GENEVA, (Reuters) – The European Union and  developing countries clashed yesterday over the treatment of  generic drugs, with Brazil accusing Brussels of trying to  undermine special public health rules for poor countries.

But the European Union said it had the right to inspect  generic drugs in transit, to protect EU citizens and people in  developing countries from the risk of fake medicine.

The argument involved the detention last December by Dutch  customs authorities of an Indian generic drug to treat high  blood pressure while in transit in the Netherlands for Brazil.

It touches on one of the most sensitive issues between rich  and poor countries — access to affordable medicine — and has  been cited by developing countries as an example of rising  protectionism in the economic crisis.

Brazil’s envoy to the World Trade Organisation told a WTO  meeting on the trade in intellectual property agreement TRIPS  that the Dutch move was part of a pattern by rich countries to  try and claw back special treatment for poor countries.

“Not only is this a violation of the WTO disciplines but it  runs counter to the spirit of everything developing countries  negotiated under TRIPS to get the flexibilities that would allow  public health concerns of developing countries to be taken into  consideration, to be protected,” Roberto Azevedo told reporters  after the meeting.

Azevedo, whose arguments were echoed by India and backed by  another dozen developing countries, said the detained cargo of  570 kilos of Losartan Potassium, an ingredient used to make an  arterial hypertension drug, had been enough to treat 300,000  Brazilian patients for one month.

The drugs were held to investigate an alleged violation of  IP rights, not to safeguard health in poor countries, he said.

He said there were similar examples, and Brazil was now  investigating more than a dozen seizures of drugs in the  Netherlands in 2008 intended for seven Latin American and  African countries.

Azevedo said Brazil did not rule out launching a formal  trade dispute at the WTO over the Losartan case.

But the head of the EU delegation to the TRIPS meeting, Luc  Devigne, said there was no legal basis for a dispute, and added  that Brazil had not raised any of the other cases with Brussels.

“We remain fully committed to a policy of access for  medicine,” he told reporters, noting that Europe was one of the  world’s biggest producers of generic drugs in any case.

But he said the TRIPS agreement allowed WTO members to  inspect goods in transit, including generic medicines.

Fake medicine in the EU rose by half between 2006 and 2007,  with one third coming from India, and a two-month action in late  2008, known as MEDI-FAKE, resulted in the seizure of 34 million  illegal medicines, he said.

“Many countries actually should be grateful to European  customs who most likely have saved lives and certainly in  developing countries, because fake medicines are more spread in  developing countries than developed countries,” he said.

In this case Dutch customs held the cargo at the request of  a company holding Dutch patent rights, he said.

After a settlement between the patent-holder and the  exporter, India’s Dr Reddys Laboratories Ltd, customs returned  them to Dr Reddys, who flew them back to India rather than  continuing the shipment to Brazil, he said, adding that 21  companies in Brazil also manufactured the drug.