Update on Intellectual Property Protection

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SENSITIVE


E.O. 12958: N/A
TAGS: ETRD KIPR TU
SUBJECT: Update on Intellectual Property Protection

Summary
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1. (SBU) Econoff discussed intellectual property and
market access priorities with American pharmaceuticals
companies and with the copyright-based industry
associations in Istanbul. The drug companies agreed
that they need to make the case with the new Turkish
Government on data exclusivity. With the objective of
refuting GOT and generics producers' arguments that data
exclusivity is too expensive to implement, Eli Lilly has
prepared detailed estimates of the cost of this policy
to the Turkish Government (approximately USD 3 million
annually). Organizations representing the motion
picture, music and software industries continue to
identify enforcement as their main concern. Some
interlocutors believe the new government will be more
receptive to their concerns, and these industries plan
to call on new policymakers in the near future. End
Summary.



2. (U) Econoff met with representatives of U.S.
pharmaceuticals companies and the U.S. copyright-based
industries in Istanbul on November 21 and 22 to discuss
developments in intellectual property protection and
market access. Econoff met with the pharmaceuticals
companies as a group, which included Eli Lilly, Pfizer,
Bristol-Myers Squibb, Wyeth, Abbott Laboratories, Merck
Sharp & Dohme, Schering Plough, Pharmacia Upjohn,
Janssen Cilag (Johnson and Johnson). We also held a
group discussion on problems facing the copyright
industries with Erol Ozkur, Anti-Piracy Marketing
Manager, Microsoft/ Business Software Alliance (BSA);
Nasser Ali Khasawneh, Vice President, BSA; Baha
Ozyukseler, General Manager, AMPEC/ MPA (film industry);
Nilufer Sapancilar, General Manager AMPEC; and Daghan
Baydur, Chairman of MSG (composers/songwriters).
Econoff met separately with Mehih Ayracman, Sony Music
Managing Director and Board Member of MUYAP (Musical
Work Producers Society).


Drug Companies on Data Exclusivity, Price Discrimination
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3. (U) In their roundtable meeting at the U.S. Consulate
on November 21, the pharmaceuticals firms did not, in
depth, address the question of reversing GOT cost-saving
measures in the health and pension funds favoring
reimbursement of generic drugs. The discussion focused
primarily on data exclusivity and price controls and how
to address these issues with a new GOT. Ahmed Esen,
Pfizer's General Manager, and Roberto Giusti, Eli
Lilly's General Manager, dominated the discussion.



4. (U) Data Exclusivity: Roberto Giusti and his
Corporate Affairs Manager Sebnem Kocaalp made the case
that GOT implementation of data exclusivity would cost
the Turkish treasury as little as USD 3 million annually
in the form of higher reimbursements for pharmaceuticals
covered by the health and pension funds, well below the
USD 1 billion cost estimate promoted by Turkish generic
drugs manufacturers. Lilly presented a detailed in-
house analysis to back up its estimate. Other U.S.
companies responded very favorably to Lilly's analysis
and discussed various options for presenting it to the
GOT, including commissioning an independent study
through a Turkish university.



5. (U) Price Discrimination: There was less consensus
on the need to press the GOT on price controls, and even
on whether the controls discriminated against imports.
Ahmed Esen, Pfizer's General Manager, argued that the
entire system of price controls, for both local and
imported drugs, was not transparent and needed reform.
He suggested that a study be commissioned to examine the
impact of price controls on imported and local products.
Giusti contended that current price/margin controls were
clearly discriminatory, and noted that the European
pharmaceuticals industry association had examined the
issue and would report its conclusions in the near
future. Roundtable participants were in general
agreement that the current margin control system, which
encourages companies to inflate costs to obtain
government approval for price increases, depresses
reported profits and tax payments by the industry.
Copyright Industries Focused on Improving Enforcement
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6. (U) Representatives of the motion picture, music and
software industries maintained that small-scale street
sales of pirated material are the leading problem,
though they disagreed as to the adequacy of the GOT's
response. Microsoft and BSA representatives opined that
the recently-formed, multi-agency inspection and control
committees for copyright products were functioning well
in the Istanbul region, which accounts for two-thirds of
Microsoft's sales in Turkey. In a separate meeting,
Melih Ayracman, Sony's Managing Director told Econoff
that the committees existed largely on paper, and were
not equipped with appropriate tools (support staff,
vehicles) to fulfill their functions. Ayracman also
raised the continuing problem of broadcast piracy.
MSG's Chairman told Econoff that delays and sometimes
uneven judgements from the Turkish judiciary were a
serious barrier.



7. (U) Our interlocutors were cautiously optimistic that
the new GOT would take IPR protection seriously, and
they discussed making a coordinated approach to key
ministers and other officials in the near future. Baha
Ozyukseler, of AMPEC, said it would offer to organize a
conference for judges and prosecutors on copyright
enforcement in the spring. AMPEC pointed out that one
of the new government's first appointments was that of
Fikret Uccan, formerly Undersecretary in the Culture
Ministry, to the position of Undersecretary in the Prime
Ministry. Ozyukseler opined that this might raise the
profile of IPR issues overall in the next GOT.


Comment
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8. (SBU) Given the new government's interest in
attracting more foreign investment, we intend to
emphasize the link between improved IPR protection and
U.S. companies' willingness to maintain or increase
investments in Turkey. Pearson