DOJ Opinion No. 235, s. 1989

DOJ OPINION NO. 235 , s. 1989 December 13, 1989 Dr. Alfredo R.A. Bengzon, M.D. Secretary of Health Department of Health San Lazaro Compound Rizal Avenue, Sta. Cruz Manila Sir : This refers to your request for opinion on the scope of Section 10 of Republic Act No. 6675, otherwise known as the Generics Law of 1988, which provides: "Section 10. Authority to Import . Within three (3) years from the effectivity of this Act, extendible by the President for another two (2) years and during periods of critical shortage and absolute necessity, the Department of Health is hereby authorized to import raw materials of which there is a shortage for the use of Filipino owned or controlled drug establishments to be marketed and sold exclusively under generic nomenclature. The President may authorize the importation of raw materials tax and duty-free. The Secretary of Health shall ensure that the imported raw materials are allocated fairly and efficiently among Filipino-owned or controlled drug establishments. He shall submit to the Office of the President and to Congress a quarterly report on the quantity, kind and value of the raw materials imported." You state that some multi-national drug companies have made public announcements of a drug shortage; that because of the detrimental effects of such shortage on the health of the people, and considering that the process of drug manufacturing requires months of lead time, the Department of Health (DOH) can neither allow such shortage to occur nor wait for an actual shortage to happen before initiating the necessary process of drug manufacturing; and that, consequently, the DOH has identified all these products manufactured by non-Filipino companies and is working on the premise that the said drugs will no longer be available in the market by January 1, 1990. Specifically, you raise the following queries: "(1) whether or not DOH is authorized to import raw materials still covered by patent and to distribute these to Filipino manufacturers for production consistent with Section 10 of Rep. Act No. 6675. "(2) under the circumstances described in the background above, may Filipino Drug manufacturers produce drug products covered by patents. In this regard, Filipino companies are willing to pay for royalties to recognize the patent right of multi-nationals even if the latter are not willing to allow such manufacturing of patented products." Regarding the first query, the issue raised is whether or not the DOH can import patented raw materials pursuant to Section 10 of R.A. 6675. We believe that the DOH can do so subject to the conditions mentioned in Section 10 of R.A. No. 6675 and to payment of reasonable compensation to the patentee or patentees pursuant to Section 41 of R.A. No. 165 (The Philippine Patent Law), as amended. Section 10 of R.A. No. 6675 authorizes the DOH in case of critical shortage and absolute necessity, to import "raw materials" for the use of Filipino-owned or controlled drug establishments to be marketed and sold exclusively under generic nomenclature. Under this provision, the conditions which will justify the importation of raw materials are: 1) that there is a critical shortage of, and absolute necessity for, the raw material; 2) that the importation is for the use of Filipino-owned or controlled drug establishments; and 3) that the finished product will be marketed and sold exclusively under generic nomenclature. Under Section 10, DOH, as a police measure, can import patented raw materials, and there will be no infringement of patents right provided DOH pays reasonable compensation to the patentee or patentees. Pursuant to Section 41 of the Philippine Patent Law, the government is authorized to use any patented invention at any time for governmental purposes without violating the patentee's right against infringement subject, however, to the condition that the patentee shall be entitled to receive a reasonable compensation for the use of the invention. Section 10 does not qualify the term "raw materials", and in the absence of any qualification in the law, we should not qualify ( Olfato vs. COMELEC , 103 SCRA 741; Colgate-Palmolive Phil., Inc. vs. Gimenez , 1 SCRA 267). Anent your second query, Section 34 of the Philippine Patent Law allows the grant of compulsory license over a patented invention or article to any person if, inter alia , the patented invention or article relates to food or medicine of manufactured products or substances which can be used as food or medicine , or is necessary for public health or public safety (par. 1[e]), provided that he can prove his capability to make use of the patented product in the manufacture of a useful product , or to employ the patented process (par. 3). In the light of this provision, it is believed that Filipino drug manufacturers may produce drug products covered by patents provided that they shall have first obtained a compulsory license from the Philippine Patent Office in accordance with and subject to the provisions of the Philippine Patent Law, particularly, Section 35-B which enumerates the terms and conditions for the grant of a compulsory license, among which is payment of adequate royalties to the patentee or patentees. Please be guided accordingly. Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice