SCENESETTER FOR DHHS SECRETARY MICHAEL LEAVITT'S

C O N F I D E N T I A L SECTION 01 OF 03 ROME 003767 SIPDIS STATE FOR EUR/WE (YOUNG/FETCHKO) AND OES/IHA (OSTFIELD), HHS FOR OS/OPHS/OGHA (TGAY/PBUDASHEWITZ) E.O. 12958: DECL: 11/14/2015 TAGS: IT OTRA OVIP PREL SOCI TBIO FAO SUBJECT: SCENESETTER FOR DHHS SECRETARY MICHAEL LEAVITT'S ITALY TRIP REF: A. STATE 205181 ¶B. ROME 003731 Classified By: Acting Economic Minister Counselor Kathleen M. Reddy, fo r reasons 1.4(b) and (d). SUMMARY -------------- ¶1. (C) Ambassador Spogli and Minister of Health Francesco Storace warmly welcome your visit to Italy to further our already excellent relations in health cooperation. Italy has been a key U.S. ally and steadfast partner. Italy is the third largest contributor of troops to coalition forces in Iraq, the largest contributor to NATO Balkans operations, and commands international security assistance forces (ISAF) and a Provincial Reconstruction Team in Afghanistan. Newfound international leadership has weighed heavily on the Italian public, most of whom are convinced a terror attack will occur here soon. Prime Minister Berlusconi's government has been particularly supportive of our policies; we hope to continue effective coordination with the GOI, should a center-left coalition win elections next spring. ¶2. (U) We enjoy a robust collaboration on medical/health research, and the Embassy has excellent contacts at the Ministry of Health, the Higher Institute of Health, and other health agencies. The Department of Agriculture (USDA) has also cooperated closely with the Ministry of Health's Veterinary Service to facilitate the export of "prosciutto" hams to the United States in accordance with U.S. food safety requirements. On our commercial interests, the healthcare market is important for U.S. manufacturers. The Foreign Commercial Service advocates for U.S. pharmaceutical companies with the Ministry of Health on issues of pricing, consumer choice, and quality of medical care. On pandemic preparedness, the Ministry has almost finished revising the GOI's pandemic influenza preparedness plan according to the WHO's most recent guidelines. The Ministry has also announced that Italy paid five million euros in pre-emption rights to purchase 36 million doses of vaccine, enough to cover 20% of the population. The GOI is also spending 1.5 million euros to stockpile retroviral drugs, and another one million euros on surveillance. On the animal health and veterinary side, the GOI has so far issued four ordinances and one draft law (Decreto Legge) to prevent the outbreak of high pathogenic avian influenza (AI) in Italy. END SUMMARY. ITALY OUR STRONGEST ALLY ON THE CONTINENT -------------- ¶3. (C) Italy is our strongest ally in continental Europe; and our political, military and anti-terrorism cooperation is excellent. Italy is the third largest contributor of troops to coalition forces in Iraq; the largest contributor to NATO Balkans operations (Kosovo, Bosnia, Macedonia, Albania); commands international security assistance forces (ISAF) and a Provincial Reconstruction Team in Herat, Afghanistan; is hosting a training center for peacekeeping forces in Vicenza; provided C-130 support for the Darfur Airlift; hosted Democracy Assistance Dialogue events for Turkey and Yemen, and took over command of KFOR in Kosovo in October of 2005. Italy is also providing judicial training assistance in Iraq and Afghanistan. ¶4. (C) Prime Minister Silvio Berlusconi, who met with the President November 1, has been under strong pressure to continue a withdrawal of Italian troops from Iraq. He has indicated he will do so in coordination with international allies and the Iraqi government. ¶5. (SBU) PM Berlusconi leads a four-party coalition government of the center-right and has been PM since 2001, the longest consecutive period an Italian PM has served since just after World War II. Elections are scheduled for April 9, 2006. Berlusconi's center-right coalition is down in the polls, undermined by internal leadership spats and continued economic stagnation. The center-left opposition also is plagued by internal disputes, but former European Commission President Romano Prodi won a triumphant electoral victory in Italy's first-ever coalition primaries on October 16. Pending electoral law changes may slightly increase the odds for the center-right, but it is too early to deal Berlusconi out. However, most political observers predict Prodi's center-left coalition will win in April. ROBUST HEALTH/MEDICAL RESEARCH WITH ITALY -------------- ¶6. (U) Francesco Storace became Minister of Health after a Cabinet reshuffle following the defeat of the ruling coalition in a dozen regional elections, including Lazio, of which he was president. The change has had no negative effect on our excellent cooperation, which has continued over at least two decades. The bilateral relationship has significantly expanded since the DHHS-Ministry of Health Memorandum of Understanding on oncology, rare/orphan diseases, and bioterrorism was signed in 2003. In