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Cablegate: France: Us Pharmaceutical Firms Agenda

VZCZCXRO3899
RR RUEHIK
DE RUEHFR #1745/01 3571046
ZNR UUUUU ZZH
R 231046Z DEC 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 7968
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 PARIS 001745

SENSITIVE

SIPDIS

USDOC FOR FCS, MAS, MAC

E.O. 12958: N/A
TAGS: ECON ETRD KIPR FR
SUBJECT: FRANCE: US PHARMACEUTICAL FIRMS AGENDA

PARIS 00001745 001.2 OF 002


Summary
-------

1. (U): Ambassador Rivkin met with the board of AGIPHARM, the
association of American pharmaceutical subsidiaries in France to
review the results of President Sarkozy's pharmaceutical strategy
conference (CSIS) held on October 26. AGIPHARM considers that the
CSIS yielded important breakthroughs but that key issues remain.
The 10th Annual France-U.S.A. conference on "Access to
Pharmaceutical Innovation," which will take place in Boston, MA on
June 11, 2010, offers an excellent venue for discussing these
issues, provided it can attract the right participants. AGIPHARM
asked Ambassador and EEB A/S Jose Fernandez to support high level
participation by USG and senior American pharmaceutical executives.

2. (SBU) President Sarkozy's advisor for health, Raphael Radanne met
subsequently with FCS to explore themes of mutual interest for the
conference. These include addressing a perception that rigid French
labor laws detract from an otherwise excellent investment climate
for research and development in France, presenting the American
model for public private partnerships in the pharmaceutical industry
and considering best practices from the French healthcare system.
Radanne agreed to promote the conference at the ministerial level of
the GOF. We understand that French Ambassador Pierre Vimont and
former Prime Minister Jean Pierre Raffarin have already committed to
attend the conference. AGIPHARM will meet with Radanne in January
to develop a detailed agenda for the conference. End Summary

Background: AGIPHARM and USCS France
----------------------------------------

3. (U) For more than 15 years, USCS France has worked closely with
AGIPHARM (Association des Groupes Internationaux pour la Pharmacie
de Recherche) composed of the subsidiaries of American research
laboratories operating in France. AGIPHARM is recognized by public,
industrial and medical authorities as an involved and responsible
key player in French public health issues. AGIPHARM members are:
Abbott, Amgen, Baxter, Biogen IDEC, Bristol-Myers Squibb BMS,
Cephalon, Gilead, Janssen-Cilag, Lilly, Merck Sharp and Dohme MSD,
Mundipharma, Pfizer, Procter and Gamble, Schering-Plough. AGIPHARM
member companies have created approximately 18,000 direct jobs in
France. This represents 18 percent of the total workforce in
France's pharmaceutical industry. They operate manufacturing
facilities and distribution centers as well as R and D sites.
AGIPHARM advocates for a legal, regulatory and economic climate that
advances global health care by assuring access to the benefits of
innovative pharmaceuticals. To achieve this, AGIPHARM promotes:

-- Speedier product approval by industry regulators;

-- Faster agreement by French health insurance to cover new products
and higher prices for these products;

-- Loosening strictures on direct communication including
advertizing to key audiences including legislators, regulators,
medical societies and patient organizations.

Sarkozy Makes Pharma R and D a Strategic Sector
--------------------------------------------- --

4. (U) On October 26, President Sarkozy announced plans to make
France the priority destination for foreign investment in medical
research, with the healthcare industry becoming "a centerpiece of
French competitiveness" on par with its aerospace and luxury goods
sectors. To launch his new plan, President Sarkozy invited 15 CEOs
of major foreign pharmaceutical and medical device companies -
including three U.S. firms - to take part in a meeting of the
Strategic Council for Health Industries (CSIS), a council created by
then President Chirac in 2004 but which had not met for three years.
Five ministers (Economy Minister Christine Lagarde, Budget Minister
Woerth, Health Minister Bachelot, Industry Minister Estrosi, and
Research Minister Pecresse) took part in small roundtables, along
with President Sarkozy himself.

5. (U) AGIPHARM considers that Sarkozy broke important new ground
through his personal participation, his designation of pharma as a
strategic sector and through practical measures; e.g., companies can
now charge two prices for drugs: one fixed price for pharmaceutical
products reimbursed by French Social Security and an unregulated
price for export. This pricing strategy will prevent parallel
imports that undercut companies' marketing strategy and sales in
export markets, a key issue for all U.S. firms.

