A bill now making its way through the Brazilian Congress is expected to cut red tape for companies that conduct bioprospecting and sign benefit-sharing contracts involving genetic resources in Brazil.

The legislation, expected to win passage in April or May, has been dubbed by the Environment Ministry as the year’s most important environmental legislation. But those who provide genetic resources—typically agricultural cooperatives and rainforest communities engaged in sustainable production—argue that they gain far less from the bill than the companies engaged in bioprospecting.

The bill is intended primarily to speed up the permitting process for companies developing new pharmaceuticals or cosmetics made with genetic resources—biological material from plants, animals or microorganisms. Under its terms, companies and research institutes doing bioprospecting would only need to register electronically with the Genetics Assets Management Council (CGEN), an inter-ministerial body. Not until a company is ready to commercialize a product would it have to sign a CGEN-approved benefit-sharing contract.

Current hurdles

By contrast, the 2001 executive order currently governing genetic resources in Brazil requires express CGEN approval before bioprospecting can proceed. It also requires a CGEN-approved benefit-sharing contract be in place even before it is known whether a substance targeted for investigation will be commercially viable. The contract-approval process now takes an average of a year. Another difference is that under the proposed law, companies would sign a benefit-sharing contract with the government, whereas the current decree requires such contracts to be signed directly with genetic resources providers.

The proposed legislation would require that 1% of the annual net revenues of the commercialized product be deposited into a special government fund, some of which would go to the genetic-resource providers and some of which would be retained by the government for biodiversity protection. Observers say that on average, providers now receive less than 1% of annual net sales, sometimes much less.

The new legislation would permit sales-revenue sharing levels as low as 0.1% when the government reaches industry-wide agreements—for instance, with all pharmaceutical or cosmetic manufacturers—on use of a specific genetic resource.

Taken together, the bill’s provisions have gotten a warm reception from industry groups.

“The bill will make it much easier for companies to bioprospect and commercialize products derived from genetic resource in Brazil,” says Adriana Diaféria, vice president of Grupo FarmaBrasil, an association of local pharmaceutical companies. “And it will provide greater legal security than the confusing 2001 executive order it replaces.”

Says Luiz Gustavo Martins of Mapric Produtos Farmacosméticos, which supplies local cosmetics companies with the extract of processed pulp of passion fruit, and açaí, a palm berry, and other tropical fruits: “Because many companies now have to sign benefit-sharing contracts, only to find the product they have developed is not commercially viable, the bill will prevent the companies signing these contracts [from] wasting both time and money.”

Less benefit-sharing?

But environmental groups argue the bill in some respects is regressive because, unlike the 2001 executive order, it limits benefit sharing only to those genetic resources that are “the main, value-added [biological] materials” in commercialized products derived from them. Benefit sharing contracts wouldn’t be required for use of secondarily important ingredients in such products.

The bill also restricts benefit sharing to commercialized products included in a classification list to be drawn up by an inter-ministerial commission. The bill exempts small companies using genetic resources to commercialize a product from having to sign benefit-sharing contracts. Says Maurício Guetta, a lawyer with the Social Environmental Institute, a leading Brazilian green group: “[The bill’s] benefit-sharing restrictions will reduce the amount of fees going into the government fund, part of which will be passed on to providers of genetic resources, likely reducing their proceeds.”

That concern is shared by Marciano Silva, a coordinator of the Small Farmers’ Movement, a nationwide advocacy group representing both family farmers and farming cooperatives that provide genetic resources to pharmaceutical and chemical companies.

Silva also worries about stakeholder participation: “The bill does not say who will manage the government fund and whether providers will be involved in its management or its oversight. Such transparency is needed to guarantee that providers of genetic resources are fairly compensated.”

Congress’s lower house, called the Chamber of Deputies, approved the bill late last month and sent it to the Senate, which is expected to pass the legislation in April or May.