TAIWAN PASSES DATA EXCLUSIVITY BILL

UNCLAS SECTION 01 OF 02 TAIPEI 000313

SIPDIS

STATE FOR EAP/RSP/TC AND EB/TPP/MTA/IPC, STATE PASS AIT/W
FOR RUZICKA AND USTR FOR KI AND FREEMAN, DOC FOR MBMORGAN

E.O. 12958: N/A
TAGS: ECON ETRD KIPR TW IPR
SUBJECT: TAIWAN PASSES DATA EXCLUSIVITY BILL


1. Summary: After striking a compromise the last week of the
legislative session, Taiwan's Legislative Yuan (LY) passed a
bill that will provide protection for pharmaceutical data in
accordance with Taiwan's WTO commitments under TRIPS. The
new law will protect test data for new drugs with new
ingredients for five years. Pharmaceutical companies must
apply to register their drugs in Taiwan within three years of
release in an advanced country market. The research
pharmaceutical industry in Taiwan is grudgingly pleased, but
disappointed that a provision that would protect new
indications and administrations was deleted from the
compromise version. A local industry association has been
awarded a grant to study the drug registration system in
advance of a plan by the LY to consider amendments to the
pharmaceutical law in the next session. Representatives from
international manufacturers have not been invited to
participate. End Summary.


2. Four separate bills to provide protection for
pharmaceutical data were merged into one compromise bill on
January 12, for consideration during the last week of the LY
session. Despite a contentious battle over the national
budget and threats from both sides to take procedural actions
that would derail the passage of remaining bills, the DE bill
was approved by a voice vote early the morning of January 21,
the last day of the legislative session.


3. The compromise bill provides five years of protection for
new pharmaceutical products with new ingredients. However, a
provision that would have extended protection for other new
drugs (i.e., new indications and administrations of
previously approved drugs) for an additional three years was
deleted. New pharmaceutical products with new ingredients
are required to apply for registration with the Taiwan health
authorities within three years of approval for use in one of
ten advanced foreign countries (including the US, EU, and
Japan, but excluding India and Russia) or face loss of
protection.


4. Representatives from the International Research
Pharmaceutical Manufacturers Association (IRPMA) were pleased
that the bill had passed and were resigned to the idea that
this bill was the best that could be expected now. While
disappointed that protection for "other new drugs" was
deleted, their disappointment was tempered by a clarification
in the law specifying that new pharmaceutical products must
only begin the Taiwan application process within three years
of approval in an advanced country market to avail of DE
protection, rather than requiring the registration process be
completed within three years. Given their sometimes
difficult relationship with the Department of Health, Bureau
of Pharmaceutical Affairs, IRPMA has vowed to closely follow
the drafting of implementing regulations to ensure that these
are consistent with their understanding of the provisions of
the bill.


5. IRPMA also expressed concern that plans by the LY to
codify provisions of the drug registration system have thus
far not taken into account the views of international
research pharmaceutical companies. The Taiwan Pharmaceutical
Manufacturers Association (TPMA) has been awarded a grant by
the LY to complete a study of the registration system in
preparation for proposed amendments to the pharmaceutical law
but IRPMA member companies have not been consulted.


6. Comment: The passage of the DE bill fulfills a promise
made by recently resigned Vice Minister of Health Chang
Hong-jen to Assistant USTR Charles Freeman during the
latter's July 2004 visit to Taiwan, later repeated by DOH
Minister Chen to the AIT Deputy Director in August 2004 and
by Deputy Minister of Economic Affairs Steve Chen during the
November 2004 Trade and Investment Framework Agreement (TIFA)
meeting. Passage comes despite reported efforts from within
the Department of Health to undermine the bill in an attempt
to protect local industry. While a few Taiwan research based
pharmaceutical companies will also benefit from the new
protections, most observers believe the passage of this new
law is a direct response to U.S. preconditions for improving
the U.S./Taiwan trade relationship in preparation for a Free
Trade Agreement and removal from the Special 301 Watch List.
Despite any shortcomings in the new law, Taiwan officials are
likely to point to its passage as one more reason the U.S.
should consider negotiating an FTA with Taiwan. End Comment.
PAAL