Cablegate: Scenesetter for D/Hhs Visit to Israel


DE RUEHTV #0622/01 0771456
R 171456Z MAR 08





E.O. 12958: N/A

This message has been cleared by Consulate General Jerusalem.

1. (U) Post welcomes the visit to Israel of HHS Deputy Secretary
Tevi Troy on April 2. Post offers the following update on its social
and public health situation. Your visit presents an opportunity to
underscore our shared interests in matters of primary health care
and global public health, including avian influenza, HIV/AIDS, and
Tuberculosis -- especially drug-resistant TB. Shared bilateral
issues include development of cancer treatment capacity in the
region, enhancing Israeli protection of intellectual property rights
pertaining to pharmaceuticals, and helping address the weak public
health care sector of the Palestinian Authority (PA) in the context
of the Annapolis Peace Process.

Economic Situation
2. (U) Israel's economy has been riding a wave of unprecedented
growth. After four years of over 5 percent GDP growth, the economy
will expand about 3.5 to 4 percent in 2008. Inflation is in the
three percent range, and unemployment has fallen to about seven
percent. Israel's high technology, tourism and construction sectors
are all booming, and the country attracted $12 billion in foreign
investment in 2007 on top of nearly $26 billion in 2006.

3. (U) Over the last year, however, the New Israeli Shekel (NIS) has
strengthened by approximately 16 percent - to the dismay of Israel's
major exporters who have traditionally priced goods in US dollars,
reflecting their major export market. Exports ranging from textiles
to military hardware now earn Israeli producers far less, and some
Israeli factories have closed, having become uncompetitive. Because
export earnings fueled 40 percent of economic growth in recent
years, steady expansion and job creation may also be at risk. The
central bank recently lowered the discount rate by 0.5 percent to
weaken the shekel and defend export competitiveness.

4. (SBU) The strong expansion of the past five years has also
resulted in widening wealth disparities in Israeli society, as
workers in areas outside of growth sectors have not shared
proportionately in the boom. Socially-oriented politicians and the
media criticize the concentration of wealth among well-educated,
private sector professionals and industrial investors, and claim
that the majority of working class Israelis see little growth in the
real value of their income and assets. Although the strong shekel
has kept inflation in check, the pressure to keep wages low in the
face of international competition has limited the real income growth
of workers despite strong GDP growth. The Haredi and Arab sectors
of Israeli society have not shared in the prosperity, largely due to
their lower labor participation rates.

Public Health
5. (SBU) Israel has one of the world's best public health care
systems, offering excellent medical care, world class research, and
access to nearly all citizens. It was extensively revamped and
improved during the 1990s, with all healthcare provided by the
private sector, but the GOI funding most costs assisted by private
insurers payments. Privately-paid healthcare is available parallel
to the public care. The system has shown strains recently, with
mounting insurance fees on businesses, tight government budgets
moving the system toward greater user co-payments, and the national
health plan restricting access to some medications due to high
pharmaceutical prices. Government funding of health services has
decreased over the past decade, both in real and in per capita
terms, as the MOH budget dropped from 658 million shekels (NIS) in
2001 to 561 million NIS in 2006. A majority of Israelis oppose
creeping privatization of the healthcare system, as household
expenditure on healthcare for all income groups has tripled in the
past decade. Hospitals look to growing income from private clients
to cover funding gaps; the growth of "medical tourism" in Israel has
the potential to supplement public funds, and in 2006 provided USD
40 million in revenue to Israeli institutions, which hosted nearly
15,000 foreign patients. Israel is becoming known for heart
surgery, cosmetic surgery, and fertility treatment, among other

6. (SBU) The healthcare of minority groups in Israel (Israeli Arabs,
Druze, Bedouin) reflects both inequality of access and particular
social circumstances. The Israeli- Arab population has a markedly
different health profile from that of Jewish-Israelis. It is a
younger population, with 41 percent under 14 years old (compared to
25 percent for the Jewish population), and only 3.1 percent are over
65 (compared to 12 percent for Jewish citizens). Arab-Israelis
suffer from a higher rate of diabetes (3.4 percent), a higher rate
of cancers, and a higher rate of congenital disabilities. This
derives partly from a higher rate of smoking (26%) and also a high
rate of co-sanguinous (inter-relative) marriage (39%).
7. (SBU) Addressing the health issues of Arab-Israelis and of the
underserved Palestinian population of the West Bank and Gaza is a
problem facing the Israeli healthcare system. PA financial,
institutional and educational resources are insufficient to address
the demand, leading to some burden being shifted to Israeli
institutions. The ability of Israel to offer the training and
advanced medical care needed by Palestinians is limited by
financial, personnel and mobility (border) factors. Relations
between Israeli and Palestinian medical practitioners remain
excellent and professional; both sides regret the politicization
that sometimes impedes contact.

