[Congressional Record (Bound Edition), Volume 151 (2005), Part 11]
[Extensions of Remarks]
[Pages 15355-15356]
[From the U.S. Government Publishing Office, www.gpo.gov]




            BRAZIL TO SEIZE AMERICAN PHARMACEUTICAL PATENTS

                                 ______
                                 

                            HON. TOM FEENEY

                               of florida

                    in the house of representatives

                        Thursday, June 30, 2005

  Mr. FEENEY. Mr. Speaker, in recent days, The New York Times and some 
of our colleagues have publicly encouraged and endorsed the government 
of Brazil to seize American pharmaceutical patents, citing an urgent 
need to accommodate a public health crisis in that country.
  These arguments are false. American drug companies sell life-saving 
antiretroviral therapies at an almost 90 percent discount in Brazil; 
furthermore, Brazil's rate of HIV infection is almost the same as it is 
in the U.S.--well below 1 percent. Brazil appears to be manufacturing 
reasons to support its intent to develop a generic export capacity.
  The WorId Trade Organization's 1994 Agreement on Trade Related 
Aspects of Intellectual Property (TRIPS), in conjunction with the 2001 
Doha Declaration, enables countries to temporarily suspend patents when 
there is a dire need and when those patents are precluding access to 
life-saving medicines.
  In Brazil's case, there are serious concerns that it is willfully 
manipulating WTO rules for commercial gain. Consider the remarks by 
Brazil's health minister just this week in Geneva: ``Brazil once again 
takes a new step forward in the struggle against AIDS . . . This stage 
may come to represent the first step for introducing a new phase in our 
local [antiretroviral] production. An additional target is to support 
our national manufacturing industry in this respect, as we are totally 
committed in maintaining high quality in the medicines available in the 
public health services.''
  The wholesale theft of American technology for another country's 
commercial gain was never the intent of the Doha Declaration or TRIPS. 
The United States should consider any and all retaliatory measures if 
Brazil proceeds with such blatant theft. The theft of these 
pharmaceutical patents will cost Americans billions of dollars and take 
away investment that could otherwise be spent on the development of new 
drugs ranging from epidemics to the common cold.
  Please include the following editorials Richman? Poorman? Beggarman? 
Thief? by James Pinkerton and Brazil Mulls Drug Patent Theft as an AIDS 
Antidote by Anastasia O'Grady.

             [From the Tech Central Station, June 29, 2005]

                  Richman? Poorman? Beggarman? Thief?

                          (By James Pinkerton)

