Identifier
Created
Classification
Origin
06OSLO207
2006-02-23 15:43:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Oslo
Cable title:  

SPECIAL 301 REVIEW FOR NORWAY: PHARMACEUTICALS

Tags:  ETRD KIPR ECON NO 
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UNCLAS OSLO 000207 

SIPDIS


SENSITIVE

STATE FOR EUR/NB RDALLAND, EB/IPE CARRIE LACROSSE
COMMERCE FOR 4212 MAC/EUR/OEURA
STATE PLEASE PASS TO USTR JENNIFER CHOE-GROVES AND
JASON BUNTIN
COMMERCE PLEASE PASS TO USPTO FOR JOELLEN URBAN

E.O. 12958: N/A
TAGS: ETRD KIPR ECON NO
SUBJECT: SPECIAL 301 REVIEW FOR NORWAY: PHARMACEUTICALS

REF: STATE 14937

Summary
-------

UNCLAS OSLO 000207

SIPDIS


SENSITIVE

STATE FOR EUR/NB RDALLAND, EB/IPE CARRIE LACROSSE
COMMERCE FOR 4212 MAC/EUR/OEURA
STATE PLEASE PASS TO USTR JENNIFER CHOE-GROVES AND
JASON BUNTIN
COMMERCE PLEASE PASS TO USPTO FOR JOELLEN URBAN

E.O. 12958: N/A
TAGS: ETRD KIPR ECON NO
SUBJECT: SPECIAL 301 REVIEW FOR NORWAY: PHARMACEUTICALS

REF: STATE 14937

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


1. (SBU) Post has assessed and agrees with the
pharmaceutical industry's concerns about weak patent
protections for many branded drugs in Norway (per the
trade group "PhRMA's" Special 301 report). Post has
consulted frequently with U.S. pharmaceutical firm
representatives in Oslo on the issue and, at their
request, has occasionally engaged Norwegian officials
on their behalf. The industry advocates amending the
public health care system's drug reimbursement
regulations to bar pharmacies from swapping copycat
generic drugs for branded drugs that, under the
Norwegian system, do not enjoy full patent protections.
U.S. and other pharmaceutical firms have been meeting
Norwegian health care system officials on the issue for
months, but so far without serious progress. Post
believes that PhRMA's request to include Norway on the
Special 301 Watch List can be a useful tool for
spurring Norwegian authorities to take action on the
patent issue. Post recommends informing appropriate
Norwegian officials of PhRMA's request and encouraging
them to engage constructively with the industry to
address its concerns, thereby offering Norway an
opportunity to act on the issue before the April 30
Special 301 report publication date. Post can assess
progress and, depending on developments, offer a
further recommendation on Special 301 inclusion closer
to the publication deadline. End summary.

Background
--------------


2. (SBU) Norway has been nominated by the
pharmaceuticals industry trade group "PhRMA" for
inclusion on the Special 301 Watch List for failure to
provide adequate patent protections for
pharmaceuticals. The basis for the nomination is that
prior to 1992, Norway granted patent protection only to
the manufacturing process for a drug's active
ingredient, as opposed to the active ingredient itself.
These "process" patents provide weaker protection than
"real" or "product" patents in that they open the door
for generic manufacturers to claim to have found a new
process to produce a branded drug, hence selling the
generic in the local market does not infringe the

branded drug's patent.


3. (SBU) Post has worked closely with local
representatives of U.S. pharmaceutical firms over the
last nine months on the process patent issue. We agree
with the substance of PhRMA's claims. The process
patent problem is a serious one for U.S. pharmaceutical
firms here. While Norway has granted product patents
since 1992, approximately 80-85 percent of their
revenues in Norway are derived from branded drugs
covered only by process patents. The annual sales
revenues at risk total about USD 1.25 billion.


4. (SBU) Norway is the only Western European nation
Post is aware of that does not offer full patent
protection to branded drugs sold locally (though we
understand companies in Spain may face similar
problems). Finland did have a similar weakness in its
patent system but remedied the problem by amending its
patent legislation earlier this year. In Norway,
pharmaceutical companies say fixing the problem does
not require changing the patent laws, but could be done
fairly quickly and simply by amending the public health
care system's drug reimbursement regulations to bar
pharmacies from swapping or substituting copycat
generics for branded drugs that have process patents.


5. (SBU) The "process" versus "product" patent issue
lay largely dormant until last year, when generic
manufacturers began aggressively to enter the Norwegian
market with generic substitutes for branded drugs.
U.S. firms filed at least five patent infringement
lawsuits in 2005 to stave off generic competitors.
They have, with one exception so far, won preliminary
injunctions to keep the generics off the market, at
least temporarily. Merck lost a preliminary injunction
motion to prevent market entry of a generic substitute

for a drug accounting for 20 percent of its local
sales, though the particular patent at issue had other
technical weaknesses and is probably not a good
precedent. Merck laid off staff following the loss.

Embassy Engagement
--------------


6. (SBU) Post has kept in close contact with U.S.
pharmaceutical firms in Oslo on the process patent
issue since it first arose last spring, but at their
request did not engage the Norwegian government until
shortly after last September's parliamentary elections.
Talks between the pharmaceutical companies and Health
Ministry officials under the prior government had gone
well, but had been launched too close to the elections
to effect change. When time ran short before a looming
change in government, the pharmaceutical companies
asked Ambassador Ong to weigh in with the Minister of
Trade and Industry to gain his support for a last
minute resolution. The Minister told the Ambassador,
however, that he could not at that point do anything
that might bind the incoming government.


7. (SBU) The September elections brought a new,
center-left coalition to power and the pharmaceutical
companies were back to square one. They opened a
dialogue with the new political team at the Health
Ministry but failed to make real headway on a
resolution. With talks showing little progress (and
Merck having lost its preliminary injunction motion),
the pharmaceutical firms asked the Embassy last
December to weigh in again with the Ministries of
Foreign Affairs and Trade to stress the international
trade/investment ramifications of the patent issue,
leaving technical discussions with the Health Ministry
to them. The Charge d'Affaires raised the matter on
December 6 with a deputy minister of foreign affairs
and Ambassador Whitney, who succeeded Ambassador Ong in
early January, raised the issue again with the same
official on January 25. Deputy Pol/Econ Chief also
raised it with working-level contacts at the Trade
Ministry. Neither ministry has responded beyond the
usual diplomatic courtesies.


8. (SBU) The dialogue in Oslo is continuing, however.
The local pharmaceutical trade association will next
meet Health Ministry officials on March 10, to discuss
the potential financial impact of making the regulatory
changes requested by industry. The Ambassador will
make an introductory call on the Minister of Trade and
Industry on March 17.

Strategy and Recommendations
--------------


9. (SBU) Post believes that including Norway on the
Special 301 Watch List, by itself, does not accomplish
much, and recommends against doing so without first
allowing Norway an opportunity to take action on the
process patent issue. Our preferred outcome is clear
-- that Norwegian health authorities amend the drug
reimbursement regulations as recommended by the
industry. PhRMA's request can be used as a tool to
spur Norwegian authorities to take action progressing
towards that outcome. Post (and Washington agencies)
can leverage the Special 301 request as an "action-
forcing event," bringing it to the attention of
appropriate Norwegian officials and requesting that
health authorities work constructively with industry to
address the process patent issue well before the
Special 301 report's April 30 publication date.
Working with local U.S. pharmaceutical company
representatives, Post can continue to monitor progress
(or lack thereof) and, based on developments, offer a
further assessment of the advisability of including
Norway on the Special 301 list as the deadline
approaches.

WHITNEY