POLAND: Comment on Pharma's Special 301 Input

UNCLAS SECTION 01 OF 02 WARSAW 000308

SIPDIS

SENSITIVE

STATE FOR EUR/NCE/MSESSUMS
STATE PASS USTR FOR DONNELLY/ERRION/WEISEL
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS

REF: (A) Warsaw 0068 (B) Warsaw 0280

E.O. 12958: N/A
TAGS: ETRD KIPR PL
SUBJECT: POLAND: Comment on Pharma's Special 301 Input


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


1. (U) Sensitive but unclassified. Not for distribution
outside USG.


2. (SBU) Pharma's call for Priority Foreign Country (PFC)
status for Poland is understandable. The industry has
indeed faced many challenges in dealing with the Polish
government prior to accession, and some of these issues have
exacerbated dealing with the Ministry of Health in the post-
accession environment as well. However, the industry's main
problem, which has consistently been at the foundation of
most, if not all, its complaints, has been access to the
reimbursement list. And while issues relating to inadequate
IPR protection played a role in hindering the
competitiveness of the industry in the late 1990s, data
exclusivity problems do not appear, given the evidence
submitted, to be the main culprit in limiting industry's
effectiveness. Indeed, we have proposed a strategy (reftel
A) for dealing with the new government that is already
bearing fruit, thanks in great measure to the visit Commerce
Secretary Gutierrez. In sum, we believe that cooperative

SIPDIS
engagement is the best way to address industry's main
complaint: access for innovative drugs to the reimbursement
list. End Summary.

--------------
Industry's Points: Data Exclusivity
--------------


3. (SBU) As we review industry's submission, we find a
number of complaints, some with more substantive merit than
others. But most of the complaints are the same that we
have read in previous years' submissions. This does not
mean the problems should be discounted. However, it does
beg the question for this year's review as to what specific
301-related issues the industry has. We have discussed this
very issue with the primary AmCham pharmaceutical group
(LAWG) as well as with specific companies. We emphasized
the need for current actionable examples regarding
violations of data exclusivity.


4. (SBU) We did get a number of complaints regarding "ghost
list" drugs and the increasing number of molecules found on
that list (reftel B),but by industry's admission, some of
these drugs do not even exist as a marketable product. Even
the example of Fozomax, which industry uses in its
submission as evidence of the data exclusivity problem, is
not actionable on that basis. We asked Merck (protect)
directly if the company could claim the generics competing
with Fozomax violated its patent (as reported in reftel A).
The answer was no. As to Lilly's Zyprexa, we understand
this drug was subject to IP-related judicial proceedings in
the United States as well. Again, this does not diminish
the threat to industry that Poland's lack of commitment to
cooperation with the innovative drug industry demonstrates.
But it does underscore why it is difficult for the Embassy
to raise data exclusivity violations as a cudgel to gain
access to the reimbursement list for innovative drugs, and
why enhancing cooperation and dialogue is far more likely
than threatening sanctions to get industry what it wants.


5. (SBU) It is true that Poland has not implemented fully
all data exclusivity directives (65/65 is still pending
implementation). But Poland has filed for an exception to
implementation for full term data exclusivity in accordance
with EU rules. From our perspective, it is difficult to
view this request as substantive IPR violation.

--------------
Industry's Points: Customs and Margins
--------------


6. (SBU) Industry has been rightly concerned about this
issue, as the potential damage could be catastrophic, with
literally hundreds of millions of dollars in financial
penalties at stake. However, the issue has been winding its
way through the Polish courts, which have been consistently
rendering decisions in industry's favour. And while the
case is still in court, the Minister of Health himself is
pressing U.S. officials and industry to look for a
settlement "out of court." Previously, industry had been
eager to pursue this approach as well. Now, it smells
blood, and an out of court settlement appears unlikely. We
support industry's position on the substance of the issue.
As to the tactics related to resolving it, we of course
defer to the LAWG. However, given that the case is being
handled without any undue political interference, we believe
the issue does not rise to the level that would warrant an
elevation of Poland's watch list status.

--------------
Give Dialogue a Chance
--------------


7. (SBU) Perhaps the most compelling reason to avert raising
Poland's status is the fact that we now are dealing with a
new government, which in meetings with Embassy officials and
Washington visitors has impressed us with its desire to
engage with us and industry to resolve problems on the IPR
front. In discussions with Secretary Gutierrez, Minister
Religa gave reassuring answers to the Secretary's points
about innovative drug access to the reimbursement list
(again this is *the* major issue for industry). Religa, a
medical doctor and not a PiS party member, appeared genuine
when he expressed both his desire to add innovative drugs to
the reimbursement list and difficulties in dealing with the
Finance Ministry to obtain the necessary budget to do it.
While words and deeds, of course, need to be brought into
synch, we nonetheless believe it is important to give
substantive engagement a chance. As reported, we are
currently working to establish a regular dialogue between
industry and the Health Ministry that we hope will resolve
the thorniest outstanding issues. It would send the wrong
message to this Polish government if we were to use the
stick as our opening gambit.