       Will the real Brazil please stand up? Is Brazil a poor 
     country that needs more foreign aid from the United States--
     even involuntary aid? Or is it an increasingly rich and 
     powerful country that can seize foreign markets for itself? 
     Indeed, is it so powerful that that it doesn't need to play 
     by the rules?
       One source not to look to for answers is the Brazilian 
     government itself, as we shall see.
       To an outside observer, it's apparent that the Brazilians 
     clearly want to have it all three ways: being needy when it 
     suits them, being export-y as they are able, being greedy 
     when they think they can get away with it--and if that last 
     stance hurts the U.S. economy, too bad. It's a little 
     complicated, and a little bewildering. And yet Uncle Sam's 
     answer to the ``Brazil Bewilderment'' will help determine 
     America's own wealth, and health, in the 21st Century.
       Two recent items show the sharp divergence in perspectives 
     on Brazil. The New York Times' editorial page sees Brazil as 
     a destitute place. Which means, of course, that Brazil is a 
     wonderful place--for the Times to preach some politically 
     correct ``compassion.'' Using somebody else's money, of 
     course. In a June 23 editorial, the paper sided with Brazil 
     in its long-running argument with American owners of 
     Intellectual Property (IP); in this case, the fight is with 
     the biotech industry.
       The Times noted that ``Brazil's free universal treatment 
     program, an indispensable weapon against the AIDS epidemic, 
     locks Brazil's government into buying lifelong daily 
     medicines for 170,000 people, and that number is rising.'' 
     And so, the Times continued, ``Brazil has the right to make 
     sure it can continue to meet this burden by getting medicines 
     at the cheapest possible price.'' And the cheapest possible 
     price can be arrived at, quite often, through simple theft: 
     the violation of IP property rights.
       In other words, the Times is so in love with government-run 
     ``universal'' health care that it wants the U.S.--or, more 
     precisely, U.S. Pharma companies--to finance such health care 
     in other countries. It would be one thing if the Times simply 
     editorialized in favor of America subsidizing the Brazilian 
     social insurance system. That is, the president and the 
     Congress could simply vote to transfer a few billion dollars 
     a year to Brazil. But of course, no elected officials would 
     ever vote for such an overt wealth-transfer, so the Times 
     finds it expedient to endorse a covert wealth-transfer, in 
     the form of IP ripoff.
       And obviously the Times couldn't be expected to worry much 
     about anything so bourgeois as the rights of American 
     companies, and their shareholders and stakeholders. As the 
     Times sneeringly put it, ``Rightwing groups in the United 
     States and pharmaceutical manufacturers are calling this 
     theft, and several members of Congress have asked the United 
     States trade representative to apply trade sanctions.'' And 
     yet, the Times advised, ``The American trade representative 
     should make a public statement that the United States will 
     not retaliate against Brazil for exercising its right to save 
     lives.''
       In the paper's pro-Brazil policy, we see how p.c. 
     solicitude for AIDS victims joins up with an all-purpose 
     entitlement mentality--to create a ruinous prescription for 
     American well-being, as well as a dire prospect for future 
     medical innovation in a property-rights-wrecking environment.
       But another Times newspaper has a far different take on 
     Brazil, a country which, after all, boasts the 9th-largest 
     economy in the world today. According to a June 22 article in 
     The Financial Times that ran the same day, under the 
     headline, ``Brazil is yielding farms that can feed the 
     world,'' Brazil is on its way to becoming ``a pivotal nation 
     in the future of world trade. Brazil is to agriculture what 
