SPECIAL 301: SLOVAKIA WORKING TO GET OFF THE 2006

UNCLAS BRATISLAVA 000880

SIPDIS


DEPARTMENT FOR EB/IPE:WILSON
DEPT PLEASE PASS TO USTR LISA ERRION
USDOC FOR MICHAEL ROGERS
USPTO FOR JURBAN
LOC FOR STEPP

E.O. 12958: N/A
TAGS: KIPR ETRD ECON XG LO
SUBJECT: SPECIAL 301: SLOVAKIA WORKING TO GET OFF THE 2006
WATCH LIST

REF: BRATISLAVA 161


1. SUMMARY: The Government of Slovakia has held two meetings
in recent months with pharmaceutical companies and Embassy
representatives aimed at addressing outstanding Special 301
issues so that Slovakia can be removed from the USTR "Watch
List" in 2006. The relevant GOS ministries are saying the
right words and have proposed solutions to the two main
issues - procuring a secure storage facility for sensitive
registration data and development of a coordination
mechanism between the Drug Control Office and the Patent
Office - but need to follow their promises with action. A
USTR-hosted DVC in early December would provide a venue for
USG interlocutors to assess progress to date and encourage
the GOS to take verifiable steps before decisions are taken
for the 2006 Special 301 Report. End Summary.


2. At the urging of the Slovak Embassy in Washington, the
Ministry of Economy has hosted two "stakeholders" meetings
(July 8 and October 20) to address the outstanding
pharmaceutical issues listed in the 2006 Special 301 report.
The meetings brought together Embassy representatives, the
Amcham Local Area Working Group (LAWG),which is a
collection of research-based pharmaceutical companies in
Slovakia, and the relevant GOS agencies including the
Ministry of Health (MOH),Drug Control Office, Industrial
Property (patent) Office, Ministry of Foreign Affairs, Prime
Minister's Office, Customs Directorate, and Trade Inspection
Agency.


3. After an initial unwillingness to acknowledge
inadequacies in its IPR regime, the GOS has come around and
now recognizes that it must address the outstanding Special
301 issues before Slovakia can be removed from the Watch
List. The "stakeholder meetings" created intra-ministerial
working groups that have come up with proposals for the two
key issues outlined in the 2005 report:

STORAGE OF PROPRIETARY DATA: The Drug Control Office (DCO)
has stored sensitive registration data on the premises of a
generic drug producer for years. Minister of Health Rudolf
Zajac recently promised to provide funds for DCO to secure
a storage facility to house proprietary data. DCO initially
floated a tender to lease a storage facility, but due to the
high cost of the bids DCO is now looking to purchase a
storage facility. Zajac has promised to finalize the
transaction by the end of the year, with the goal of moving
the registration documents to a new facility in 2006.

REGISTRATION OF GENERICS: In several cases over recent years
the Drug Control Office has approved applications for
registration by generic manufacturers for drugs that are
still under patent protection because it has failed to check
the status of the original patent with the patent office.
Once a registration is granted to a generic manufacturer, it
is very difficult for the patent owner to overturn the
decision or obtain compensation through the courts. The
Drug Control and Patent offices have proposed a coordinating
mechanism to prevent future registrations of unauthorized
patent-infringing products. Although LAWG considers this an
improvement to the status quo, they would like the Drug
Control Office to notify the patent holder when they receive
a request from a generic manufacturer to add a degree of
transparency to the process. The relevant GOS ministries
promised during the October meeting to consider the LAWG
proposal and discuss it with them in mid-November.


4. LAWG is also using the stakeholder meetings to push for
improvements on non-IPR market access for pharmaceutical
companies. They complain that a recent Ministry of Health
decree (No. 723/2004),which was published in July and went
into effect on October 15, 2005, further reduces the
transparency of GOS decisions regarding pricing and
reimbursement decisions for medicines prescribed by national
health insurance. The decree specifies the rules to be
applied in determining the price of the medicinal product
and level of reimbursement. The original decree provided
detailed rules for calculation of the price and level of
reimbursement. However, recent amendment of the decree
cancelled the detailed rules for determination of the
reimbursement amount and, instead, provided the Ministry of
Health with a wide scope of discretion to decide on the
amount of reimbursement without setting a clear set of
guidelines for such decisions. LAWG complains that the new
regulation increases the subjectivity of the Board's
decision-making, and thus minimizes the predictability and
transparency of the process.



5. COMMENT: During the October meeting the relevant GOS
ministries needed less than 45 minutes to agree on proposals
to address the patent issues that have kept Slovakia on the
Watch List for several years. The trick now is to ensure
that the GOS follows through with verifiable actions before
final decisions are made for the 2006 report. As a next
step we recommend a USTR-hosted digital video conference
with the relevant GOS officials (the Embassy will host the
GOS participants in our DVC facilities) to assess progress
to date and encourage quick action to fulfill their
promises. A DVC sometime between November 28 and December 9
should provide the GOS with sufficient time to finalize
negotiations with LAWG, while simultaneously providing a
large enough window to implement their proposals before the
2006 301 review.

VALLEE


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