Cable 230726

id: 

230726

date: 

10/21/2009 22:19

refid: 

09QUITO893

origin: 

Embassy Quito

classification: 

CONFIDENTIAL

destination: 

09QUITO998

header:

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C O N F I D E N T I A L QUITO 000893 

SIPDIS 

DEPT PLEASE PASS TO USTR FOR BENNETT HARMAN 

DEPT FOR WHA/AND AND EB/TPP/IPE 

E.O. 12958: DECL: 2019/10/21

TAGS: ETRD, KIPR, EIND, EC 

SUBJECT: Presidential Decree on Compulsory Licensing Expected Soon

REF: QUITO 998 

CLASSIFIED BY: Heather Hodges, Ambassador, State, Exec; REASON:

1.4(B), (D) 

1.   (SBU) Summary.  President Correa appears set to issue within 

days a presidential decree to pave the way for compulsory licensing 

of patented pharmaceutical products.  Local representatives of

international pharmaceutical companies point out that a 

presidential decree is not legally required for the government to 

proceed with compulsory licenses, and worry that a decree will make 

it more difficult for the GoE to moderate its stance.  The 

Ambassador raised U.S. concerns about this issue on October 19 with 

three key GoE officials in the Ministries of Foreign Affairs and 

Production, and EmbOffs are in close contact with industry 

representatives.  End Summary. 

2.  (U) In his October 17 television address, President Correa 

expanded on his earlier threats to annul pharmaceutical patents

(ref A) and noted his intention to publish a presidential decree 

early this week.  Correa said he plans to initially issue 

compulsory licenses for all medicines, and then the policy will be 

applied to agrochemicals and other types of products that could be 

considered as public goods.  Correa claimed international treaties 

allow Ecuador to establish compulsory licenses and described the 

GoE as a pioneer in implementing this policy in which knowledge is 

treated as a public good. 

3.  (C) In an October 15 meeting, Maria del Carmen, Executive 

Director of IFI - a local chamber representing international R&D 

pharmaceutical companies, told Econoff and  Commercial Assistant 

that a presidential decree on compulsory licensing of patented

pharmaceutical products had been drafted, but that the content was 

not yet final.  According to del Carmen's sources, the decree is 

expected to have two main provisions declaring:  1) access to 

medicines as a "public interest," and 2) all patented 

pharmaceutical products are subject to potential compulsory

licensing.  A third provision requested by local industry to allow 

importation of products under compulsory license was reportedly 

rejected by President Correa because it did not promote local 

production.  However, Andres Ycaza, the head of Ecuador's 

Intellectual Property Institute, said in an October 19 El Universo 

article that if local manufacturing of a product under compulsory 

license was not possible, copies could be imported. 

4.  (C) Local representatives of U.S. and other international R&D 

pharmaceutical companies have identified and been in contact with 

potentially sympathetic ministries. They see as allies the Minister 

of Health Caroline Chang, Coordinating Minister for Production 

Nathalie Cely, and Coordinating Minister for Social Development 

Jeanette Sanchez.  IFI has been told that these ministers have 

tried to explain to Correa the potential negative implications for 

economic development and the health system of issuing wholesale 

compulsory licenses, but he has rejected their arguments.  Minister 

of Health officials are reportedly concerned they will be involved 

in enforcing any compulsory license and worry about the quality of 

copies. [Copies of patented pharmaceutical products are already 

pervasive in Ecuador and there have been problems with some not 

containing the active ingredient(s) of the patented product.] 

According to IFI, Chang is looking into financial irregularities 

and business dealings of some of the local producers in an attempt 

to gain some leverage and better understand their true objectives. 

5.  (C) On October 19, the Ambassador took advantage of a 

previously schedule meeting at the MFA to express concern over the 

issue with three key GoE interlocutors on economic policy.   The

Ambassador spoke at length with Technical Secretary Mauricio Pena

of the Coordinating Ministry for Production (second to Minister 

Cely).  Pena claimed not to have details on the President's plan,

but said Correa was being motivated by an interest in gaining 

access to medicine and that the Ministry of Health was in charge of 

the issue.   In her meeting with MFA Vice-Minister for Trade Julio 

Oleas, the Ambassador said that while not delivering official 

points, she wanted to register Washington's concern with the GoE's 

plans for compulsory licensing as expressed by President Correa.

Oleas responded candidly that it was a presidential, political 

decision and that now the government would have to figure out what 

to do.  The Ambassador noted the IPR eligibility requirements of 

unilateral trade programs such as the Andean Trade Promotion and 

Drug Eradication Act and the Generalized System of Preferences. 

Oleas said he was also aware that the issue is covered in 

provisions of various international treaties and directed Pena to

gather more details about the President's plan and forward to the

Mission.  Later, in response to urging by MFA Under Secretary for

Bilateral Affairs Jorge Orbe that Ecuador and the United States 

develop a closer relationship through our Bilateral Dialogue

process, the Ambassador pointed to the potential IPR issue as a 

serious problem. 

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

COMMENT AND REQUEST

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6.  (SBU) Despite Pena's claim that Correa's principal interest is 

access to medicine, we believe that his primary objective is 

promotion of local production, both on ideological grounds and 

possibly in response to specific requests by close associates in 

the local pharmaceutical industry.  Among those close associates 

are Renato Carlo, President of the Chamber of Small Industries in 

Guayaquil and former President of ALFE, the association of local 

pharmaceutical producers, and the Ayala family (Rafael and 

Mauricio) who own Farmayala.  Both allegedly contributed financial 

resources to President Correa's presidential campaign and Carlo is 

also a close friend from school.  Econ and FCS officers continue to 

consult with representatives of U.S. pharmaceutical companies and 

have suggested they present President Correa with data that would 

help dispel his misperceptions regarding the extent to which 

wholesale compulsory licensing will yield a substantial increase in 

local production.  The Embassy has also reached out to other 

diplomatic missions and conveyed an interest in collaborating. 

Although concerned, neither the French nor the Swiss Missions have 

yet approached the GoE on the issue.  According to our contact at 

the French Embassy, the local EU delegation is calling a meeting 

next week with representatives of Member States to devise a common 

approach.  While not a member of the EU, the Swiss Embassy expects 

to join the EU meeting next week.  The major French pharmaceutical 

companies in Ecuador are Sanofi-Aventis and Salvie; the Swiss 

companies are Roche and Novartis.  The German Mission did not 

convey a high level of interest in pursuing the issue with the GoE. 

We will follow up with the British Mission over the next couple 

days. 

HODGES 

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