     India is to business offshoring and China to manufacturing: a 
     powerhouse whose size and efficiency few competitors can 
     match.''
       As the FT details, Brazil now enjoys the largest 
     agricultural trade surplus in the world, and the country's 
     balance of trade is helped enormously by IP theft, which 
     often goes by the more polite name of ``compulsory 
     licensing.'' But by any name, it's still theft, and theft is 
     ``zero sum.'' So if Brazil has more, the U.S. has less. From 
     Brazil's narrow point of view, it's easy to see the logic of 
     its current course. In the words of Ken Adelman, former 
     deputy U.S. representative to the United Nations, Brazil's 
     ``earnest commitment to premeditated theft of American assets 
     should prompt the administration to stop considering Brazil a 
     good partner and its president a great friend until they 
     demonstrate a stronger commitment to the Rule of Law and free 
     trade.'' That was on May 9. On June 24, in an important Wall 
     Street Journal column entitled ``Brazil Mulls Drug Patent 
     Theft as an AIDS Antidote,'' Mary Anastasia O'Grady wrote, 
     ``The possible compulsory licensing of AIDS drugs is only 
     part of Brazil's wider assault on intellectual property 
     rights. While China and India are promising to firm up 
     protections and sucking in capital investment, Brazil seems 
     bent on joining the likes of Cuba, Iran and Venezuela.
       Like IP itself, IP theft is a somewhat obscure topic, but 
     across the board, from movies to music to software to 
     pharmaceutical patents, such theft costs the United States 
     some 750,000 jobs and $200 billion a year annually. Which is 
     to say, it's a lotta money. Indeed, one might ask how The New 
     York Times would feel if, in some alternative universe, the 
     key to treating AIDS patients was discovered to be the 
     breaking of all the Times' copyrights and trademarks.
       So which Brazil is it? Poverty-stricken victim? Hyper-
     aggressive trader? Or rogue-nation with a national strategy 
     of IP-pirating? I posed that exact three-part question to 
     Roberto Abdenur, Brazil's ambassador to the U.S., at a June 
     24 meeting at the Council of the Americas Society in 
     Manhattan.
       And here's what he said to me in response: ``It is 
     absolutely not true that Brazil would have a national 
     strategy [of IP theft]. Keeping a perfectly straight face, he 
     added, ``Of IP there is something like a revolution taking 
     place in Brazil; . . . we are taking very decisive actions on 
     piracy. Brazil is deeply committed to enforcing TRIPs [trade-
     related intellectual property rights].''
       Well, those were nice and reassuring words. But there was 
     one small problem: they weren't true. That very afternoon, on 
     June 24, came the news that Abdenur's bureaucratic buddies 
     back in Brasilia had announced that the country would impose 
     ``compulsory licensing'' on Abbott laboratories'' anti-HIV 
     drug Kaletra if the company didn't surrender the license 
     first. Sorry, Mr. Ambassador, but your own government has 
     made you into a liar.
       The irony is that for all Brazil's enthusiasm for IP-
     mulcting, such a policy is not actually in the country's 
     overall long-term best interest. That was a useful 
     perspective supplied at the same June 24 Council of the 
     Americas discussion by Donna Hrinak, the former U.S. 
     ambassador to Brazil. She reminded the audience, which 
     included Abdenur, that for Brazil, ``the whole issue of IP 
     goes from AIDS treatment to the guy who is selling a pirated 
     CD to the grey market in computers.'' Which is to say, 
     Brazil's IP-lawlessness is endemic.
       Then she added, ``I never understood Brazil's IP position. 
     It goes against its own interest.'' That is, Brazil would 
     ultimately gain more by working within the world IP system, 
     where rights are respected for the long-term benefit of all 
     property holders. Continuing, Hrinak added, ``Recife would be

