As the largest country in Latin America and the fifth largest in the world, with a population of around 200 million, it is perhaps not surprising that Brazil has the largest pharmaceutical market in Latin America. The size of this market has also been buoyed during the twenty-first century by a dramatic shift in the economic wellbeing of the population: some 40 million individuals joined the Brazilian middle class between 2003 and 2011, increasing it from 65.9 to 105.5 million, and leading to an increased demand for improved healthcare and consumer products. Brazil is also one of the most resource-rich and biologically diverse countries in the world; its natural resources are a key asset of the country, which is the world’s second biggest grower of genetically modified crops and a leader in biofuel use.

With this wealth of diverse natural resources and strong demands for consumer and pharmaceutical products, research and development based around Brazil’s rich genetic heritage could be expected to be a huge growth area. The current legal framework governing such research, however, has up until now severely restricted the activities of companies and other research institutions alike: a situation that a new bill currently being considered by the Brazilian legislature seeks to address.

The international approach

Before considering the changes to Brazil’s domestic legislation, it is interesting to note the approach taken globally regarding access to genetic resources. The key international treaty on the issue is the Convention on Biological Diversity (CBD), which now has over 190 signatories, including Brazil. The CBD goes beyond previous international initiatives, in that it broadly recognises that the conservation of biological diversity is a common concern of humankind and that nations are responsible for conserving their biological diversity and for using their biological resources in a sustainable manner.  The objectives of the CBD are threefold: (1) the conservation of biological diversity; (2) the sustainable use of its components; and (3) the fair and equitable sharing of the benefits arising out of the utilisation of genetic resources.  The CBD recognises every state’s sovereignty over its own biological resources, with the authority to determine access to genetic resources resting with national governments and subject to national legislation. The UK is among a number of countries not to have not introduced specific legislation on the topic, instead relying on other areas of law, particularly those relating to property, trespass, statutory protection of certain species and site protection.

Existing Brazilian rules and issues

In contrast, the preservation of Brazil’s genetic heritage is important enough to have been recognised in the Federal Constitution of 1988 (Article 225, paragraph 1, item II), which requires the government to “preserve the diversity and integrity of the genetic heritage of the country and control entities engaged in the research and manipulation of genetic material.” The key legislation actually governing the use of genetic heritage in Brazil, though, is Executive Order No. 2.186-16/2001 (the “2001 Order”), originally passed as a temporary measure by presidential decree in 2001, which together with a series of other orders and decrees regulates the use of genetic material in Brazil.

The 2001 Order defines genetic heritage and regulates its access and use for scientific research, technological development or bio-prospecting (Article 1). It also provides for the creation of the Conselho de Gestão do Patrimônio Genético, or Genetic Heritage Management Board, responsible for setting standards and guidelines, authorising and monitoring research and development and granting access to traditional knowledge related to genetic heritage (Articles 10 and 11). Under presidential decree 6159/2007, authorisation for access to genetic heritage for commercial purposes is required prior to either commencing any research or to a patent application being filed.

The process of gaining authorisation, however, is extremely lengthy: according to a government minister, around 13,000 patents are currently being stalled due to their use of genetic material. In addition, the rules contained in the Order and related legislation are often unclear, meaning that even those researchers that do obtain authorisation (or those that believe they are not required to do so) run the risk of criminal liability or large fines. Against this background, it is easy to see why companies and universities have been unwilling to take the risks involving in the research and development of Brazil’s genetic heritage.

New legislation and widening access

The government’s desire to tackle this issue can be seen in the way the new bill has been put forward. Introduced under the urgência constitucional regime, it must be considered by the Brazilian congress within 45 days, and by the senate within another 45, to avoid the government being locked out. The new law will fill in the gaps left by the 2001 Order (without replacing it entirely), clarifying the positions of institutions involved in the research and commercial use of Brazil’s genetic heritage, and giving such institutions more certainty that inventions that would otherwise be patentable are not stalled by problems in obtaining authorisation from the Genetic Heritage Management Board. In part, this will be done by replacing the authorisation process with a register setting out institutions that are pre-approved for genetic heritage research, including commercial use. Rather than authorisation being required on each use of genetic matter, a researcher will be required to specify their development aims or area of interest at the outset, with research that falls within this not requiring further authorisation prior to patenting being obtained.

The law will also provide for the involvement in the decision-making and research process of Brazil’s indigenous people, who have historically been responsible for protecting and utilising many of those species that make up Brazil’s rich biological diversity. Where research leads to a product based on certain species coming to market, a percentage of sales revenue will be funneled back to conservation and these indigenous communities: a sharing of the benefits arising from the use of genetic heritage that chimes with the third goal of the CBD mentioned above.

More broadly, in seeking to ensure that the commercialisation of Brazil’s natural resources has a direct benefit to the people, this measure is also similar to those passed last year in relation to Brazil’s massive offshore oil and gas reserves, which required oil royalties to be used specifically for investment in education and health. In the lifesciences sector, as in the oil and gas sector, Brazilian governments have traditionally been wary of the use of Brazil’s natural resources by foreign parties: and it is partly its desire to prevent exploitation that has led to the current restrictive and bureaucratic process. There is also, however, a growing recognition of the need for foreign expertise and investors, with the country now the third highest global destination for foreign direct investment after the US and China. If this new bill succeeds in widening access to the country’s genetic heritage then, given the size of its latent resources, Brazil may move from being a key consumer market to a key destination for biotech research and investment.