PHARMACEUTICAL INDUSTRY GROUP STILL SEEKING

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 000290 SIPDIS STATE PASS TO USTR FOR JASON BUNTIN USDOC FOR TYLER HOFFMAN E.O. 12958: DECL: 09/17/2017 TAGS: ECON ETRD EINV KIPR SA SUBJECT: PHARMACEUTICAL INDUSTRY GROUP STILL SEEKING EXCLUSIVE MARKETING RIGHTS AND TO ROLL BACK MEDICINE PRICING REFORMS REF: A. 08 RIYADH 2139 ¶B. 08 RIYADH 2149 ¶C. 08 RIYADH 2155 Classified By: Charge d'Affaires Sandra Muench for reasons 1.4 (b) and (d). 1.(U) Key points -------------- -- The chief priority for the Pharmaceutical Research and Manufacturers of America (PhRMA) is to have the Saudi Government provide exclusive marketing and manufacturing rights to certain pharmaceutical products. -- PhRMA belives The Saudi Government might have violated WTO rules by cutting prices on all pharmaceuticals deemed "non-lifesaving" without consulting industry. Comment -------------- ¶2. (C) PhRMA has lobbied vigorously in the past for USG support for their priorities, while acknowledging that only 30% of their pharmaceutical products are produced in the United States. Nevertheless, the group's EMR proposal apparently is a priority for some of its U.S. members, and we understand the Saudi government may finally be moving closer to making a counter proposal that U.S. firms could accept, perhaps as early as the upcoming TIFA council meeting in Washington in March 2-6. End comment. PhRMA priority for Saudi Arabia remains its Exclusive Marketing Rights proposal -------------- ¶3. (U) PhRMA representatives Samir Mansour, Waleed al-Abd, and Rouba Chalabi met ECON and Commercial Service officers February 3 to discuss ongoing pharmaceutical industry priorities and concerns. The PhRMA representatives said their major priority remained for the Saudi government to accept their proposal to provide transitional protection in the form of exclusive marketing and manufacturing rights to certain pharmaceutical products that had enjoyed such rights previously, while their patent applications had been pending (i.e., stuck for years in bureaucratic limbo),until the passage of a Saudi patent law in 2004. The delegation emphasized such transitional protection is recognized under the World Trade Organization Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. Group repeats complaints about SAG medicine pricing policy -------------- ¶4. (C) The delegation also reiterated its ongoing concerns about pharmaceutical pricing. According to al-Abd, last year the Ministry of Health (MoH) implemented an industry-wide price cut on all pharmaceuticals deemed not "life-saving" without consulting industry representatives or defining what constituted "life saving." Al-Abd claimed this violated a Saudi WTO commitment to consult stakeholders before making regulatory changes, and he expressed concern that the price cuts might lead to similar cuts across the region as other countries, such as Gulf Cooperation Council (GCC) members as well as Lebanon and Jordan, base the prices they pay pharmaceutical companies and medicine wholesalers on the price structure used in the Kingdom. He asserted that the price cut was a political move by an otherwise inactive MoH to demonstrate it had "done something for the people." ¶5. (C) Further, al-Abd said that the separate SAG decision to set these prices in Saudi riyals (instead of the currency of countries from which the medicine was imported) had cut into profits of European drug suppliers (since the euro had appreciated against the dollar-pegged riyal last year). He reported that this caused industry losses up to 5% in 2008 in terms of lost revenue from sales to Saudi Arabia. (Note: Seventy percent of pharmaceutical products used in the Kingdom are produced in Europe, and although the Saudi pricing policy might seem to have benefited U.S. producers at the expense of Europeans, the PhRMA reps explained that their members produce drugs in Europe for the Saudi market and thus RIYADH 00000290 002 OF 002 had been hurt by the policy and exchange rate one-two punch.) Tentative praise for apparently increasing Saudi willingness to consult PhRMA -------------- ¶6. (C) After bemoaning the current situation, the PhRMA reps expressed cautious optimism about improving Saudi willingness to consult them on future reforms, citing in particular a new regulatory proposal being drafted by the SFDA. Mansour said that the SFDA has requested PhRMA's input on the proposal, and PhRMA has sent two letters of comments to the agency. He continued that as an industry group PhRMA "feels good" that their "recommendations are being listened to, and for once we are well-positioned to negotiate." MUENCH