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Cablegate: Implementation of Ip Mou Stalls: Ec Not The

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

UNCLAS ZAGREB 001836

SIPDIS


SENSITIVE BUT UNCLASSIFIED

STATE FOR USTR

E.O. 12958: N/A
TAGS: KIPR ETRD EU HR
SUBJECT: IMPLEMENTATION OF IP MOU STALLS: EC NOT THE
REASON, BUT A GOOD EXCUSE

REF: ZAGREB 387

SUMMARY AND COMMENT
--------------------

1. (SBU) The GOC has not yet taken action on legislative
changes need to implement and bring into force the
Intellectual Property MOU, finally ratified in March,
despite Ministerial-level reassurances in September.
European Commission officials have raised open-ended
questions about the MOU in meetings with GOC officials,
but EU ambivalence is not why its implementation has
stalled. Rather, our allies, notably in the Ministry of
Foreign Affairs, have to push for the MOU over the
objections of a strong Minister of Health and a strong
domestic lobby. Once the EU gets data exclusivity
protection -- required by its Interim Agreement with
Croatia and also a small but important part of the MOU --
- and as Croatia begins negotiations on accession early
in 2005, we expect EU griping about the MOU to become
even louder. End Summary and Comment.

Amendments Blocked
-------------------

2. (SBU) The Ambassador has repeatedly pressed the
government -- most recently in mid-September -- to move
forward two pieces of legislation to enable the 1998 MOU
to come into force: one amends the drug law to provide
data exclusivity and the other amends the patent law to
provide "pipeline protection" (a one-year window in
which companies can file for patents on products not yet
on the market but which are past the usual period for
filing). Two ministers assured the Ambassador that one
or both pieces of legislation would be on the
government's agenda before the end of September. In
several government sessions held since then, however,
the issue was not considered.

3. (SBU) Government and industry contacts report that
the local generics industry and the Minister of Health
(and Deputy Prime Minister for Economy) Andrija Hebrang
oppose the MOU. Hebrang is wrestling with an enormous
budget gap in the public health system, and the U.S.
industry believes he extracted large pricing concessions
from local generics manufacturers in partial exchange
for delaying the introduction of data exclusivity. In
the meantime, our industry informs us that a bumper crop
of marketing requests for locally-produced generics,
which rely on U.S. test data for registration, are being
approved and the copied drugs are being put on the drug
reimbursement list.

EC Innocent... Sort Of
----------------------

4. (SBU) In late September, Globus (a sensationalist but
occasionally accurate weekly) published a titillatingly
titled article, "Barroso and Sanader in Conflict Over
Viagra." The article claimed that the European
Commission had written to PM Sanader opposing the MOU.
The EC Delegation confirmed that no such letter existed.
In fact, the EC had recently reminded the Minister of
European Integration of the need to get cracking on data
exclusivity, and complaining of long drug registration
periods. However, our EC counterpart told us that the EC
"was not overjoyed with the prospect of the MOU." She did
not provide an explanation other than exasperation that
Croatia did not discuss or share the MOU with the
Commission before it was ratified."

5. (SBU) The MFA has confirmed that the EC Delegation
had recently made informal remarks in meetings with GOC
officials indicating "serious questions" about the MOU.
Head of the North America Desk at the MFA -- a supporter
of the MOU -- said, "Frankly, these comments make our job
harder. Some clarity would be appreciated."

6. (SBU) Econoff met with visiting EC staffers on
October 18,including Alain Deckers from the Commission's
Internal Market DG. The officials said that they had no
objections to the two pieces of legislation as long as
they were non-discriminatory and did not prevent Croatia
meeting its obligations under the Interim Agreement. We
shared frustration that the Ministry of Health was
telling each of us that the other was an obstacle to
devising data exclusivity language.

7. (SBU) Deckers did note that Croatia would have to


"denounce" some parts of the MOU upon EU entry, for
procedural rather than substantive reasons. Other parts
of the MOU, notably in the copyright area, might not
conform to EU Directives, but he was not able to give
details. The Commission's Croatia Desk Officer went
further, saying that he was sure that the U.S. would not
want to do anything to complicate Croatia's accession and
implying that the MOU could cause problems. Econoff
asserted that bringing the MOU into effect was not
negotiable and noted that the mixed signals being sent
about the MOU were being used by those who wanted to
block data exclusivity and pipeline protection, which
hurts us both.

DELAWIE


NNNN

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