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Cablegate: Status of Recent New Zealand Intellectual Property

VZCZCXRO3307
OO RUEHNZ
DE RUEHWL #0489/01 1860612
ZNR UUUUU ZZH
O 050612Z JUL 07
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4431
INFO RUEHBY/AMEMBASSY CANBERRA PRIORITY 4877
RUEHNZ/AMCONSUL AUCKLAND PRIORITY 1384
RUEHDN/AMCONSUL SYDNEY PRIORITY 0541
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY 0157
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAFCC/FCC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 WELLINGTON 000489

SIPDIS

SIPDIS

EAP/ANP, EB, INR, PACOM FOR J01E/J2/J233/J5/SJFHQ, PASS TO
USTR, USPTO, COMMERCE FOR ITA

E.O. 12958: N/A
TAGS: ECON ECPS ETRD KIPR PREL NZ
SUBJECT: STATUS OF RECENT NEW ZEALAND INTELLECTUAL PROPERTY
AND TELECOMMUNICATION DEVELOPMENTS

REF: WELLINGTON 158

1. (U) SUMMARY: New Zealand remains embroiled in a
politically contentious battle over access to medicines and
regulatory reform of its pharmaceutical industry. Recent
legislation aimed at linking a proposed to create a joint
Australia - New Zealand regulatory body (ANZTPA) along with
stricter marketing regulations (e.g. labeling standards) for
pharmaceuticals has failed in Parliament, for now. The
national drug-funding agency, Pharmac, is currently facing a
historic legal challenge in the High Court, which has the
potential to loosen the agency's assessment criteria and
review processes for determining which new drugs are made
available to NZ consumers. Broader proposed reforms to bring
copyrights, patents and trademarks legislation up to
international standards continue to move slowly forward in
Parliament. The telecommunications industry is feeling the
pressure of the Ministry of Communication's attempts to
advance its liberalization plan and increase market
competition through unbundling telecommunication services.
After years of delay, there is renewed hope that New
Zealand's largest telecom provider, Telecom New Zealand, now
under new management, will finally implement needed
liberalization and modernization. End Summary

Reform of Pharmaceuticals still politically contentious
--------------------------------------------- ----------

2. (U) New Zealand had been working with Australia for more
than 10 years to develop a joint regulatory scheme for
therapeutic products and to set up a new trans-Tasman agency,
in line with a trans-Tasman treaty signed in 2003, called the
Australia New Zealand Therapeutic Products Authority
(ANZTPA), to oversee the scheme. This proposed agency would
have replaced Australia's Therapeutic Goods Administration
and New Zealand's Medsafe. Expected to have been based in
Canberra and Wellington, it was designed to be run by a
managing director and governed by a board overseen by a
council comprising the two countries' health ministers. It
would have regulatory authority over all medicines, medical
and surgical devices, and complementary/alternative
medicines. This includes prescription and over-the-counter
medicines, contact lenses, pacemakers, endoscopes, blood
products and, most controversially, most herbal and
traditional medicines, sunscreens, homeopathic remedies,
aromatherapy, vitamins, minerals and other dietary
supplements In a deliberate concession to NZ political
sensitivities, it would not regulate- but not products
prepared by traditional Maori healers for individual clients.

3. (U) In mid June, the NZ's Parliamentary select committee
charged with considering the Therapeutic Products and
Medicines Bill had been unable to reach agreement, and
therefore could not recommend the bill be passed. The select
committee received 895 submissions, three quarters of which
were from individuals, generally opposed to the regulation.
Opponents have said regulation would impose unnecessarily
prohibitive compliance costs that would squeeze out smaller
producers, limiting consumer choice. Many felt the
regulations were overly onerous for low-risk therapeutic
products. The impasse left the bill in the hands of the
Government to salvage. The bill squeaked through its first
reading on a vote of 61 to 60, but the Government's ability
to pass it has been in doubt since independent MPs Taito
Phillip Field and Gordon Copeland said they would vote
against it. As of the end of June, the bill effectively died
after all attempts to find a compromise and reformulate the
text failed.

4. (U) Currently there is minimal regulation of medical
devices and "complementary" (i.e., non-prescription)
medicines in New Zealand, which some see as out of step with
international best practices. The proposed bill also set out
the direction regulations for advertising of therapeutic
products in New Zealand. Direct to consumer advertising
(DTCA) of prescription medicines would have been permitted,
however under the scheme there would also have been controls
to ensure consumers are provided with balanced and truthful
information about the therapeutic health benefits of
medicines so that they can make more informed choices.


WELLINGTON 00000489 002 OF 003


Court case could shape future access to medicines
--------------------------------------------- ----

5. (U) For the first time in NZ, a citizen's group is
challenging the GNZ's drug-funding agency, Pharmac, in the
High Court. Seven breast cancer patients and a member of the
Breast Cancer Aotearoa Coalition, filed documents in the High
Court of New Zealand on June 29th against Pharmac's decision
to restrict treatment to a 9-week course of therapy rather
than funding a full 12 month course of Herceptin for women
with early stage breast cancer. Cost of a year's treatment
range between US$75,000 and US$90,000.

