides the share of the population already in treatment, the 600 thousand infected by the HIV virus, together with the new cases
that are sure to surge, will develop the symptoms of the disease requiring treatment.

If Brazil signs the FTAA Agreement committed to respect the TRIPS-plus provisions proposed by the United States,
which will delay or restrict generics production, even though Brazil may gain in enhancing the export of commodities by the
drop in trade barriers, it will also have to import at unreasonable prices the new drugs, protected by patents, that will be
developed to further combat AIDS.

This will make a limited-resource country such as Brazil unable to carry forward its National Sexually Transmitted
Diseases (STD) and AIDS Program, which is seen worldwide as a model of life saving. As a matter of fact, there are already new
drugs launched in 2003 (in particular, new antiretroviral drugs) that Brazil cannot copy because they are protected by patent.

Therefore, since the government would have to pay the full patent price for the AIDS medicines, the drugs most
likely would no longer be accessible to the totality of HIV infected people, in particular the poor who cannot afford them. This
people, who started to gain hope after the successful implementation of the AIDS campaign, will lose the ability to control the
disease and will begin to fear death again.

Disillusionment and Suspicion

Brazil is considered a key player to the free trade agreement for the Americas, since it represents 40 percent of
South America’s total economy. However, the home of over 175 million people still sees the FTAA with disillusionment and suspicion.

The various sectors of the Brazilian nation have different feelings about engaging in a free trade with the United
Sates. Agricultural and textile exporters, who have competitive advantage in relation to American rivals because they enjoy
much lower costs, will be the grand winner if the US tariffs and non-tariff barriers are dropped or become nonexistent.

Nevertheless, whereas it is important to consider the consequences of the FTAA to the goods and services industry,
one cannot neglect the society; therefore, it is necessary to put in perspective how the population of the country will be
affected overall. Brazilians have to analyze, then, whether the concessions it will have to make in order to gain market access,
will be worth the price it will have to pay.

Will the country, through further trade liberalization, achieve overall prosperity as the theory preaches? What if the
price the country has to pay is strengthening the Intellectual Property Rights of the pharmaceutical industry, and therefore
stopping producing the cheap and effective generic medicines that have been distributed to many HIV positive people, which has
presented outstanding results by saving million of lives?

It is important to emphasize that the Brazilian government recognizes the importance of the patents, since Brazil was
one of the first emerging countries to adopt a legislation that respects the provisions mandated by the World Trade
Organization. While the Brazilian law on Patents allows manufactures to copy any drug launched in the marked before 1997 but
enforces intellectual property rights beyond this date, countries such as India and Argentina will only adequate to this system
after 2005. In other words, the present policy in Brazil complies with the WTO Agreement established in the Uruguay round
and confirmed in Doha.

The efficacy of the Brazilian Program against AIDS was accomplished through the commitment to provide treatment
to everyone who needs it, at the lowest price possible, dealing with the epidemic as a public emergency disaster. This was
made possible not by breaking patents, but by adopting the efficacious strategy of forcing down the prices charged by
pharmaceutical companies by threatening them with compulsory license.

Brazil’s current policy has worked well in reducing AIDS. Since AIDS became a controlled disease in Brazil and the
HIV infected people were being granted with free access to the drugs that treat AIDS, the population became less reluctant
to acknowledge their HIV status and consequently started to search for testing centers to get their diagnoses. When people
are aware of their AIDS status (positive or negative), the spread of the disease slows down, since the contaminated
population tends to use protection when having sex with others.

Therefore, the more successful the campaign becomes, the more people increase their hopes, trust the system, are
tested and then treated, and the less the disease spreads out. It represents a positive, instead of a vicious, cycle. If the program
is condemned and the hope is taken away from them, the gains achieved so far can be lost very quickly.

In reality, this successful policy will be put in jeopardy if Brazil adopts stringent intellectual property rules in any
FTAA negotiations. Hence, the Brazilian government should analyze very carefully the trade-offs of this deal in order to avoid
the mistake of trading export dollars for lives.

HIV testing in Brazil

Nowadays, 1.145 Health Basic Units and 208 Examination and Advising
Centers (CTAs) provide HIV diagnostic
through the Public Health System. In 2001, The Unique Health System financed the anti-HIV testing in more than 1.6 million
people. However, it is estimated that only 1/3 of the total population in Brazil know their HIV status. By the other hand, in
developed countries, 50 percent to 75 percent of the population has already been tested.

The Brazilian Aids Program is working on a strategy to increase the amount of people to be tested for HIV through a
national campaign. The involvement of cities and states is fundamental for the success of the strategy since an infrastructure
containing laboratories and sites of collection of blood samples has to be developed. The free access to antiretroviral has
stimulated the population to seek for HIV diagnostic.

1 " Política Brasileira de AIDS: Principais Resultados e Avanços 1994 _ 2002",

Coordenação e prevenção

DST / AIDS, National Library, 2002
(March 2003)

2 The access to the drugs in Brazil is universal, the reason why only 120 thousand out of 600 thousand people have
been treated is because a person contaminated with the HIV virus should not start the treatment until he or she develops
clinical AIDS, i.e. an advanced stage of the disease. To read more about this issue go to the World Health Organization
Website: www.who.int/entity/hiv/topics/arv/en 


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Andrea Garrafa Gouveia, the author, just finished her Master’s Degree in International Commerce and Policy at
George Mason University. She welcomes comments at


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