US embassy cable - 06OSLO207

SPECIAL 301 REVIEW FOR NORWAY: PHARMACEUTICALS

Identifier: 06OSLO207
Wikileaks: View 06OSLO207 at Wikileaks.org
Origin: Embassy Oslo
Created: 2006-02-23 15:43:00
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
Tags: ETRD KIPR ECON NO
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS  OSLO 000207 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE FOR EUR/NB RDALLAND, EB/IPE CARRIE LACROSSE 
COMMERCE FOR 4212 MAC/EUR/OEURA 
STATE PLEASE PASS TO USTR JENNIFER CHOE-GROVES AND 
JASON BUNTIN 
COMMERCE PLEASE PASS TO USPTO FOR JOELLEN URBAN 
 
E.O. 12958: N/A 
TAGS: ETRD, KIPR, ECON, NO 
SUBJECT: SPECIAL 301 REVIEW FOR NORWAY: PHARMACEUTICALS 
 
REF:  STATE 14937 
 
Summary 
------- 
 
1.  (SBU) Post has assessed and agrees with the 
pharmaceutical industry's concerns about weak patent 
protections for many branded drugs in Norway (per the 
trade group "PhRMA's" Special 301 report).  Post has 
consulted frequently with U.S. pharmaceutical firm 
representatives in Oslo on the issue and, at their 
request, has occasionally engaged Norwegian officials 
on their behalf.  The industry advocates amending the 
public health care system's drug reimbursement 
regulations to bar pharmacies from swapping copycat 
generic drugs for branded drugs that, under the 
Norwegian system, do not enjoy full patent protections. 
U.S. and other pharmaceutical firms have been meeting 
Norwegian health care system officials on the issue for 
months, but so far without serious progress.  Post 
believes that PhRMA's request to include Norway on the 
Special 301 Watch List can be a useful tool for 
spurring Norwegian authorities to take action on the 
patent issue.  Post recommends informing appropriate 
Norwegian officials of PhRMA's request and encouraging 
them to engage constructively with the industry to 
address its concerns, thereby offering Norway an 
opportunity to act on the issue before the April 30 
Special 301 report publication date.  Post can assess 
progress and, depending on developments, offer a 
further recommendation on Special 301 inclusion closer 
to the publication deadline.  End summary. 
 
Background 
---------- 
 
2.  (SBU) Norway has been nominated by the 
pharmaceuticals industry trade group "PhRMA" for 
inclusion on the Special 301 Watch List for failure to 
provide adequate patent protections for 
pharmaceuticals.  The basis for the nomination is that 
prior to 1992, Norway granted patent protection only to 
the manufacturing process for a drug's active 
ingredient, as opposed to the active ingredient itself. 
These "process" patents provide weaker protection than 
"real" or "product" patents in that they open the door 
for generic manufacturers to claim to have found a new 
process to produce a branded drug, hence selling the 
generic in the local market does not infringe the 
branded drug's patent. 
 
3.  (SBU) Post has worked closely with local 
representatives of U.S. pharmaceutical firms over the 
last nine months on the process patent issue.  We agree 
with the substance of PhRMA's claims.  The process 
patent problem is a serious one for U.S. pharmaceutical 
firms here.  While Norway has granted product patents 
since 1992, approximately 80-85 percent of their 
revenues in Norway are derived from branded drugs 
covered only by process patents.  The annual sales 
revenues at risk total about USD 1.25 billion. 
 
4.  (SBU) Norway is the only Western European nation 
Post is aware of that does not offer full patent 
protection to branded drugs sold locally (though we 
understand companies in Spain may face similar 
problems).  Finland did have a similar weakness in its 
patent system but remedied the problem by amending its 
patent legislation earlier this year.  In Norway, 
pharmaceutical companies say fixing the problem does 
not require changing the patent laws, but could be done 
fairly quickly and simply by amending the public health 
care system's drug reimbursement regulations to bar 
pharmacies from swapping or substituting copycat 
generics for branded drugs that have process patents. 
 
5.  (SBU) The "process" versus "product" patent issue 
lay largely dormant until last year, when generic 
manufacturers began aggressively to enter the Norwegian 
market with generic substitutes for branded drugs. 
U.S. firms filed at least five patent infringement 
lawsuits in 2005 to stave off generic competitors. 
They have, with one exception so far, won preliminary 
injunctions to keep the generics off the market, at 
least temporarily.  Merck lost a preliminary injunction 
motion to prevent market entry of a generic substitute 
 
for a drug accounting for 20 percent of its local 
sales, though the particular patent at issue had other 
technical weaknesses and is probably not a good 
precedent.  Merck laid off staff following the loss. 
 
Embassy Engagement 
------------------ 
 
6.  (SBU) Post has kept in close contact with U.S. 
pharmaceutical firms in Oslo on the process patent 
issue since it first arose last spring, but at their 
request did not engage the Norwegian government until 
shortly after last September's parliamentary elections. 
Talks between the pharmaceutical companies and Health 
Ministry officials under the prior government had gone 
well, but had been launched too close to the elections 
to effect change.  When time ran short before a looming 
change in government, the pharmaceutical companies 
asked Ambassador Ong to weigh in with the Minister of 
Trade and Industry to gain his support for a last 
minute resolution.  The Minister told the Ambassador, 
however, that he could not at that point do anything 
that might bind the incoming government. 
 
7.  (SBU) The September elections brought a new, 
center-left coalition to power and the pharmaceutical 
companies were back to square one.  They opened a 
dialogue with the new political team at the Health 
Ministry but failed to make real headway on a 
resolution.  With talks showing little progress (and 
Merck having lost its preliminary injunction motion), 
the pharmaceutical firms asked the Embassy last 
December to weigh in again with the Ministries of 
Foreign Affairs and Trade to stress the international 
trade/investment ramifications of the patent issue, 
leaving technical discussions with the Health Ministry 
to them.  The Charge d'Affaires raised the matter on 
December 6 with a deputy minister of foreign affairs 
and Ambassador Whitney, who succeeded Ambassador Ong in 
early January, raised the issue again with the same 
official on January 25.  Deputy Pol/Econ Chief also 
raised it with working-level contacts at the Trade 
Ministry.  Neither ministry has responded beyond the 
usual diplomatic courtesies. 
 
8.  (SBU) The dialogue in Oslo is continuing, however. 
The local pharmaceutical trade association will next 
meet Health Ministry officials on March 10, to discuss 
the potential financial impact of making the regulatory 
changes requested by industry.  The Ambassador will 
make an introductory call on the Minister of Trade and 
Industry on March 17. 
 
Strategy and Recommendations 
------------------------------ 
 
9.  (SBU) Post believes that including Norway on the 
Special 301 Watch List, by itself, does not accomplish 
much, and recommends against doing so without first 
allowing Norway an opportunity to take action on the 
process patent issue.  Our preferred outcome is clear 
-- that Norwegian health authorities amend the drug 
reimbursement regulations as recommended by the 
industry.  PhRMA's request can be used as a tool to 
spur Norwegian authorities to take action progressing 
towards that outcome.  Post (and Washington agencies) 
can leverage the Special 301 request as an "action- 
forcing event," bringing it to the attention of 
appropriate Norwegian officials and requesting that 
health authorities work constructively with industry to 
address the process patent issue well before the 
Special 301 report's April 30 publication date. 
Working with local U.S. pharmaceutical company 
representatives, Post can continue to monitor progress 
(or lack thereof) and, based on developments, offer a 
further assessment of the advisability of including 
Norway on the Special 301 list as the deadline 
approaches. 
 
WHITNEY 

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