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Cablegate: Sanader Government Delivers: Intellectual Property

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ZAGREB 000387

SIPDIS


SENSITIVE

STATE FOR EB/IPC AND EUR/SCE
USTR FOR MARK WU AND LISA ERRION
USDOC FOR 4232/ITA/MAC/EUR/MROGERS
USDOC FOR 3133/USFCS/EUR

E.O. 12958: N/A
TAGS: ETRD KIPR PREL HR
SUBJECT: SANADER GOVERNMENT DELIVERS: INTELLECTUAL PROPERTY
MOU RATIFIED AFTER ALMOST SIX YEARS

Summary
-------

1. (U) Late on March 3, the Croatian parliament
approved the Memorandum of Understanding on
Intellectual Property Rights, which the GOC had
signed in May 1998 but had never ratified. While the
MOU does not go into effect until implementing
regulations and laws are in force and diplomatic
notes are exchanged, the ratification is a major
achievement that must be credited to the Sanader
government. As always, the battle now moves to the
arena of implementation and enforcement. End
Summary.

2. (SBU) On March 3, the 1998 Memorandum of
Understanding on Intellectual was ratified, with 77
votes in favor, 23 votes against and one abstention.
When the former HDZ government signed the MOU in May
1998, it promised to have the MOU in force by June
1999. Over the years since then, the GOC has offered
various reasons for delay, but eventually
acknowledged that the unwillingness of Croatian
pharmaceutical producers to give up the ability to
use clinical data created by others (including U.S.
drug companies) was the real problem.

3. (SBU) Even before the November 2003elections, top
members of the current HDZ-led government promised to
make good on Croatia's outstanding commitment and to
ratify the agreement. While seemingly easier to make
good on than other U.S. requests (i.e., Article 98
agreement, assistance for the Coalition in Iraq),
ratification was far from certain. The local
pharmaceutical companies did not want to come out
publicly against the agreement, so chose to try to
undermine it behind the scenes.

4. (SBU) When the MOU was initially put on the
parliamentary agenda mid-February, immediately after
after it on the agenda were amendments to the Drug
Law, which purported to bring domestic legislation
into line with the MOU. These amendments had been
prepared by the Ministry of Health and approved by
the Cabinet with little debate. However, the effect
of the amendments would have been to gut the MOU.
Luckily, after protest from the U.S. innovative drug
industry, the amendments were withdrawn.

5. (SBU) Interestingly, amendments to the Patent
Law, necessary to implement the "pipeline protection"
aspects of the MOU, were prepared by the Ministry of
Science and Education and are adequate, according to
U.S. industry experts.

6. (SBU) There were several attempts to open the MOU
up for amendment (the Sanader government had
submitted the bill for a streamlined, up-or-down
vote). Sources close to the committee debate said
the deputies were told that Croatia was the only
country to saddle itself with such an agreement, that
other countries had given themselves until EU
accession to implement similar provisions, etc. The
day before the final vote, the newspapers were full
of stories decrying the possible effect of the
agreement on the Croatian pharmaceutical industry.
Damage figures -- which the industry and government
had been unable to produce for years -- were quoted
at $200 million -- a figure our industry describes as
ludicrous.

7. (SBU) As ratification became inevitable, local
drug companies' strategy turned to plotting to
neutralize "negative effects" of the MOU. A Belupo
spokesperson told the press, "Belupo believes in the
Government's readiness to consult the experts of the
Croatian pharmaceutical companies in drafting the
implementing legislation in order to make MOU's
consequences as acceptable as possible." Her
counterpart at Pliva said "they (Pliva) expect that
the implementing legislation will eliminate any
dilemmas in the agreement's implementation."

Comment


-------

8. (SBU) The current government deserves credit for
making ratification of the MOU a priority and for
pushing it through. There are some individuals --
mainly in the Ministry of Health -- who will
try to undermine the MOU in the process of drafting
implementing legislation and regulations. We will
continue to monitor and engage the government
to prevent dilution of the agreement's hard-won benefits.
FRANK


NNNN

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