USAID Health Efforts
8. (U) There are many challenges which impact the delivery of health
care services in the West Bank and Gaza:

-- Limited movement and access of people and goods within the West
Bank (checkpoints) and between the Palestinian territories and other
countries (border crossings);

-- On-going violence and insecurity;

-- A fragile economy, limited capacity of families to pay for health
care services, and high degree of donor dependence to support health
care services, especially in the public sector;

-- Deteriorating health care infrastructure and shortages of
essential health commodities such as pharmaceuticals, medical
supplies, medical equipment, and spare parts (most notably in the
public sector).

9. (SBU) As part of the Palestinian Reform and Development Plan, the
Palestinian National Authority is working to strengthen the health
sector through (1) improved quality of care (infrastructure,
equipment, training, and other capacity-building), and (2) improved
health care affordability (better allocation of health financing
resources, greater accountability and transparency, and more
cost-effective procurement of goods and services). These priorities
are also reflected in the Palestinian Ministry of Health's National
Strategic Health Plan for 2008 - 2010.

10. (SBU) The U.S. Government has contributed significant resources
to help meet the challenges facing the health sector, support the
Palestinian Authority's reform and development agenda, and
strengthen the Palestinian health care system. The U.S. Agency for
International Development (USAID) currently supports maternal and
child health and nutrition projects valued at over $23 million. In
addition, USAID expects to provide over $15 million of emergency
medical assistance in FY08, including pharmaceuticals, medical
supplies, equipment, and spare parts for the Ministry of Health and
for eligible non-governmental organizations (NGOs). USAID will
continue support for health sector reform and development activities
to help improve access to quality health care services for the
Palestinian people.

Other USG Assistance
11. (U) The State Department Bureau for Population, Refugees and
Migration has committed $57 million in 2008 to support Palestinian
refugees in West Bank and Gaza through the UN Relief and Works
Agency for Palestine Refugees (UNRWA). In 2008, the USG will also
contribute $91 million to UNRWA for the provision of education,
health and relief services to 4.5 million Palestinian refugees in
Gaza, Jordan, Lebanon, Syria and the West Bank. With 54 primary
health clinics and one hospital, UNRWA is the second largest and
most cost-effective provider of primary health services in the West
Bank/Gaza. Due primarily to the PA's inability to replenish vital
medical supplies at its clinics, periodic public sector strikes, and
the inability of refugees to pay normal prescription fees at PA and
NGO health centers, the demand for UNRWA health services in West
Bank/Gaza increased 20 percent in 2007 and a similar increase is
expected 2008. Besides primary health care, the USG assistance to
UNWRA helps provide access to adequate water and sanitation services
for refugee communities, and provides counseling and mental health
support to vulnerable refugees, particularly children and youth.

Israeli IPR Situation
12. (SBU) Israeli protection for Intellectual Property Rights (IPR)
for pharmaceutical patents remains weak. While Israel has indicated
its interest in addressing the issue, and in particular, removing
itself from the 301 Priority Watch List issued by USTR annually,
there has not been a real effort in the past three years to change
important legislation. IPR in Israel is a shared domain of several
ministries and departments, including the Ministry of Industry,
Trade and Labor, Ministry of Health, Ministry of Justice and the
Ministry of Finance. A coordinated effort to affect change in
Israel's IPR regime must address all the key players of the
respective ministries.

13. (SBU) Of particular importance is the inadequate protection
against unfair commercial use of data generated to obtain marketing
approval for pharmaceuticals. Administrative delays at the Ministry
of Health further erode the ability of U.S. pharmaceutical companies
to obtain a fair term of protection, even if they submit
registration requests in Israel immediately upon approval in the
United States. Israel's use of a pre-grant opposition system for
patients impairs the ability of rights holders to protect
innovation. In 2005, Israeli legislation reduced the term of
extension of pharmaceutical patent protection provided to compensate
for delays in obtaining regulatory approval of a drug. This
legislation has discouraged U.S. companies from producing and
marketing innovative pharmaceuticals in Israel.

14. (SBU) New copyright legislation recently enacted is an
improvement for Israel, particularly in formalizing protection of
U.S. sound recordings under the 1954 bilateral treaty. Our approach
to the issue is to remind Israel that better IPR protection will
protect its nascent biotechnology and high technology industries and
encourage innovation. Israel should pursue IPR in a manner that
reflects its status as a partner in the U.S.-Israel FTA and its
objective of becoming a full member of the OECD.


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