Posted in Brazil Intellectual Property

Battle of the feds: end of the conflict between INPI and ANVISA on the registration of pharmaceutical product Patents

After 15 years, the feds have finally decided to unlock the system.

In order to address certain amendments and add-ons to Law No. 9,276/96, the so-called Intellectual Property Law, in 2001 Brazil’s National Congress promulgated Federal Law No. 10,196.

Despite appointing several technical and procedural parameters related to the National Industrial Property Institute (INPI), this law also brought an interesting – and controversial – legislative approach to the economic regulation of the pharmaceutical market, since it bonded the concession of patens in this sector to “prior consent” from the National Health Surveillance Agency (ANVISA”).

The law did not answer two key questions: “What is an “ANVISA’s prior consent?” and “Which parameters and procedures should be used for granting an ANVISA’s prior consent?”  This set up what can only be described as the battle of the feds – a conflict between ANVISA and INPI over registration of pharmaceutical product patents.

At the beginning of the battle of the feds, INPI took the position that “under no circumstance” could ANVISA assess and/or review patentability requirements, since it is not a competent governmental body regarding those requirements. On the other hand, ANVISA has affirmed that the scrutiny of the subject matter for granting of “prior consent” would include reassessment of patentability requirements, in addition to other factors established by current health legislation.

By mid-2008, the regulatory controversy over the subject matter was well established; since then, numerous jurisdictional conflicts have been argued before the agencies involved, and several lawsuits have been filed arguing that ANVISA’s position corrupted the system structured in Brazil by the Intellectual Property Law.

Now, after 15 years of interagency conflict, the casualties of the battle have mounted: 30,000 patent applications are pending for analysis, and the ramifications of the conflict, in terms of intangible liability, are even greater.

Delay in granting a patent automatically extends the start of the protection countdown. As an example, generic medicines do not enter the market as quickly as the already established pharmaceuticals; thus, access to the generic pharmaceutical product becomes more expensive. Moreover, although many patent applications have not yet been evaluated, pharmaceutical companies act as if their products are already protected, raising their prices and further discouraging other companies in the industry from developing similar formulas.

From a practical standpoint, this has created the same circumstance that occur in other countries under “pay for delay,” but without the benefits for manufacturers of generic drugs and SUS. Worse, this “patent extension” situation has resulted in losses of BRL2 billion to SUS so far.

Note that the practice of “pay for delay” is not even allowed in Brazil.

Both the healthcare and industrial property sectors have suffered the consequences of this long-term conflict – but it appears that the battle will soon draw to a close.

On April 12, 2017, INPI and ANVISA announced that they have agreed on parameters and procedures that will be used to analyze patent applications for pharmaceutical products and their proceedings. They have signed a Joint Ordinance on this matter that will be published in the coming days.

The agencies have also agreed that the regulatory bodies will establish an Inter-institutional Commission, in which representatives from both agencies will participate, with the objective of promoting the exchange of technical information and the harmonization of processes. Their goal: to end the ongoing battle over subject matter.

The regulatory model encourages the technical discretion of the regulators, besides making it clear that prior consent does not authorize, in the performance of tasks of ANVISA, the assessment of aspects unrelated to public health. The patentability requirements, in turn, remain fully established as INPI’s own competence. That is, ANVISA will certainly play an important role during the analysis of the patentability of a pharmaceutical product, but when it comes to registration, INPI will have the final word.

The applicant will therefore be responsible for filing a patent application in accordance with the conditions established by INPI, but without contradicting ANVISA’s economic and political aspirations in the field of public health.

One day soon, for the pharmaceutical sector, the battles of the feds will be in the past.

 

Please do not hesitate to contact the authors at Campos Mello Advogados, an independent law firm in Brazil

for further information at terence.trennpohl@cmalaw.com, paula.menabarreto@cmalaw.com, or bruna.rocha@cmalaw.com.

Terence Trennepohl, Partner in Campos Mello Advogados’ Life Sciences practice

Paula Mena Barreto, Partner in Campos Mello Advogados’ Intellectual Property practice

Bruna Rocha, Associate in Campos Mello Advogados’ Life Sciences practice

 

 

Posted in Brazil COSIT Insurance Reinsurance Tax

Taxation and Reinsurance in Brazil: Regulatory Update

COSIT CONSULTATION RESPONSE 62/2017

The following are comments to the effects of COSIT Consultation Response No. 62, published on 20 January 2017, which the General Office to Coordinate Taxation (“COSIT”) of the Brazilian Federal Revenue Service (“RFB”) expressed its position on the tax regime applicable to reinsurance companies operating in Brazil.

