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Cablegate: Ambassador's Meeting with Health Minister

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

261641Z Apr 04

UNCLAS SECTION 01 OF 02 ANKARA 002346

SIPDIS


SENSITIVE


COMMERCE FOR DEFALCO
DEPT PASS USTR FOR LERRION
STATE FOR EUR/SE, AND EB/TPP/MTA/IPC


E.O. 12958: N/A
TAGS: ETRD ECON SENV
SUBJECT: AMBASSADOR'S MEETING WITH HEALTH MINISTER


1. (Sbu) Summary: In a meeting with Minister of Health Recep
Akdag, the Ambassador reiterated U.S. pharmaceutical
companies' concerns about data exclusivity and the pricing
decree under consideration by the GOT. The Minister pushed
back, claiming that there were differences of interpretation
of Turkey's commitments under TRIPS and the EU Customs Union,
and that the decree struck a balance between research-based
and generic producers. The Minister noted the relatively
high share of Turkish public health spending that goes to
medicines in Turkey. The Ambassador recommended U.S. and
Turkish trade experts exchange views in a DVC. The
Ambassador also noted the danger that HIV/AIDS could become
more prevalent in Turkey. End Summary.


Pharmaceuticals:
----------------


2. (Sbu) In a meeting requested by the Ambassador, he
reiterated USG and U.S. pharmaceutical companies' concerns
about the GOT's proposed data exclusivity policy. Unless
research-based companies could recoup their investment in
research and development, the Ambassador said there was a
danger they might stop investing. If these companies stopped
investing in Turkey, he went on, there could be lost jobs in
Turkey, and there could be an effect on the local availablity
and cost of medicines. The Ambassador also said that the
U.S. believes that the TRIPS agreement and Turkey's customs
union with the EU both require Turkey to protect the
exclusivity of data.


3. (Sbu) Referring to the recent meeting between Trade
Minister Tuzmen and USTR Zoellick, as well as to the imminent
meeting between USDOC A/S Lash and Ambassador Logoglu, the
Ambassador said he did not want the GOT to be surprised if
the USG ruled that Turkey should be elevated the Priority
Watch list under Special 301.


4. (Sbu) The Minister responded by claiming that everything
the GOT had done on this issue was done in close consultation
with companies in the pharmaceutical sector. Admitting that
imported pharmaceuticals had experienced low profit margins
over the past two years, the Minister asserted that a new
pricing decree eliminated the differential between the profit
margins of imported and domestic drugs. He pointed out that
the new pricing policy, like that of Greece, would help the
state to save money by using the lowest price in five
European countries as a reference. The Minister said the
Turkish budget allocation for medicine is lower than any EU
country's. In Turkey, the Minister said that majority of
spending on medicine comes from public sector insurance, and
that Turkey spends $150 per capita on health whereas the U.S.
spends $4,000. Moreover, he contrasted the share of health
spending that goes to medicines in Turkey, at 40 percent,
with that in developed countries: 15 percent. He therefore
was confident that the U.S. and European countries would
approach the issue in an understanding way, taking into
account Turkey's large budgetary allocation to cover the
deficit in its Social Security system. Except for some
companies pushing for higher prices, the Minister claimed
that there was broad agreement with the pharmaceutical sector
on the new pricing policy.


5. (Sbu) On intellectual property rights issues, the Minister
said Turkey will fulfill its Customs Union and TRIPS
commitments. Throughout the process, the Minister believed
that the only disagreement was one of interpretation.
Regarding TRIPS he referred to the phase-in period for
developing countries.


6. (Sbu) The Health Minister reminded the Ambassador that
other GOT agencies play important roles on this issue: the
State Planning Organization and the Ministry of Finance, but
most importantly the Foreign Trade and Industry Ministries,
with the Minister of Industry chairing the Economic committee
of the Council of Ministers. Coming back to the need for
clarity in interpreting concepts in international agreements,
the Minister likened the differences in interpretation to the
story of the blind man describing the elephant based on the
part he was touching. He implied that, on the data
exclusivity issue, different sides were closing their eyes
to the part of the elephant they could not reach. He called
for the research-based companies and the generics to find
common ground during the transition period, and then share
their position with the public sector which is the major
consumer of their products.


7. (Sbu) Finally, the Minister made a vague reference to the
possibility pharmaceutical companies would try to impose
measures by force, in which case Turkey would need to react
with protective measures. The Minister doubted such a
situation would ever arise, however, because the
pharmaceutical companies are likely to look to the attractive
future of the Turkish pharmaceutical market, in which
spending on medicines is likely to rise substantially in the
years to come.


8. (Sbu) The Ambassador agreed that the Turkish market would
be attractive, but only if pharmaceutical companies could
recoup their investment in R and D. In a globally
integrating world, with Turkey poised to enter the EU, the
Ambassador said protectionist measures are self-defeating.
The data exclusivity issue is a problem not only for American
companies, but for European companies as well. The
Ambassador also said he was well aware of the
interministerial nature of the issue for the GOT, and said he
would continue to raise it with other ministers.


9. (Sbu) In order to try to deal with the differing
interpretations of TRIPS concerning data exclusivity, the
Ambassador thought it would be useful to get U.S. and Turkish
IPR experts together using a DVC to save time. The
Ambassador also agreed that generic and research-based
companies needed to have more dialogue: even though there are
sharp differences, the two groups share some long-term
interests.


10. (Sbu) Noting the important role U.S. companies play in
the global pharmaceutical industry, the Minister acknowledged
the importance of the Ambassador raising the issue with him,
and undertook to pass on the Ambassador's message to his GOT
colleagues. The Minister reiterated his optimism that the
issue could be solved.


HIV/AIDS:
-----------


11. (Sbu) At the end of the meeting, the Ambassador noted
concerns about a potential increase in prevalence in HIV/AIDS
in the Black Sea region: though Turkey is not the most
at-risk country in the region, there is a danger that
HIV/AIDS could become much more prevalent. The Minister
agreed that Turkey had been fortunate so far. He said that
there was a need to increase education for those who were not
"monogamous." He asserted that the GOT attached great
importance to education and prevention and that it would
continue its efforts.
EDELMAN

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