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Parallel Imports and Generic Drugs in the Philippines

The Philippines position on generics and parallel imports in respect of drugs

Generics

The issue regarding generic drugs and parallel importation of drugs has been brewing for a long time in the Philippines due to the concern over the high costs of drugs in the country. The Generics Act 1988 (which allows generic drugs to trade after the patents on the same have expired) was passed and was aimed at promoting the production, dissemination, prescription and use of generic drugs.

This was as competition from generic drugs was seen as a crucial way to making quality drugs affordable in the Philippines. The measure of allowing generics in itself however was not appeared not to be sufficient, as in 1999 the Philippine Senate Committee on Health asserted that the prices of pharmaceuticals sold in the Philippines are higher than in other Asian countries and the multinational drug companies were asked to look into their pricing structures and “identify where the problem lay”.

However as pointed out by the Executive Vice President of the Pharmaceutical Healthcare Association of the Philippines (PHAP), that many factors influence pharmaceutical prices, such as the cost of raw materials, labour, taxes, duties and the structure of the wholesale and retail markets.

Parallel imports

The other approach taken by the government of the Philippines was to use parallel imports of branded drugs from countries where the branded drugs were sold cheaper than in the Philippines. The idea behind this programme of parallel importation was to influence multinational drug manufacturers to lower the costs of drugs sold in the Philippines. The PHAP objected to parallel imports being allowed, as under the Counterfeit Drugs Act any unregistered drugs that had a registered counterpart were considered counterfeit and any change in this regime (to allow for parallel imports) would make the problem of controlling counterfeit drugs even more difficult. Furthermore parallel imports would violate the rights of PHAP membeArs to “exploit their trademarks as they see fit”.

The development that took place was that under the Administrative Order 85 (series 2000) issued by the Department of Health, the import of generic pharmaceuticals from countries such as India are now allowed in the Philippines. As a result of this from 2002 to 2004 the Philippines International Trading Corporation (PITC) succeeded in importing low-costs drugs from India to an amount of about USD 535,000 and they are now planning to import lower-cost patented drugs from China.

The impact of TRIPS and TRIPS-Plus

The current legislation on generics and parallel imports in the Philippines can be said to be narrower then as allowed by TRIPS. This is as the TRIPS Agreement allows countries to use certain key flexibilities, such as compulsory licensing and parallel importation. Furthermore the use of the flexibilities in TRIPS was reaffirmed by the Doha Declaration on TRIPS and Public Health of 2001.

There is also the WTO General Council Decision of 30th August 2003 which is a temporary waiver to the TRIPS Agreement that allows States with insufficient drug manufacturing capacity to fully benefit from compulsory licensing.

However with the various trade agreements that are being negotiated by the Philippines, especially a possible US-Philippines Free Trade Agreement (FTA), the flexibilities given to the government of Philippines under TRIPS as reaffirmed by the Doha Declaration could be reduced. This as the IP protection provisions proposed in the other FTA’s signed by the United States which is termed as TRIPS-Plus do go beyond what is required by TRIPS.

The TRIPS-Plus conditions include:

Extension of the patent term beyond the twenty year period required by TRIPS

Limitation on exports of drugs made under compulsory license

Limitation on parallel imports of patented drugs

Exclusivity over test data

Marketing authorization rules requiring generic manufacturers to obtain the consent of patent owners in order to use test data for marketing approval.

Whether or not these conditions are accepted by the Philippines or whether an FTA is finally be concluded will be left to be seen. However what is clear is that the landscape regarding the use of generics and the parallel imports of drugs will be severely impacted by an FTA with the US.

The Pfizer case

The Philippines government’s attempt to expedite the registration of generic drugs in the Philippines has been challenged by the American-based pharmaceutical firm, Pfizer, Inc which has sued Philippine Government-owned company, the Philippines International Trading Corporation (PITC) and the Bureau of Food and Drugs (BFAD) for having imported and registered a patented anti-hypertensive medicine.

The product in question is amlodipine besylate, which in the United States, known as Norvasc. The equivalent product in India, Amlogard is available at a much cheaper price.

In this matter Pfizer Ltd. UK and Pfizer, Inc. Philippines filed a case in the Philippines Regional Trial Court , Makati City Branch against the PITC, BFAD and two employees at the BFAD for having imported 200 Amlogard tables from India for the purposes of submitting them for BFAD registration, as registration was required even if the drugs were not intended to be sold until the expiry of the Pfizer patent.

The BFAD then approved the drug in the form of parallel import drug registration. The PITC claimed that it informed Pfizer that they do not intend to manufacture the drug, but to begin the process of registering the equivalent product, so it can promptly enter the market when Pfizer’s patent expires. (The PITC is the sole entity authorized by the Department of Health to conduct parallel importation on drugs.)

Pfizer’s view was that the act of importing the Amlogard tablets infringed its patent on Norvasc that runs until 13th June 2007 and is demanding that the registration granted to PITC be revoked.

The practice of exempting from patent infringement a generic drug that is brought into a country for early registration in IP is referred to as “Bolar provision”, after the change in the US patent law to allow for such use. The Philippine patent law has not been amended as yet, however, according to the Consumer Project on Technology (CPTech), this custom has been part of Philippines regulatory practice for several years, and it has never been challenged before

Pfizer stand on the matter is that Pfizer India found that none of the PITC’s sources were their authorized distributors or sub-distributors. The complaint further states that BFAD and its officers induced the violation of Pfizer’s patent rights by granting registration approval to PITC. Furthermore there was no legal assurance that their patent would not be infringed by the importation of an unauthorized amlodipine besylate product and the company was also concerned about product safety as it was an unknown from which manufacturing source the product would be imported to the Philippines.

In a new development the PITC filed a Peso1.5 million counter suit against Pfizer because of its attempt to stop the government’s importation of generic drugs.

Concerns by patent owners

The Pharmaceutical and Healthcare Association of the Philippines (PHAP) has expressed their concern that the way to reduce medicines prices in the Philippine is not by parallel imports but through strict implementation of the generics law. They claim that drug counterfeiters are taking advantage of the parallel importation policy by labeling fake drugs as branded-drugs imported from India, and passing them of as part of the parallel imports by the government. In this regard PHAP has filed a petition for injunction against Department of Trade and Industry to stop their attempt at parallel importing drugs.

In order to avoid dilution of their patent rights, the pharmaceutical industry in the Philippines, including Pfizer and other members of the PHAP is also lobbying against Senate Bill 2139 that would finally introduce all the flexibilities enjoyed under TRIPS Agreement into the intellectual property law in the Philippines.

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