US embassy cable - 04ZAGREB387

UNCLAS  ZAGREB 000387 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE FOR EB/IPC AND EUR/SCE 
USTR FOR MARK WU AND LISA ERRION 
USDOC FOR 4232/ITA/MAC/EUR/MROGERS 
USDOC FOR 3133/USFCS/EUR 
 
E.O. 12958: N/A 
TAGS: ETRD, KIPR, PREL, HR, Intellectual Property 
SUBJECT: SANADER GOVERNMENT DELIVERS: INTELLECTUAL PROPERTY 
MOU RATIFIED AFTER ALMOST SIX YEARS 
 
 Summary 
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1.  (U) Late on March 3, the Croatian parliament 
approved the Memorandum of Understanding on 
Intellectual Property Rights, which the GOC had 
signed in May 1998 but had never ratified.  While the 
MOU does not go into effect until implementing 
regulations and laws are in force and diplomatic 
notes are exchanged, the ratification is a major 
achievement that must be credited to the Sanader 
government.  As always, the battle now moves to the 
arena of implementation and enforcement.  End 
Summary. 
 
2.  (SBU) On March 3, the 1998 Memorandum of 
Understanding on Intellectual was ratified, with 77 
votes in favor, 23 votes against and one abstention. 
When the former HDZ government signed the MOU in May 
1998, it promised to have the MOU in force by June 
1999.  Over the years since then, the GOC has offered 
various reasons for delay, but eventually 
acknowledged that the unwillingness of Croatian 
pharmaceutical producers to give up the ability to 
use clinical data created by others (including U.S. 
drug companies) was the real problem. 
 
3.  (SBU) Even before the November 2003elections, top 
members of the current HDZ-led government promised to 
make good on Croatia's outstanding commitment and to 
ratify the agreement.  While seemingly easier to make 
good on than other U.S. requests (i.e., Article 98 
agreement, assistance for the Coalition in Iraq), 
ratification was far from certain.  The local 
pharmaceutical companies did not want to come out 
publicly against the agreement, so chose to try to 
undermine it behind the scenes. 
 
4.  (SBU) When the MOU was initially put on the 
parliamentary agenda mid-February, immediately after 
after it on the agenda were amendments to the Drug 
Law, which purported to bring domestic legislation 
into line with the MOU.  These amendments had been 
prepared by the Ministry of Health and approved by 
the Cabinet with little debate.  However, the effect 
of the amendments would have been to gut the MOU. 
Luckily, after protest from the U.S. innovative drug 
industry, the amendments were withdrawn. 
 
5.  (SBU) Interestingly, amendments to the Patent 
Law, necessary to implement the "pipeline protection" 
aspects of the MOU, were prepared by the Ministry of 
Science and Education and are adequate, according to 
U.S. industry experts. 
 
6.  (SBU) There were several attempts to open the MOU 
up for amendment (the Sanader government had 
submitted the bill for a streamlined, up-or-down 
vote).  Sources close to the committee debate said 
the deputies were told that Croatia was the only 
country to saddle itself with such an agreement, that 
other countries had given themselves until EU 
accession to implement similar provisions, etc.  The 
day before the final vote, the newspapers were full 
of stories decrying the possible effect of the 
agreement on the Croatian pharmaceutical industry. 
Damage figures -- which the industry and government 
had been unable to produce for years -- were quoted 
at $200 million -- a figure our industry describes as 
ludicrous. 
 
7.  (SBU) As ratification became inevitable, local 
drug companies' strategy turned to plotting to 
neutralize "negative effects" of the MOU.  A Belupo 
spokesperson told the press, "Belupo believes in the 
Government's readiness to consult the experts of the 
Croatian pharmaceutical companies in drafting the 
implementing legislation in order to make MOU's 
consequences as acceptable as possible."  Her 
counterpart at Pliva said "they (Pliva) expect that 
the implementing legislation will eliminate any 
dilemmas in the agreement's implementation." 
 
Comment 
 
 
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8.  (SBU) The current government deserves credit for 
making ratification of the MOU a priority and for 
pushing it through.  There are some individuals -- 
mainly in the Ministry of Health -- who will 
try to undermine the MOU in the process of drafting 
implementing legislation and regulations.  We will 
continue to monitor and engage the government 
to prevent dilution of the agreement's hard-won benefits. 
FRANK 
 
 
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