PHARMA COMPANIES DISCUSS PORTUGAL MARKET ISSUES

C O N F I D E N T I A L SECTION 01 OF 02 LISBON 000552

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COMMERCE DEPT FOR ITA/MAC:DCALVERT

E.O. 12958: DECL: 10/15/2019
TAGS: ECON KIPR PGOV PO SZ EU UK FR GM
SUBJECT: PHARMA COMPANIES DISCUSS PORTUGAL MARKET ISSUES

Classified By: Gary B. Applegarth, Pol-Econ Officer, Reasons 1.4 (b) an
d (d).

SUMMARY
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1. (C/NF) The Local American Working Group (LAWG) of the
Pharmaceutical Association in Portugal hosted a September 24
breakfast meeting with diplomatic and company representatives
to discuss strategies for addressing longstanding market
access issues. Diplomatic participants opined that industry
lobbying efforts would be more effective if presented jointly
by the industry rather than by individual companies,
stressing the potential benefits to the Portuguese economy of
improving market access rather then the negative monetary
impacts of existing regulatory issues to the pharmaceutical
companies. The diplomatic participants also suggested the
issue be addressed with the GOP via a joint working session
including the ministries of Finance, Justice, Economy, and
Health, to underscore industry recognition of the magnitude
of the issues and facilitate comprehensive solutions. The
industry representatives are improving their lobbying
approach for seeking an improved business environment in
Portugal, but the group faces a difficult task to improve
market conditions through negotiations with a new minority
government and a struggling economy. End summary.

INDUSTRY GROUP PRESENTS CHALLENGES, SEEKS EMBASSY GUIDANCE
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2. (SBU) On September 24 the Charge d'Affaires, Senior
Commercial Officer, and Poleconoff attended a roundtable
breakfast meeting organized by the Local American Working
Group (LAWG) of the Pharmaceutical Association in Portugal.
Also in attendance were: UK Ambassador Ellis, Swiss
Ambassador Shaller, German Econ Counselor Deichmann, and
French Econ Counselor Monne. Company representatives
included General Managers from Abbott Labs (U.S.),Amgen
(U.S.),Bristol-Myers Squibb (U.S.) Janssen-Cilag (U.S.),
Pfizer (U.S.),Merck Sharp & Dohme (U.S.),Schering-Plough
(U.S.),AstraZeneca (U.K.),GlaxoSmithKline (U.K.),Bayer
(Germany),Novartis (Switzerland),Roche (Switzerland),and
Aventis (France).


3. (SBU) The LAWG called the meeting to discuss market
access issues. In particular, they identified several "key
priority" problems with the regulatory environment, including
unstable pricing policies, GOP reimbursement delays,
capricious and opaque revenue caps, and lax enforcement of
patent rights. Although these problems have been repeatedly
raised by industry in recent years, this was the first time
that the LAWG sought to coordinate its messaging and strategy
development with all diplomatic and industry players
simultaneously, and is an approach post has urged them to
develop.


4. (SBU) After a brief presentation summarizing the issues
and noting the impact that they have had on the
pharmaceutical industry in Portugal (the LAWG estimates lost
revenues of 540 million euros from 2006 to 2008),the LAWG
members requested diplomatic input for effective ways to
engage and lobby the GOP.

ACCENTUATE THE POSITIVE...
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5. (SBU) All diplomatic representatives agreed that future
dialogue with the GOP would be more effective if conducted
jointly by industry representatives. The diplomatic
attendees also suggested that Portuguese firms impacted by
the same market issues, such as Bial, a major Portuguese
pharmaceuticals manufacturer based in Porto, be included in
the dialogue to demonstrate that these are not exclusively
"foreign company" issues. U.K. Ambassador Ellis emphasized
the need for LAWG members to link their recommendations to
Portugal's innovation and technology goals when speaking with
public officials and to stress the advantages of proposed
reforms (e.g., increased industry investment in Portugal, job
creation) rather than dwelling on corporate financial losses.


6. (SBU) Swiss Ambassador Shaller recommended that
discussion with the GOP be held with all involved ministries
at the table, including the Ministries of Finance, Justice,
Economy, and Health, to highlight industry understanding of
the broad impact of these issues and to facilitate a
coordinated GOP response.


7. (SBU) Charge d'Affaires pointed out that, despite the
purported transparency and predictability problems with
Portugal's regulatory system, none of the LAWG members had
left the market, which puts them in a precarious position
when arguing to GOP officials that the current business

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climate is untenable. Charge d'Affaires recommended that
dialogue with the GOP avoid an overemphasis on the
intolerability of the status quo and instead, as Ambassador
Ellis had said, focus on potential benefits to the Portuguese
economy from policy and regulatory improvements.


8. (SBU) The French Econ Counselor suggested that industry
leverage Portuguese partners where possible to increase the
benefits to the Portuguese economy accrued by potential
pharmaceutical industry investments.

AVOID REHASHING ACKNOWLEDGED RESOURCE CONSTRAINTS
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9. (SBU) There were also several comments regarding the
negative impact of resource and capability constraints on the
regulatory environment in Portugal. Senior Commercial
Officer related that the Ministry of Justice has blamed its
slow performance in patent rights enforcement on a shortage
of resources, and Poleconoff suggested that problems with
data sharing among hospitals, researchers, and regulators in
the Portuguese health care system are probably a factor in
the GOP's difficulties with formulating realistic annual
revenue caps for new drugs. Both cautioned against repeated
industry complaints about GOP performance in these areas
without offering realistic and achievable solutions.


10. (SBU) At the end of the meeting LAWG members expressed
appreciation and committed to revising their "Key Priority"
guiding document to reflect the input from the meeting. The
LAWG members also asked to meet with the diplomatic
representatives again soon to review their revisions before
initiating direct dialogue with the GOP on these issues.

COMMENT
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11. (C/NF) The LAWG session was productive, and a
coordinated pharmaceutical industry approach to relevant GOP
ministries has a better chance of succeeding than the
uncoordinated overtures used before. It is ironic, however,
that one of the major LAWG complaints is about the slow,
uncoordinated, and non-responsive regulatory regime, given
that we have been urging LAWG to change their lobbying
approach for over eighteen months. The group's leadership,
reshuffled this year, seems to have taken our recommendations
to heart and recognizes they have an opportunity to state
their case to the new government. The LAWG has tentatively
scheduled a follow-up meeting with diplomatic and industry
representatives on November 10. Post will continue to
support the LAWG's efforts and report future progress. End
comment.


For more reporting from Embassy Lisbon and information about Portugal,
please see our Intelink site:

http://www.intelink.sgov.gov/wiki/portal:port ugal
BALLARD