Portuguese language is below.

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Posted in Brazil Insolvency Insurance Reinsurance

Insurance Update: Brazil Federal Regional Court

BRAZILIAN FEDERAL REGIONAL COURT: IMPORTATION AND COFINS-IMPORTATION APPLIES TO (RE)INSURANCE BUSINESS

By Campos Mello Advogados, an independent law firm in Brazil in Cooperation with DLA Piper

 

The Brazilian Federal Regional Court recently unanimously decided that insurance policies and reinsurance agreements are equivalent to rendering of services; therefore PIS-importation and COFINS-importation (PIS/COFINS-importation) applies to premiums remitted abroad. Pursuant to Law No. 10.865/2004, PIS-importation and COFINS-importation applies to the remittance of amounts abroad as consideration for services rendered. The basis for calculation of these taxes is 15 percent over (re)insurance premiums remitted abroad.

The lawsuit, brought against an insurance company and a local reinsurer, debates whether social contributions PIS/COFINS-importation applies on premium of reinsurance remitted abroad. Continue Reading

Posted in Brazil Real Estate

New Bill Proposal – Public Offering of Hotel Units || Projeto Regulador de Oferta Pública de Projetos Hoteleiros

 Analysis by Campos Mello Advogados in Brazil (in cooperation with DLA Piper)

For more information, please contact Lynn Cadwalader (US).

The Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários – CVM) has submitted for public comment a proposal for a new ruling (Instrução Normativa) (the CVM Bill) − aiming to regulate the public offering of hotel-related collective investment contracts (Hotel CICs).

A Comissão de Valores Mobiliários (“CVM”), por meio do Edital de Audiência Pública SDM Nº 08/16, submeteu à audiência pública minuta de instrução (“Minuta de Instrução”) dispondo sobre a oferta pública de distribuição de contratos de investimento coletivo hoteleiro (“CIC Hoteleiro”)

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Posted in Incentives Tax tax exemptions transfer pricing

New transfer pricing requirements in Latin America under BEPS

This publication first appeared as a Latin America Alert on www.dlapiper.com.

Several countries in Latin America have established new transfer pricing documentation obligations associated with the OECD’s Base Erosion and Profit Shifting (BEPS) initiative.

In this new year, Mexico, Colombia and Peru have included in their local legislation new documentation requirements that follow a three-tiered approach: country-by-country (CbC) report, master file, and local file. These requirements are based on the revised Chapter V of the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration.  Below is a summary of those requirements.

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Posted in Financial Services Offshore Real Estate Tax uruguay

Uruguay Fully Aligns with OECD Standards: Tax Transparency Law Enacted

The following is a guest post from Bergstein Abogados, Montevideo, Uruguay

Over the last few years, Uruguay has fully aligned with OECD standards. For example, Uruguay has entered into more than 10 tax information exchange agreements and more than 15 double taxation agreements. Uruguay became a member of the Committee on Fiscal Affairs, signed the Convention on Mutual Administrative Assistance in Tax Matters. Uruguay, and also agreed to start the automatic exchange of information in September 2018.

In this context, on December 29, 2016, Uruguayan Parliament passed the Tax Transparency Act. Continue Reading

Posted in Financial Services Puerto Rico Regulatory

International Financial Entities in Puerto Rico

The principal goal of International Financial Entities (IFEs) is to attract United States and foreign investors to Puerto Rico. IFEs are licensed and regulated by the Office of the Commissioner of Financial Institutions pursuant to Act No. 273 of September 25, 2012, as amended and Regulation No. 5653. The IFE Act offers tax incentives to IFEs that set up operations in Puerto Rico, subject to the licensing requirement and regulatory powers of the Commissioner.

Pursuant to the IFE Act, any person other than an individual, incorporated or organized under the laws of Puerto Rico, the United States or any other country, or any entity constituted as a unit of said person, may apply for a license to do business as an IFE.

See our summary of the applicable laws and regulations governing the establishment of IFEs in Puerto Rico that may be of interest to those seeking a general understanding of the organization and licensing process of an IFE, as well as the tax benefits offered under the IFE Act.

Posted in M&A Tax VAT

US House Tax Bill Proposal – LatAm M&A Implications

This article first appeared as a Financial Services Regulatory Alert on www.dlapiper.com.

