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Brazilian Government considers privatization of the agency that analyzes patents, which may increase the price of medicines

While the proposal is criticized by businessmen from the national pharmaceutical industry, the association that represents multinational corporations is not against the measure

The Brazilian Institute of Industrial Property (Instituto Nacional da Propriedade Industria – Inpi) may cease to be an autonomous federal agency and be transferred to the group of organizations known as “Sistema S” (Photo: Fernando Frazão/Agência Brasil)

“Insane”, “foolish” and “preoccupying”. That is how Brazilian businessmen from the pharmaceutical industry and specialists in access to medicines evaluate the proposal of privatization of the Brazilian Institute of Industrial Property (Inpi from the acronym in Portuguese “Instituto Nacional da Propriedade Industrial”),  currently under consideration by the Ministry of Economy

For them, the measure will harm the national industry and favor multinational corporations, responsible for 80% of patent applications in Brazil. Experts warn that if the proposal is implemented, new drugs will become more expensive.

Inpi is the federal government agency responsible for evaluating applications for trademarks, patents, computer programs, among others, including new drugs. Upon receiving a patent, a company gains a monopoly on selling the product — and ends up charging more because there are no competitors in the market.

The Ministry of Economy, however, is considering extinguishing Inpi and creating the Brazilian Agency for Industrial Property and Development (Agência Brasileira de Desenvolvimento e Propriedade Industrial), which would be incorporated into the group of private management organizations known as Sistema S, which includes Sesc, Sesi and Senai. The change, which may be made via a provisional measure, has been criticized for opening a gap for the private sector lobby, in addition to the possible approval of undue patents.

“There is no industrial property office in the world that is not part of the government structure”, points out the head of the 13th Federal Court of Rio de Janeiro, Judge Márcia Nunes de Barros, specialist in social security and intellectual property.

Industry lobby

Health will be one of the areas most affected by the change because pharmaceutical patents directly impact on the price of medicines. The effect is immediate in the public budget, since the largest buyer of medicines in the country is the Ministry of Health, with an annual expenditure of around 19 billion BRL (US$ 4.6 billion).

“This proposal transfers the responsibility of the State to the private sector. There is an evident conflict of interest”, says Jorge Bermudez, head of the Department of Medicines Policy and Pharmaceutical Assistance (Departamento de Política de Medicamentos e Assistência Farmacêutica) at Fiocruz. “With this [private] model, the chances of undue patents being granted increase,” says Reinaldo Guimarães, a researcher at the Federal University of Rio de Janeiro (Universidade Federal de Rio de Janeiro – UFRJ). 

The Brazilian Public Health System (SUS) is the largest medicines buyer in Brazil: US$ 4.6 billion per year (Photo: Marcello Casal Jr./Agência Brasil)

Another problem of linking the analysis of pharmaceutical patents to a private entity is that it may weaken the exemption and impartiality of the examiners, who would be subject to corporate lobbying, say researchers.

“A weakened Inpi that is not public will not have the strength to regulate the private sector. And the private sector cannot regulate the private sector,” says Pedro Villardi, coordinator of the Working Group on Intellectual Property (Grupo de Trabalho Sobre Propriedade Intelectual), which assesses the impact of patents on public health.

When a drug patent is granted, the company gains exclusivity for 20 years to sell the product on the market. In the case of Brazil, Patent Law allows the monopoly time to extend over the international standard of two decades. This happens when the Inpi takes more than 10 years to confirm a patent — in the pharmaceutical sector, the average time is 13 years.

Proposal divides national and multinational industry

According to an internal document from the Ministry of Economy, the proposal aims to increase Inpi’s efficiency and a cut on public spending. The institute, however, is in the black. The forecast for 2020 is 513 million BRL (US$ 125 million) in revenues and 333 million BRL (US$ 81 million) in expenses — a positive balance of 180 million BRL (US$ 44 million).

“This argument [of the government] is not solid. If they want efficiency, Inpi’s revenues should remain in the agency, and not be directed to the Treasury, as is the case today,” says Guimarães, from UFRJ.

When contacted, the Inpi declined to comment. The Ministry of Economy did not answer the questions sent by the reporter and chose not to comment. 

Inpi’s president, Cláudio Furtado, denied that the agency will be extinguished, but did not exclude the possibility of it leaving the government structure. “INPI may, in fact, cease to be an autonomous [federal] agency, but with the objective of becoming a world-class office”, he stated at a meeting held in December at the Yacht Club in Rio de Janeiro.

Representatives of the national industry contacted by Repórter Brasil were concerned about the measure being considered by the ministry. “Today Inpi has autonomy as a regulatory agency, and that is why it makes independent decisions. Weakening the intellectual property body will cause legal uncertainty “, says Sérgio Frangioni, partner at Blanver and president of Abifina, an association that brings together the largest pharmaceutical companies in the country.

“Medicines prices go up when patents are granted beyond limits.” Reinaldo Guimarães, from UFRJ and Abrasco

The owner of the Brazilian record-breaking patent laboratory, Ogari Pacheco, from Cristália, evaluates the proposal as “insane”. “It is safer the way it is today, connected to a public agency”, he says.

Interfarma, an association that represents foreign companies in Brazil, avoided commenting on the withdrawal of Inpi from the federal government. The entity defends “a robust structure, with transparency and efficiency, to issue patents”, but did not answer whether this would be the case under private management.

“There needs to be a formal or public proposal by the government so that the productive and innovative sector can express its views”, says the pronouncement sent to Repórter Brasil.

Plan of attack

The proposal to privatize the Inpi comes just a few months after the agency put in place a plan to drastically reduce the queue of patent applications — which today has 155 thousand applications waiting for analysis, for a total of 320 examiners (484 requests per civil servant). 

“With the plan, we started to do a more precarious exam,” an INPI examiner told Repórter Brasil, on condition of anonymity. He says that the agency’s productivity has increased because the new management requires civil servants to do more patent analysis so that his salary remains the same.

The lawyer Luiz Edgard Montaury Pimenta, president of the Brazilian Intellectual Property Association (ABPI), recognizes that the quality of the exam has dropped with the government’s plan. But he sees advantages in a faster work by Inpi. “It is worse to take 13 years to grant a pharmaceutical patent and extend the monopoly time. Whoever feels harmed [by a wrongly granted patent] can ask for annulment”, he says.

Experts on access to medicines disagree and say that the solution to the problems of the INPI is not the precariousness of the agency or the work of the civil servants. “The worse the examination of an application, the more patents are granted. And the more drugs that are patented, the more expensive medicines are,” says Villardi.

“What makes medicine cheaper is competition,” summarizes Bermudez, noting that the price of other products will also be affected by the possible privatization of Inpi, such as pesticides.

This story was originally published on 9th January 2020

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