AMBASSADOR DISCUSSES SAMPLE SHARING AND VACCINE WITH BAXTER

UNCLAS SECTION 01 OF 02 JAKARTA 002230

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SIPDIS

DEPT FOR EAP/MTS, G/AIAG AND OES
USAID FOR ANE/CLEMENTS AND GH/CARROLL
DEPT ALSO PASS TO HHS/WSTEIGER/MSTLOUIS AND HHS/NIH
GENEVA FOR WHO/HOHMAN

E.O. 12598: N/A
TAGS: TBIO EAGR CASC KHIV PGOV KFLU ID
SUBJECT: AMBASSADOR DISCUSSES SAMPLE SHARING AND VACCINE WITH BAXTER
VACCINES PRESIDENT


1. (SBU) Summary. The President of Baxter Bioscience's Vaccine
Business, Kim Bush, told the Ambassador on August 14 that he
believes the Indonesians would welcome a solution to the AI virus
sample sharing impasse. Negotiations among a smaller group of key
stakeholders could best resolve the issue. He identified possible
steps including use of existing domestic industry-government
agreements that would provide a reasonable royalty arrangement, such
as the 0.5 percent royalty paid to sample suppliers in certain
protocols. Bush also described the status of Baxter's human AI
vaccine and current negotiations with the Government of Indonesia
(GOI),including their possible involvement in clinical trials and
the development of a downstream "fill and finish" vaccine production
partnership. Baxter requested that the Embassy urge key WHO
officials to visit commercial laboratories, such as Baxter's U.S.
facilities, to witness cell culture vaccine-based technology for
possible application in developing countries. End Summary.

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Sample Sharing Impasse
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2. (SBU) Based on numerous Baxter-GOI meetings, Bush offered
insights into the GOI perspective on sample sharing. In his
opinion, multilateral discussions have stalled and negotiating
positions are widening rather than narrowing. Bush urged that the
USG consider quiet, focused discussions involving key Indonesian
officials and fewer international players. Solving a complex
problem on the public stage is not conducive to a quick resolution
to the impasse, since the media are following the issues closely.
Bush noted that fewer people away from the public eye would allow
for calmer fact-based negotiations and would more likely result in
real progress.


3. (SBU) In addition to GOI concerns about access to a pandemic
vaccine for its population and a share of commercial rewards or
success, Bush emphasized the importance of respect. He felt that a
Washington-initiated invitation to key GOI figures would go a long
way in building up better relations for a faster and more productive
resolution to the impasse.


4. (SBU) Bush also noted that the GOI appears naove in its
understanding of the commercial vaccine business. Bush explained
that Dr. Triono Soendoro, Director of the GOI National Institute of
Health Research and Development and other key MOH figures have never
had the experience of working out material transfer agreements
(MTAs) with industry. They don't have a sense of realistic royalty
sharing, nor an appropriate model text. Although GOI officials have
ideas of what they want to see in a final agreement, they don't know
how to reasonably get there. Bush recommended that negotiators find
a commercial precedent that works and adapt it in Indonesia. For
example, he noted that domestic U.S. pharmaceutical producers pay a
0.5 percent royalty to sample suppliers in certain protocols. Baxter
has previously worked arrangements with the U.S. NIH and the U.S.
Centers for Disease Control (CDC). Bush felt that if negotiators
provided the GOI with fact-based information on how business works
and how governments can license technology, sample sharing
negotiations could move forward faster. However, Bush did not offer
ideas of how this could be worked within the context of WHO
influenza surveillance network.

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Baxter-MOH Negotiations
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5. (SBU) Bush clarified the terms of the Baxter-GOI MOU. Despite
press articles to the contrary, Bush noted that Baxter has never
received virus samples directly from MOH, nor is the company seeking
virus samples in the future. Baxter is committed to working
exclusively through the WHO collaborating centers to acquire virus
strains. Bush explained that Baxter developed the AI vaccine from
the Indonesian strain that used CDC-released samples from 2005, not
later samples. Baxter has completed initial testing in Europe, with
Phase II clinical trials in Hong Kong and Singapore to be completed
by the end of the month. Baxter intends to conduct a pediatrics
trial and a Phase III trial prior to releasing the vaccine. Baxter

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has offered Indonesia a chance to participate in the Phase III trial
but contrary to MOH press statements, has not yet reached any
agreement.


6. (SBU) Bush clarified that the Baxter-MOH MOU signed in February
is simply a framework agreement that will incorporate future
agreements addressing specific issues such as technology transfer
for downstream production of vaccine. Bush noted that the Baxter
MOU only references bulk vaccine transfer for a "fill and finish"
production partnership. The GOI recognizes its own limitations for
vaccine development and is not seeking anything beyond a bottling
role in vaccine production.


7. (SBU) Bush also asked the Embassy's help in urging WHO to do
field site visits to better understand cell-culture based vaccine
technology. Bush noted that WHO remains dubious about the
application of cell-culture vaccine technology for application in
developing countries but that this technology was of critical
importance to meeting global demand in the event of a pandemic.
Bush reported that Baxter had invited WHO officials to tour Baxter
laboratories to better understand the merits of this new
technology.


8. (SBU) Bush summarized that Baxter does not want to find itself in
the crossfire between Indonesian and WHO negotiations but would be
willing to play a constructive role, as appropriate. Baxter wants
quick resolution of the sample sharing impasse in order to be able
to obtain current samples from WHO collaborating centers. Bush
pledged to continue to communicate with the Embassy in order to help
all parties understand the industry position.


9. (SBU) Comment: Embassy believes Baxter officials are operating
in good faith with their recommendations. Embassy concurs that
getting key policymakers to meet away from the public eye may be
more effective in hammering out resolution to the myriad of sample
sharing issues. Embassy also believes that if one of the Indonesian
key issues (for example, a royalty sharing arrangement along the
lines of those already in use with other sample suppliers) could be
separated out from the others for priority discussion and perhaps
resolution, the MOH may be persuaded to resume sample sharing while
remaining issues are still under discussion.

HUME