6. (U) This case challenges Pharmac's approval processes and
assessment criteria for drugs that are funded under the
national health care system. It is indicative of increasing
public dissatisfaction with the GNZ limiting access to
pharmaceuticals through the single drug-funding agency. If
successful the case would force a revision of Pharmac's
approval processes and assessment criteria, potentially
increasing market access for US companies.

Copyright legislation still under scrutiny
------------------------------------------

7. (U) The Copyright Amendment Bill currently remains under
the consideration of the Parliamentary Commerce Select
Committee. The bill amends the Copyright Act 1994 (the Act)
intended to clarify the application of existing rights and
update the Act to take account of changes in recent
technology and international treaty obligations. The
Committee has received an extension for ongoing
deliberations, and it is not expected to return the bill to
the parliament for a third and final reading before the end
of July.

Patent legislation expected to meet little resistance
--------------------------------------------- --------

8. (U) The new draft patent bill has been remained on the
parliamentary docket for some time now, but according to a
source at the Ministry of Economic Development (MED), it will
most likely be introduced over the next three months and no
later than the end of this year. Modeled largely after
current British patent law, the GNZ drafters had hoped to
capture the UK's experience in conforming to its patent
regime to EU standards. An unofficial preliminary draft
version of the bill, called an "exposure draft," was
initially released in 2005 and received only technical
comments as to the form of the bill. These have been reviewed
and applied as appropriate. Despite the bill's long gestation
period, MED attorneys responsible for drafting feel that the
bill is likely to pass with little additional modification.

Trademarks - GNZ moving towards WIPO compliance
--------------------------------------------- ---

9. (U) MED is also currently amending existing trademark
legislation to incorporate recent World Intellectual Property
Organization (WIPO) treaties. These amendments are expected
to bring GNZ in compliance with the recent WIPO trademark
treaties otherwise referred to as the Madrid, Singapore and
Nice treaties. Under the new legislation, investigation and
enforcement provisions will be enhanced, and compliance
responsibilities will be given to directly to MED, which will
have the enhanced capacity to properly investigate claims and
enforce regulations. MED expects to have the bill fully
drafted by the end of 2007 and introduced to parliament by
beginning of 2008.

Telecommunications reform in flux
---------------------------------

10. (U) In December 2006 the parliament passed a program of
market reforms - The Telecommunications Amendment Act - and
introduced a timetable for restructuring the state-owned
telecommunications enterprise, Telecom NZ, which includes
enhanced competition through unbundling local loop (LLU),
local loop co-location and bitstream access. An industry-wide
process to determine the terms for unbundling started in
February 2007. Though Telecom NZ remains on track to meet

WELLINGTON 00000489 003 OF 003


the government's timetable for unbundling, Telecom NZ
executives did submit a request for an extension of their
time frame for LLU. The Commerce Commission (ComCom -
functions similar to FCC) rejected Telecom NZ's request. This
action on the part of GNZ is seen by industry analysts as a
sign that the GNZ wants no furthers delays and its
relationship with Telecom NZ is no longer business as usual.

11. (U) On 1 May 2007, the Ministry of Communications (a part
of the Ministry of Economic Development - MED) invited
comment on Telecom's proposal to separate wholesale and
retail operations as it implements local loop unbundling (LLU
terms open to public comment as of June 13). ComCom is
expected to finish a first round draft of terms by end of
July based on the industry submissions although some market
analysts remain pessimistic about pace of liberalization.
Some have commented that, despite MED's efforts at
modernization, the lack of technological investment over the
past 25 years remains a hurdle in upgrading current
infrastructure.

12. (U) Finally, Telecom NZ has just appointed United
Kingdom's Telco executive Dr Paul Reynolds as its new chief
executive to succeed Theresa Gattung. Reynolds is currently
chief executive of BT (British Telecom) Wholesale, an arm of
UK-based Telco and information technology firm - BT Group.
Although Post is unsure of Reynolds' ultimate plans regarding
Telecom NZ modernization, he does have a reputation as an
agent of change while at BT. This has led to renewed hope in
local government and industry that Telecom NZ will finally
implement needed liberalization and modernization.


13. (U) COMMENT: Although recent media reports reveal that
the left-leaning Government and the small right-wing ACT
Party have tacitly agreed to have an open dialogue regarding
the Therapeutic Products and Medicines bill, Post believes it
is unlikely to result in a political union to support the
bill. (Note. If Labour secured ACT's two votes in Parliament
it would have enough votes to pass the bill through
Parliament. End Note.) It is likely that the ideological gulf
between Labour and ACT on the issue of regulation - Labour is
pro-regulation and ACT is fervently anti-regulation - would
be a step too far for the two parties to team up and support
this particular bill. Post believes that ACT's motivation was
less to do with working with Labour to progress this
particular bill and more to do with heightening the party's
profile. END COMMENT.
MCCORMICK

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