At the risk of oversimplification, the purchase price on an asset purchase agreement allocable to certain intangibles or goodwill is generally amortized over 15 years.  The House tax bill proposes to allow the full purchase price (allocable to intangibles/goodwill) to be recovered immediately.  Assuming the House version on “tax expensing” passes, the effective date of the legislation will be a critical factor in timing your M&A closings. For example, the effective date might be (i) the date the legislation is signed into law by the President-elect, (ii) retroactive to an earlier date, or (iii) a future date (e.g., all deals closed after 12/31/17).  And although LatAm deals–commonly subject to local value added tax (VAT)–make asset purchases the exception, there is still the opportunity for a US buyer to plan carefully for the immediate recovery of the goodwill/intangible purchase price. For example, US tax law permits certain stock deals to be treated as asset deals permitting depreciation/amortization of the acquired assets, so please stayed tuned on further developments of the House tax proposals.

If passed into law, this expending provision will be a key driver in accelerating asset purchase deals of targets having significant intangibles or goodwill.

Contact the author for more information

Michael A. Silva

Partner

Posted in Financial Services Puerto Rico Regulatory Tax

House passes pro-growth bill, HR 6427, 391 – 2: top points

HR 6427, a potentially important piece of financial services related legislation, has been passed by the US House of Representatives by a vote of 391-2. Entitled “The Creating Financial Prosperity for Businesses and Investors Act,” the bill aggregates six House Financial Services Committee measures that each previously passed the House with bipartisan support.

The bill is seen as a move by Republican leadership, particularly newly re-elected Financial Services Committee Chairman Jeb Hensarling (R- TX), to promote capital formation and remove barriers to growth faced by small businesses and startups.  While there is no guarantee the Senate will approve the Bill, the House would not  be trying to get something to the Senate unless there was at least some chance for it to get through.  Observers have even suggested that individual pieces of HR 6427 – which is more or less a compilation of prior bills approved by the House – may get through the Senate in the wake of the House’s recent and overwhelmingly bi-partisan approval.

Of particular relevance to financial services industry practitioners are the following portions of the bill:

  • New SEC office and committee focused on small business: Title II would establish the Office for Small Business Capital Formation within the SEC to assist small businesses and their investors to resolve significant problems with the SEC or self-regulatory organizations and identify issues and propose changes to statutes, regulations, and rules to benefit small businesses and their investors and facilitate capital formation. It would also establish the SEC Small Business Advisory Committee to provide the SEC with advice on capital formation, securities trading, public reporting, and corporate governance for emerging, privately held businesses and smaller public companies.
  • Increase in investor limit for qualifying venture capital funds: Title III of the bill would amend the Investment Company Act of 1940 (1940 Act), to allow “qualifying venture capital funds” to avoid registration under the Act until they amass 250 investors.  A QVCF, as defined, would not be able to purchase more than $10 million in securities in any one issuer, adjusted for inflation.
  • Amendments to crowdfunding law:  Title IV of the bill would amend aspects of the “crowdfunding” provisions  contained in the Jumpstart Our Business Startups Act (known as the JOBS Act).  It would amend the 1940 Act as well as the Securities Act of 1933, to permit special purpose vehicles to acquire securities of qualifying issuers, and raise the threshold for registering the securities of crowdfunding issuers under the Securities Exchange Act of 1934 to $75 million ($50 million for issuers that have previously not reported any revenues).
  • Expansion of the definition of “accredited investor”: Title V of the bill would amend the definition of “accredited investor” found in Regulation D adopted under the 1933 Act to add inflation adjustment provisions to the current $1 million net worth and $200,000 ($300,000 jointly), income requirements, and to add two new categories of accredited investors: (i) persons with a current securities-related license; and (ii) persons whom the SEC determines by rulemaking to have demonstrable education or job experience to qualify as having professional subject-matter knowledge related to a particular investment.  Notably, the Financial Industry Regulatory Authority (FINRA) or another self-regulatory organization would be required to verify the person’s education or job experience.
  • Elimination of the 1940 Act exemption for funds located in Puerto Rico, the Virgin Islands and other US territories and possessions: Title VI of the bill would amend the 1940 Act to terminate an exemption for investment companies located in Puerto Rico, the Virgin Islands and any other possession of the United States that sell their shares only to the residents of the territory or possession in which they operate.  The bill would establish a three-year safe harbor for funds that currently enjoy this exemption.  Furthermore, the bill would authorize the SEC to further delay the effective date of this change for specific funds for up to three additional years.

Find out more about these aspects of the bill by contacting the author.

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