6. (U) A second very positive point: to prevent subcontractors from
manufacturing generic drugs in low-cost countries like China, India
and Brazil, which could siphon off 5,000 French jobs, the
President's plan allows companies to produce generics in France a
few weeks before patents expire so that products can be ready for

PARIS 00001745 002.2 OF 002


sale as soon as the patent ends. In France, the generics market
represents 20 percent of the drug market, compared to 4 percent in
2004. France has been promoting generic drugs as part of overall
healthcare reforms.

Dialog with Ambassador Rivkin
-----------------------------

7. (U) On December 8, CEOs of 14 U.S. subsidiaries briefed the
Ambassador on key issues concerning operations and sales in France.
For most U.S. firms, France represents the largest market outside of
the United States. All CEOs noted that French tax credits on
Research and Development, plus the highly qualified French
scientific and technical personnel, make France an excellent
location for R and D. Unfortunately, the rigid labor laws and the
extremely complex consultations with unions required for almost any
change have given France a poor image in U.S. corporate
headquarters. Despite the success of the CSIS meeting, there remain
other issues to pursue with the GOF. Public Private Partnerships
(PPPs), for example, fascinate the GOF, but the GOF tends to view
this as a way to gain private sector financing for government
projects. AGIPHARM, by contrast, wants to see PPPs lead to greater
cooperation on epidemiological data bases, which could serve as a
measure of effectiveness of innovative products. The 10th annual
France-U.S.A. conference on "Access to Pharmaceutical Innovation,"
which will take place in Boston, MA on June 11, 2010, offers an
excellent venue for discussing these issues, provided it can attract
the right participants. Ambassador Rivkin and visiting EEB A/S
Fernandez, offered to promote this conference to senior U.S. and
French policy makers and top U.S. pharmaceutical executives.

Meeting with Presidential Advisor on Health
-------------------------------------------

8. (U) On December 14, FCS SCO and Commercial Specialist met with
Raphael Radanne, Technical Advisor to President Sarkozy, to
emphasize Embassy support for the dialog between the GOF and the
American pharma subsidiaries in France. SCO offered three themes
that could be of mutual interest.

-- Sector Image. While France has a lot to offer as a place for
research and development, there continues to be an image problem in
U.S. HQs regarding the rigidity of the labor market. Radanne
acknowledged this image problem in the U.S. business community. SCO
emphasized the opportunity to address this image problem at the
conference, especially after President Sarkozy's strong commitments
for the pharmaceutical sector. This would involve the Ministry of
Finance and the Ministry of Industry to describe the reforms
President Sarkozy is undertaking to provide greater flexibility.

-- Public-Private Partnerships (PPPs). SCO proposed that PPPs
should be an important theme of the 10th conference, especially to
showcase examples of successful PPPs in the U.S. as they relate to
pharmaceutical R and D. Radanne responded enthusiastically on this
theme, noting that President Sarkozy has made PPPs a priority.

-- Healthcare Reform. SCO noted that the healthcare reform would
probably pass the Congress, but that the debate over implementation
would continue. Hearing some best practices from France would be
useful. Radanne agreed and added that the current healthcare reform
in the U.S. is of great interest for France's decision makers in
that field. He stated that, should pharmaceutical products
experience price cuts on the U.S. market, it is very likely that
laboratories will then try to raise prices in foreign markets.

9. (SBU) Significantly, Radanne offered to reach out to Ministers
Bachelot (Health), Estrosi (Industry) and even Lagarde (Finance) in
order to promote participation of those Ministers in the 10th
conference, once we have a final agenda. We agreed that both sides
would have to work in tandem to raise the level of participants if
the conference were to have real impact. AGIPHARM will meet with
Radanne in January to discuss the agenda in detail.

10th France - U.S. AGIPHARM Conference, 6/2010
--------------------------------------------- -

10. (SBU) Since the meeting with Radanne, we understand that French
Ambassador to the U.S. Pierre Vimont, Jean Pierre Raffarin - former
French Prime Minister who created the "Competitive Clusters" - and
Louis Giscard d'Estaing - who chairs the France - USA Friendship
Group at the French National Assembly - have tentatively agreed to
participate in the conference. If these speakers are confirmed, it
should help to attract high ranking executives from the U.S. pharma
industry and from the GOF and USG. The conference is scheduled for
June 10 and 11, 2010, in Boston.

RIVKIN

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