[[Page 15356]]

     like Bangalore if Brazil would look to its own interest, and 
     implement its own [IP] laws.'' Better to be supportive of a 
     thriving indigenous high-tech industry, she was saying, than 
     to merely be stealing technology from others.
       From an American point of view, it's nice to know that some 
     U.S. diplomats see the importance of IP, for the well-being 
     of this country, and also for the well-being of the world 
     property-rights system--which will make all countries better 
     off if it's allowed to work. But so far, at least, there's 
     not much evidence that Brazil is looking to anybody's 
     ultimate well-being, not even its own. However, it does have 
     The New York Times in its corner. Maybe Brazilians can feast 
     on that.

                     [From the Wall Street Journal]

           Brazil Mulls Drug Patent Theft as an AIDS Antidote

                      (By Mary Anastasia O'Grady)

       When the Bush administration offered Brazil $40 million for 
     its anti-AIDS program earlier this year, Brasilia turned it 
     down on principle. The terms of the deal required the 
     government to condemn the sexual exploitation of women--
     otherwise known as prostitution. Calling the U.S. demand 
     ``theological, fundamentalist and Shiite,'' Brazil rejected 
     the offer.
       Turning down a $40 million contribution seems like a luxury 
     that a developing country with an estimated HIV-infected 
     population of 600,000 couldn't afford. But as it happens, 
     Brazil has a back-up plan. It is moving to force foreign drug 
     makers to surrender their patents on anti-AIDS drugs at a 
     price dictated by Brasilia, a tiny fraction of the medicine's 
     value.
       Brazil's lower house passed legislation abridging AIDS drug 
     patent rights earlier this month. The bill specifically names 
     drugs produced by Abbott Laboratories. Gilead Science and 
     Merck. It is not clear whether the Senate will pass the law 
     or Brazilian President Luiz Inacio ``Lula'' da Silva will 
     uphold it or exercise his veto. But steamrolling the rights 
     of patent holders is something that Brazil has been 
     threatening since 2001.
       The possible compulsory licensing of AIDS drugs is only 
     part of Brazil's wider assault on intellectual property 
     rights. While China and India are promising to firm up 
     protections and sucking in capital investment, Brazil seems 
     bent on joining the likes of Cuba, Iran and Venezuela in 
     cutting its own throat by destroying those rights.
       The effort pits the short-run benefits of grabbing at 
     little cost today's best medicines--claiming ``humanitarian'' 
     motives--against the long-run damage to research and 
     development that weakened property rights are sure to 
     inflict. Such policy positions could devastate Brazil's 
     stated hopes of attracting a thriving biotech industry.
       Brazil posits that the WTO's Trade-Related Aspects of 
     Intellectual Property Rights (TRIPS) allows it to go after 
     patents in a public health ``crisis.''
       Yet more than half the drugs Brazil distributes through its 
     anti-HIV/AIDS program can be copied legally. As to cutting-
     edge medicines that still have patent protection, Brazil 
     receives sharp discounts from pharmaceutical companies, which 
     try to recoup their research and development costs in 
     wealthier countries like the U.S. To be sure, Brazil is not 
     as rich as the U.S., but it's not among the poorest either, 
     as evidenced by its space program and thriving aircraft 
     industry.
       One example of drug company generosity is the deal Merck 
     has given Brazil on its anti-retroviral drug Stocrin. 
     According to Grey Warner, senior vice president for Latin 
     America Human Health at the company, ``Stocrin is sold to 
     Brazil at the lowest price in the world outside of the least 
     developed countries, such as sub-Saharan Africa, where we 
     supply the product at no profit. In practical terms, this 
     equates to a price that is about 90% lower than in the U.S., 
     Canada and Western Europe.'' That seems like rather generous 
     treatment of a large country well advanced toward 
     industrialization.
       Meanwhile, at the strategically critical World Intellectual 
     Property Organization (WIPO) in Geneva, Brazil is leading the 
     charge to weaken intellectual property rights within the 
     World Trade Organization. This week, a second session on ``a 
     development agenda'' for the WIPO was underway. This meeting 
     is a follow-up to the April WIPO session in which the ``Group 
     of Friends of Development,'' led by Brazil, spelled out its 
     objection to intellectual property rights as traditionally 
     defined. The 14 countries in this euphemistically titled 
     alliance include such paragons of sound economic development 
     policy as Iran, Cuba, Argentina, Bolivia, Ecuador, Peru, 
     Venezuela and Sierra Leone.
       In its April document the group stated that it wants to 
     examine the implications of intellectual property rights 
     protection, ``rather than seek to approach this highly 
     controversial issue as if it were governed by absolute 
     truths, loosely under the one dimensional perspective of the 
     private rights holders, ignoring the broader public 
     interest.''
       That's clearly code language for socializing property 
     rights, a view that has dominated Brazilian thought over most 
     of the 20th century and produced the current squalor that so 
     many Brazilians live in. Few people want to invest in a 
     country where legalized theft is government policy.
       Another egregious attempt to destroy intellectual property 
     rights is the effort by a group of developing nations--again 
     led by Brazil--to include a bizarre amendment to the 1992 
     United Nations Convention on Biodiversity, which has been 
     ratified by 188 countries, ostensibly to protect nations' 
     biological resources. The change would give nations the 
     ability to sue for patent rights to a successful biotechnical 
     innovation if they could prove that a plant molecule, animal 
     molecule or some ``traditional knowledge'' originating in 
     their country was used in the development of the product.
       According to Timothy Wolfe and Ben Zycher, who studied the 
     law for the Pacific Research Institute, this would be 
     ``analytically equivalent to a long-run tax on 
     biotechnological and pharmaceutical research and development 
     investment.'' Their PRI study estimates the effects of such a 
     tax on 27 countries including Brazil, Mexico, Peru and 
     Colombia. By the year 2025, the law ``would reduce the 
     biotechnological and pharmaceutical research and development 
     capital stock by about $144 billion (in year 2004 dollars), 
     or almost 27 percent, for the 27 nations,'' Messrs. Wolfe and 
     Zycher write. ``This implies a loss of 150-200 new drugs.''
       As Mr. Zycher points out this is similar to price controls, 
     which have of course wreaked havoc in economies wherever they 
     have been applied. ``You can erode property rights in the 
     short term without much effect, but the long-run effects are 
     far more serious,'' he said.
       Brazil's actions, ostensibly designed to help people with a 
     terrible disease, will retard economic development and 
     handicap all efforts to improve human health standards. 
     Ailing AIDS patients will need new pharmaceutical 
     developments as the virus mutates and becomes resistant to 
     today's wonder drugs. But what company will volunteer to 
     produce drugs that politicians demand free of charge? Job-
     seeking Brazilians who would benefit from foreign investment 
     in biotech will have to move to India. Brazil will sink ever 
     lower into underdevelopment. Maybe soon it will legitimately 
     qualify for the same charity as poverty-stricken sub-Saharan 
     Africa.

                          ____________________