US embassy cable - 04ZAGREB1836

UNCLAS  ZAGREB 001836 
 
SIPDIS 
 
 
SENSITIVE BUT UNCLASSIFIED 
 
STATE FOR USTR 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, EU, HR, Intellectual Property 
SUBJECT: IMPLEMENTATION OF IP MOU STALLS: EC NOT THE 
REASON, BUT A GOOD EXCUSE 
 
REF:  ZAGREB 387 
 
SUMMARY AND COMMENT 
-------------------- 
 
1.  (SBU) The GOC has not yet taken action on legislative 
changes need to implement and bring into force the 
Intellectual Property MOU, finally ratified in March, 
despite Ministerial-level reassurances in September. 
European Commission officials have raised open-ended 
questions about the MOU in meetings with GOC officials, 
but EU ambivalence is not why its implementation has 
stalled.  Rather, our allies, notably in the Ministry of 
Foreign Affairs, have to push for the MOU over the 
objections of a strong Minister of Health and a strong 
domestic lobby.  Once the EU gets data exclusivity 
protection -- required by its Interim Agreement with 
Croatia and also a small but important part of the MOU -- 
- and as Croatia begins negotiations on accession early 
in 2005, we expect EU griping about the MOU to become 
even louder.  End Summary and Comment. 
 
Amendments Blocked 
------------------- 
 
2.  (SBU) The Ambassador has repeatedly pressed the 
government -- most recently in mid-September -- to move 
forward two pieces of legislation to enable the 1998 MOU 
to come into force: one amends the drug law to provide 
data exclusivity and the other amends the patent law to 
provide "pipeline protection" (a one-year window in 
which companies can file for patents on products not yet 
on the market but which are past the usual period for 
filing).  Two ministers assured the Ambassador that one 
or both pieces of legislation would be on the 
government's agenda before the end of September.  In 
several government sessions held since then, however, 
the issue was not considered. 
 
3.  (SBU) Government and industry contacts report that 
the local generics industry and the Minister of Health 
(and Deputy Prime Minister for Economy) Andrija Hebrang 
oppose the MOU.   Hebrang is wrestling with an enormous 
budget gap in the public health system, and the U.S. 
industry believes he extracted large pricing concessions 
from local generics manufacturers in partial exchange 
for delaying the introduction of data exclusivity.  In 
the meantime, our industry informs us that a bumper crop 
of marketing requests for locally-produced generics, 
which rely on U.S. test data for registration, are being 
approved and the copied drugs are being put on the drug 
reimbursement list. 
 
EC Innocent... Sort Of 
---------------------- 
 
4.  (SBU) In late September, Globus (a sensationalist but 
occasionally accurate weekly) published a titillatingly 
titled article, "Barroso and Sanader in Conflict Over 
Viagra."  The article claimed that the European 
Commission had written to PM Sanader opposing the MOU. 
The EC Delegation confirmed that no such letter existed. 
In fact, the EC had recently reminded the Minister of 
European Integration of the need to get cracking on data 
exclusivity, and complaining of long drug registration 
periods.  However, our EC counterpart told us that the EC 
"was not overjoyed with the prospect of the MOU." She did 
not provide an explanation other than exasperation that 
Croatia did not discuss or share the MOU with the 
Commission before it was ratified." 
 
5.  (SBU) The MFA has confirmed that the EC Delegation 
had recently made informal remarks in meetings with GOC 
officials indicating "serious questions" about the MOU. 
Head of the North America Desk at the MFA -- a supporter 
of the MOU -- said, "Frankly, these comments make our job 
harder.  Some clarity would be appreciated." 
 
6.  (SBU) Econoff met with visiting EC staffers on 
October 18,including Alain Deckers from the Commission's 
Internal Market DG.  The officials said that they had no 
objections to the two pieces of legislation as long as 
they were non-discriminatory and did not prevent Croatia 
meeting its obligations under the Interim Agreement.  We 
shared frustration that the Ministry of Health was 
telling each of us that the other was an obstacle to 
devising data exclusivity language. 
 
7.  (SBU) Deckers did note that Croatia would have to 
 
 
"denounce" some parts of the MOU upon EU entry, for 
procedural rather than substantive reasons.  Other parts 
of the MOU, notably in the copyright area, might not 
conform to EU Directives, but he was not able to give 
details.  The Commission's Croatia Desk Officer went 
further, saying that he was sure that the U.S. would not 
want to do anything to complicate Croatia's accession and 
implying that the MOU could cause problems.  Econoff 
asserted that bringing the MOU into effect was not 
negotiable and noted that the mixed signals being sent 
about the MOU were being used by those who wanted to 
block data exclusivity and pipeline protection, which 
hurts us both. 
 
DELAWIE 
 
 
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