Cablegate: Ukraine Continues Dialogue with Pharmaceutical

VZCZCXYZ0000
RR RUEHWEB

DE RUEHKV #1056/01 1540752
ZNR UUUUU ZZH
R 020752Z JUN 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 5713
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUCPDOC/USDOC WASHDC
RUEHSF/AMEMBASSY SOFIA 0035

UNCLAS KYIV 001056

SIPDIS
SENSITIVE

STATE FOR EUR/UMB AND EB/TPP/IPE
STATE PLEASE PASS TO USTR FOR BURKHEAD/GROVES
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK
USDOC FOR CLDP
SOFIA FOR MLAMBERTI

E.O. 12958: DECL: N/A
TAGS: ETRD KIPR ECON UP
SUBJECT: UKRAINE CONTINUES DIALOGUE WITH PHARMACEUTICAL
INDUSTRY ON IPR ISSUES

REFS: A) KYIV 456

B) KYIV 110
C) 2007 KYIV 2865
D) 2007 KYIV 1780
E) 2007 KYIV 1452

Treat as Sensitive but Unclassified. Not for Internet.

1. (SBU) Summary: The GOU held a public roundtable on May
28 to discuss IPR enforcement issues of importance to the
pharmaceutical industry. GOU reps said they were now
implementing the data exclusivity provisions agreed to as
part of Ukraine's accession to the WTO, but admitted that
generic drugs were sometimes still able to improperly
receive market approval. There was some dispute over the
role that executive branch agencies should be playing in
regulating pharmaceutical approvals as opposed to the
judiciary, but the GOU committed to do what it could to
bolster enforcement. End Summary.

2. (U) EconOff attended a May 28 roundtable entitled "Legal
Enforcement and Protection of Medicines," hosted by the
State Department of Intellectual Property (SDIP), Ukraine's
lead agency for intellectual property rights (IPR) issues.
The roundtable brought together officials from SDIP, the
Ministry of Health, and the State Pharmacological Center --
responsible for registering new pharmaceutical drugs (i.e.
granting market approval) -- with representatives of the
pharmaceutical industry, mostly local patent lawyers
employed by large international firms. The event was a
follow-up to a November 2007 meeting of the U.S.-Ukraine
Enforcement Cooperation Group (ECG) that focused on similar
issues (ref C).

Enforcing WTO Rules...
----------------------

3. (U) Volodymyr Dmytryshyn, SDIP Deputy Chairman,
emphasized the importance of improving IPR enforcement in
the pharmaceutical sector in order to both protect the
rights of companies operating in Ukraine and to ensure that
Ukrainians have access to safe, quality medicines.
Dmytryshyn and Olga Baula, 1st Deputy Chairperson of the
State Pharmacological Center, noted Ukraine's accession to
the WTO on May 16 and said that the GOU was now enforcing
the five-year data exclusivity provisions agreed to as part
of WTO accession negotiations.

4. (SBU) Baula said that the State Pharmacological Center
was doing its best to make its drug registration system as
transparent as possible, noting that new applications were
now publicly available on the internet. (Note: Poor access
to applications had previously been a primary complaint of
pharmaceutical companies. End note.) She added that the
State Pharmacological Center was trying to develop a cadre
of its own experts, recognizing that the current situation,
with some of its staff working part-time in the private
sector, created the potential for a conflict of interests.

... But a Data Exclusivity Loophole Remains
-------------------------------------------

5. (U) Baula admitted, however, that a problem remained in
the enforcement of the data exclusivity provisions. She
said that generic producers were occasionally beating the
original manufacturer to the Ukrainian market with
applications to register their drugs. In such cases, said
Baula, with no application from the innovative drug
producer on file, the generic would be registered even
though its clinical test data would presumably come from a
third party, and the five-year data exclusivity period
could not be enforced. Michael Doubinsky, a well-respected
patent attorney who often advises the GOU, noted that other
countries, including Russia, had tackled such problems and
argued that Ukraine needed to make systematic changes to
ensure that a generic drug could not get registered by the
State Pharmacological Center before the original.

Patent Linkage Also Needs Strengthening
---------------------------------------

6. (U) Doubinsky added that, despite the improvements made
as part of WTO accession, there was still a gap between

patent applications and pharmaceutical registration rules.
Too often a generic drug was able to improperly receive
market approval when the patent of the original producer
was still valid, said Doubinsky. Baula responded that the
State Pharmacological Center was not responsible for
verifying the validity of patents, a task that fell to SDIP
and the courts, before registering a drug.

Reliance on Courts?
-------------------

7. (U) Doubinsky argued that relying on court litigation
was not an efficient strategy, as patent cases often lasted
as long as three years, and companies were loath to file a
case against the State Pharmacological Center for fear of
upsetting the principal government regulator. Iryna
Vasylenko, Head of SDIP's Legal Division, noted that courts
officially had up to 1,460 days to rule on a patent case
and that some judges still lacked the necessary expertise.

8. (SBU) One local patent attorney criticized the USG for
pressuring GOU agencies to defend the IP rights of U.S.
pharmaceutical companies; such companies, he said, should
use the Ukrainian court system. EconOff responded that,
while the USG was calling on Ukraine to improve protection
of IP rights, it was up to Ukraine to decide how best to do
so. EconOff recognized that courts should play an
important, although not solitary, role.

Comment: Signs of Progress
--------------------------

9. (U) That the GOU is now initiating public discussions
with industry to explore how to improve IPR enforcement
testifies to Ukraine's real progress over the last few
years. Ukraine's system of granting market access to
pharmaceutical drugs remains imperfect, but the GOU appears
serious about improving it. Dmytryshyn, for example, said
in his closing statements that the GOU recognized "the gap"
between patent approvals and pharmaceutical registration
and would work to eliminate it.

10. (SBU) Contrary to the criticism directed at the USG,
Post has long recognized the critical role of the courts in
bolstering IPR enforcement and has targeted much of its IPR
technical assistance on training Ukrainian judges (refs A-
B, D-E). Unfortunately, however, defending IP rights in
Ukrainian courts remains costly, lengthy, and risky, as
many judges lack the expertise needed to properly
adjudicate IPR cases, and as corruption in the courts is
still widespread. Post believes that the path to enhanced
IPR enforcement lies in improving the performance of both
the relevant GOU agencies and the courts.

TAYLOR

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