Update and Next Steps on Pharmaceuticals Issues

UNCLAS SECTION 01 OF 02 ANKARA 006279

SIPDIS

DEPT FOR E, EB/TPP/MTA/IPC, EUR/ERA, EUR/SE
USTR FOR LERRION/BPECK
USEU FOR CHRIS WILSON
USPTO FOR ELAINE WU
USDOC FOR ITA/MAC/DDEFALCO

SENSITIVE

E.O. 12958: N/A
TAGS: ETRD KIPR TU
SUBJECT: Update and Next Steps on Pharmaceuticals Issues
in Turkey


SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.

Ref: (A) Ankara 5695 (B) 2003 State 322108
(C) Ankara 5385

Summary
--------------


1. (SBU) The research-based pharmaceuticals industry
continues to grapple with a difficult set of challenges
in the areas of intellectual property protection (lack
of data exclusivity and potential patent infringement)
and reimbursement reform (including non-transparent
development of restrictive lists of eligible drugs). In
response to the EU's threat of WTO dispute settlement or
even trade sanctions if Turkey continues to delay data
exclusivity, it appears that the GOT is close to a
decision to implement protection soon. Washington
agencies and Mission elements have actively advocated
for the pharmaceuticals companies in the past and will
continue to do so. End Summary.

Data Exclusivity
--------------


2. (SBU) As reported ref A, the EC's Trade Barrier
Report (TBR) found that Turkey has not complied with the
customs union and TRIPS Agreement requirements on data
exclusivity. The EU threatened formal WTO consultations
or trade sanctions if Turkey did not agree to implement
these by the end of October 2004. Industry sources tell
us that this deadline has been extended by several
weeks. The Foreign Trade Undersecretary in October
hosted a meeting with representatives of both the
research-based and generic industries to discuss data
exclusivity. Pfizer representatives are cautiously
optimistic that the GOT will ultimately agree to move
forward implementation of data exclusivity (currently
planned for end-2007),perhaps even to retroactive
implementation. A Dutch diplomat based in Ankara
recently told us that there is interest in several EU
member embassies in a joint demarche with the USG on
this issue if the GOT does not come up with a
satisfactory policy, as Washington had suggested last
year (ref B),but we have not heard an authoritative
view from the European Union delegation on this matter.

Zyprexa
--------------


3. (U) Eli Lilly is concerned that generic manufacturers
have applied to the Health Ministry for registration of
copies of Zyprexa, which has a valid Turkish patent
which is not due to expire until 2016. We have raised
this issue with the GOT on several occasions (see
below).

Reimbursement System Reform and Drug Savings
--------------


4. (U) As part of its planned social security reform,
one of the key structural reforms supported by the IMF
and World Bank, the GOT is contemplating reforms in its
pharmaceuticals reimbursement systems which will reduce
health expenditures, but have a dramatic impact on the
industry. A "positive list" of drugs eligible for
reimbursement, not yet approved by the GOT, could
severely limit Turkish patient access to innovative
products by restricting the types of physicians and
facilities authorized to prescribe certain drugs.
Research-based industry claims that it has not had
sufficient opportunity to provide input into the
development of this restrictive list. It also objects
to GOT pressure to provide significant discounts on drug
prices.

Recent Advocacy
--------------


5. (SBU) Washington agencies and the Mission have
advocated aggressively and at high levels on behalf of
research-based industry, particularly over the data
exclusivity issue. Lack of data exclusivity was the
primary reason for elevating Turkey to the Priority
Watch List in the 2004 Special 301 Review. Recent
advocacy includes:

- Commerce U/S Aldonas' October 29 letter to Foreign
Trade Undersecretary Tuncer Kayalar;

- The Ambassador raised the data exclusivity problem in
an October 25 speech to the Izmir Chamber of Commerce on
investment issues, as well as in his opening remarks at
a September 9 conference for Turkish judges and
prosecutors on intellectual property enforcement;

- The Ambassador told State Minister Tuzmen that Turkey
is not complying with its WTO TRIPS obligations on data
exclusivity in a September 17 meeting (ref C);

- Commerce DAS Stewart's September 9 meeting with the
Health Ministry's General Director for Pharmaceuticals,
the Deputy U/S Foreign Trade, and other GOT officials;

- The Ambassador's August 19 letter to Health Minister
Akdag urging that the Ministry not approve patent-
infringing copies of Eli Lilly's Zyprexa drug.

Next Steps
--------------


6. (SBU) Post sees results from our and EU pressure on
GOT. The dialog between Pharma companies and senior GOT
officials seems to have improved. We will continue to
press the Turks to implement data exclusivity
immediately, involve industry stakeholders fully in
reimbursement reform, and refrain from approving generic
copies of drugs which should enjoy patent protection.
As noted above, Turkey's data exclusivity policy may
improve in the near future in response to the EC's TBR
report. Mission has requested meetings with the Health
Ministry U/S as well as the President of the Turkish
Patent Institute on these issues. We will also ensure
that visiting economic officials are briefed and have
the opportunity to raise pharmaceuticals issues with
decisionmakers in the GOT. We should also use the next
Trade and Investment Framework Agreement (TIFA) meeting,
likely to be held in early 2005 in Ankara, to further
our objectives in this area.
Edelman