US embassy cable - 05TAIPEI313

UNCLAS SECTION 01 OF 02 TAIPEI 000313 
 
SIPDIS 
 
STATE FOR EAP/RSP/TC AND EB/TPP/MTA/IPC, STATE PASS AIT/W 
FOR RUZICKA AND USTR FOR KI AND FREEMAN, DOC FOR MBMORGAN 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, KIPR, TW, IPR 
SUBJECT: TAIWAN PASSES DATA EXCLUSIVITY BILL 
 
1.  Summary: After striking a compromise the last week of the 
legislative session, Taiwan's Legislative Yuan (LY) passed a 
bill that will provide protection for pharmaceutical data in 
accordance with Taiwan's WTO commitments under TRIPS.  The 
new law will protect test data for new drugs with new 
ingredients for five years.  Pharmaceutical companies must 
apply to register their drugs in Taiwan within three years of 
release in an advanced country market.  The research 
pharmaceutical industry in Taiwan is grudgingly pleased, but 
disappointed that a provision that would protect new 
indications and administrations was deleted from the 
compromise version.  A local industry association has been 
awarded a grant to study the drug registration system in 
advance of a plan by the LY to consider amendments to the 
pharmaceutical law in the next session.  Representatives from 
international manufacturers have not been invited to 
participate.  End Summary. 
 
2.  Four separate bills to provide protection for 
pharmaceutical data were merged into one compromise bill on 
January 12, for consideration during the last week of the LY 
session.  Despite a contentious battle over the national 
budget and threats from both sides to take procedural actions 
that would derail the passage of remaining bills, the DE bill 
was approved by a voice vote early the morning of January 21, 
the last day of the legislative session. 
 
3.  The compromise bill provides five years of protection for 
new pharmaceutical products with new ingredients.  However, a 
provision that would have extended protection for other new 
drugs (i.e., new indications and administrations of 
previously approved drugs) for an additional three years was 
deleted.  New pharmaceutical products with new ingredients 
are required to apply for registration with the Taiwan health 
authorities within three years of approval for use in one of 
ten advanced foreign countries (including the US, EU, and 
Japan, but excluding India and Russia) or face loss of 
protection. 
 
4.  Representatives from the International Research 
Pharmaceutical Manufacturers Association (IRPMA) were pleased 
that the bill had passed and were resigned to the idea that 
this bill was the best that could be expected now.  While 
disappointed that protection for "other new drugs" was 
deleted, their disappointment was tempered by a clarification 
in the law specifying that new pharmaceutical products must 
only begin the Taiwan application process within three years 
of approval in an advanced country market to avail of DE 
protection, rather than requiring the registration process be 
completed within three years.  Given their sometimes 
difficult relationship with the Department of Health, Bureau 
of Pharmaceutical Affairs, IRPMA has vowed to closely follow 
the drafting of implementing regulations to ensure that these 
are consistent with their understanding of the provisions of 
the bill. 
 
5.  IRPMA also expressed concern that plans by the LY to 
codify provisions of the drug registration system have thus 
far not taken into account the views of international 
research pharmaceutical companies.  The Taiwan Pharmaceutical 
Manufacturers Association (TPMA) has been awarded a grant by 
the LY to complete a study of the registration system in 
preparation for proposed amendments to the pharmaceutical law 
but IRPMA member companies have not been consulted. 
 
6.  Comment: The passage of the DE bill fulfills a promise 
made by recently resigned Vice Minister of Health Chang 
Hong-jen to Assistant USTR Charles Freeman during the 
latter's July 2004 visit to Taiwan, later repeated by DOH 
Minister Chen to the AIT Deputy Director in August 2004 and 
by Deputy Minister of Economic Affairs Steve Chen during the 
November 2004 Trade and Investment Framework Agreement (TIFA) 
meeting.  Passage comes despite reported efforts from within 
the Department of Health to undermine the bill in an attempt 
to protect local industry.  While a few Taiwan research based 
pharmaceutical companies will also benefit from the new 
protections, most observers believe the passage of this new 
law is a direct response to U.S. preconditions for improving 
the U.S./Taiwan trade relationship in preparation for a Free 
Trade Agreement and removal from the Special 301 Watch List. 
Despite any shortcomings in the new law, Taiwan officials are 
likely to point to its passage as one more reason the U.S. 
should consider negotiating an FTA with Taiwan.  End Comment. 
PAAL