GOT Defends New Data Exclusivity Regulation

UNCLAS SECTION 01 OF 02 ANKARA 000839

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: GOT Defends New Data Exclusivity Regulation
and Reports System for Patent Linkage


SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.

REF: (A) State 19340 (B) Ankara 394
(C) State 23950

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


1. (SBU) Health Ministry and Foreign Trade
Undersecretariat representatives argued that Turkey's
new data exclusivity regulation goes as far as is
legally possible to protect research-based companies
within Turkey's legal framework. The Health Ministry
reported that it had implemented a system for ensuring
that generic registration applications for patented
drugs are not accepted. End Summary.

Data Exclusivity Demarche
--------------


2. (SBU) Econoff and Econ Specialist met with Orhan
Gumrukoglu, the Health Ministry's Director General for
Pharmaceuticals, on February 10 to deliver ref (A)
demarche outlining U.S. concerns with Turkey's January
19 data exclusivity regulation (ref B). Gumrukoglu
responded that Turkey had gone as far as it could go in
providing limited retroactive protection for research-
based companies. He maintained that generic companies
would flood the Turkish court system with challenges if
the GOT were to retroactively provide data exclusivity
in cases in which generic copy applications had already
been filed. This would hurt the research-based
companies by tying up implementation of the entire
regulation, possibly for years. Gumrukoglu asserted
that the GOT would fully implement the protections in
the regulation, and planned to increase the term of
protection from six to ten years when Turkey joins the
European Union.


3. (SBU) Gumrukcuoglu stated that he was aware of at
least 118 molecules with license applications in Europe,
but not in Turkey, filed before 2005; all of these drugs
could enjoy retroactive protection. In response to
Econoff's question as to how many Turkish generic
applications had been filed before 2005 for molecules
which would otherwise be entitled to retroactive data
exclusivity protection, Gumrukoglu stated that there
were perhaps 30 to 50 such molecules. However, there
might be multiple generic applications for the same
molecule. Note: Research-based industry has said that
there are hundreds, perhaps even 1,000 or more, data
exclusivity-infringing applications in the Health
Ministry pipeline. End Note.


4. (SBU) Gumrukoglu predicted that the January
regulation would be a boon to research-based companies.
He estimated that they would realize an extra one
billion USD in sales over the next three or four years,
and that this would create exceptional fiscal strain in
connection with Turkey's IMF program since some 90
percent of this would be publicly-funded. Note:
Research-based industry has claimed that the overall
impact, especially for the GOT budget, will be far
smaller. End Note.


5. (SBU) In response to Econoff's caution that
continuing gaps in data exclusivity protection would be
a major issue in this spring's Special 301 review,
Gumrukoglu emphasized that the GOT had done all that it
could on this issue and expressed the hope that the USG
would recognize Turkey's efforts in this area.


6. (SBU) Econ Counselor and Econoff also delivered ref
(A) demarche to Tevfik Mengu, Foreign Trade's Director
General for Agreements, on February 11. We highlighted
the inconsistency of the loopholes in the new
regulations with the commitments Turkey made when it
joined TRIPS, as well as the difficulties they created
for expanding bilateral trade and investment. Mengu
noted that Turkey did not share the U.S. interpretation
of TRIPS Article 39 and echoed the Health Ministry's
opinion that doing more on retroactivity is legally
impossible. He said that GOT agencies are considering
further amendments to the legislation that might address
the concerns raised in our demarche. However, he did
not hold out any hope that "the lawyers" would be able
to find a way around the legal problem.
Patent Linkage
--------------

7. (U) Recalling the Ambassador's discussion with the
Health Minister in December 2004 on the patent linkage
issue, Gumrukoglu reported that as of January 1, the
Health Ministry and Turkish Patent Institute (TPI) have
established a system to prevent generic registration of
molecules entitled to patent protection. Gumrukoglu
stated that new generic applications must be accompanied
by correspondence from TPI stating that there is no
valid Turkish patent on the drug. He said the Health
Ministry would check with TPI if there were any reason
to doubt whether an approval would infringe a Turkish
patent. He also told us he had asked the Research-Based
Pharmaceuticals Association (Turkish acronym AIFD) for a
list of patented drugs in Turkey.


8. (SBU) Gumrukoglu implied that this system has no
impact on Eli Lilly's efforts to block registration of
generic copies of Zyprexa, but said that the Health
Ministry has not approved the copy registration. He
downplayed Eli Lilly's claim that recent layoffs in
Turkey were in part to weaknesses in the intellectual
property regime, claiming that most of those laid off or
reassigned were sales and marketing personnel.

Comment
--------------


9. (SBU) Comment. The local EU Delegation and the
Belgian Embassy (the local representative of the EU
Presidency for economic issues),have told us that they
share our views on the shortcomings of the new
regulation. In their presentations to the Turks, they
highlight the inconsistency of the law with Customs
Union obligations. The EU will raise the issue at a
regular bilateral Turkey-EU meeting under the Customs
Union that will be held in Brussels at the end of
February. (This may account for the slightly more
equivocal position we heard at the FTU.) The EU
Delegation has been attempting to assess the commercial
impact of the loophole on retroactive application, but
has not received useful information on pending
applications from the Health Ministry. The EU
representatives have not responded to Embassy's
suggestions that we jointly raise these issues with the
Turks.


10. (U) Embassy also plans to deliver ref (A) demarche
to MFA and possibly other GOT agencies involved in
pharmaceuticals policy. We will also provide input on
this issue septel for the Special 301 review process.
Edelman