late September of this year, in Rome, we reviewed all ongoing health/medical cooperation at the Joint Committee Meeting mandated every two years under the bilateral Umbrella S&T Agreement. In early October, a delegation from the National Institute of Allergy and Infectious Diseases (NIH/NIAID) met with counterparts at the Higher Institute of Health's Spallanzani Hospital to discuss joint projects on bioterrorism. In mid-October, the Ministry of Health formally proposed collaboration in the following additional areas: adult stem cells, epidemiology and prevention of the leading causes of mortality, organ transplantation and cellular therapies, and avian and pandemic influenza. The Embassy enjoys excellent contacts with the Ministry, the Higher Institute of Health, and other health agencies. COOPERATION FOR U.S. EXPORT PROMOTION -------------- ¶7. (U) Since at least 1990, the Department of Agriculture (USDA) has cooperated closely with the Ministry of Health's Veterinary Service. The Embassy's Foreign Agriculture Service facilitates Italy's export of Parma and San Daniele hams to the United States, worth about 36 million euros in 2004, through USDA veterinary inspections of "prosciutto" ham production facilities. HEALTHCARE TECHNOLOGIES MARKET STRATEGICALLY IMPORTANT -------------- -------------- ¶8. (U) U.S. companies in Italy, represented by the Italian American Pharmaceutical Group, operate fourteen manufacturing plants, eight research centers, and employ 15,000 people. U.S. firms also invest $20 million annually (27% of the industry's annual expenditure on R&D). ¶9. (U) The Italian healthcare technology market is of strategic importance to U.S. exporters. Of a total $10 billion in U.S. exports to Italy in 2004, approximately $2 billion were in healthcare products. Some 290 Italian companies will participate in the Medica Fair organized by the Department of Commerce in Germany. FCS Italy will host an important healthcare trade mission in May 2006, and will participate in the "Expo Sanita Fair" in Bologna. ITALIAN PREPAREDNESS FOR AVIAN/PANDEMIC INFLUENZA OUTBREAKS -------------- -------------- ¶10. (U) Italy has almost completed revising the GOI's avian/pandemic influenza preparedness plan along guidelines issued by the World Health Organization this spring. The revision awaits Minister Storace's signature. In early September, the Ministry of Health announced that Italy paid five million euros in pre-emption rights to purchase 36 million doses of vaccine, enough to cover 20% of the population. The GOI is also spending 1.5 million euros to stockpile retroviral drugs, and another one million euros on surveillance. On the animal health and veterinary side, the GOI has issued four ordinances and one draft law (Decreto Legge) to prevent the outbreak of high pathogenic avian influenza (AI) in Italy. The Ministry of Health is opening a new "Center for the Coordination and Response to Animal Disease" and has been authorized to hire 60 new veterinarians for border inspection points, 50 new support staff at the Ministry of Health, and 96 new Carabinieri (federal police) assigned to the Ministry's food safety unit. An ordinance requiring mandatory indication of origin in all poultry and egg products, both imported and domestically produced, went into effect on October 17. On October 27, Genoa's Advanced Biotechnology Center announced that it has developed a specific test for the H5N1 AI strain that can produce results in under two hours. Italian veterinarians have conducted over 1,000 tests on domestic poultry and wildfowl. Only one sample, on November 9, tested positive for the low repeat low pathogenic H5N1 virus strain. ITALIAN HEALTH CARE SYSTEM - IN TRANSITION -------------- ¶11. (U) The Italian National Health Service (NHS) was established in 1978 as a public system funded by general taxation. It provides universal coverage and comprehensive, free healthcare. Total healthcare expenditure last year was 113 billion euros, about 8.5% of GDP, in line with the OECD average of 8.5% and the EU average of 8.2%. Expenditures on drugs totaled 19.3 billion euros, fourth in the EU after Germany, France and the UK. ¶12. (U) From 1978 to 2000, the central government financed and managed the NHS; but in 2001, responsibility began to devolve to the regions. The roles and responsibilities of the central and regional governments, however, are not clear. This lack of clarity on competence has led to regions overspending and expecting the central government to make up the deficit. In addition, there are often major delays in the transfer of funds from the central government to the regions. In 2004, a new body, the National Drug Agency, became responsible for drug approvals, pricing and reimbursement, with input from the central and regional governments. Industry critics maintain that patented drug prices are set too low -- 20% below the EU average price. U.S. pharmaceutical companies are concerned that pricing policies and other cost-cutting measures discourage innovation in pharmaceutical research. SPOGLI